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The move reflects a shift towards practical and outcome-driven tax administration
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By reducing paperwork without weakening tax collection, Budget 2026 makes genuine property transactions smoother for both resident buyers and NRI sellers
Buying property in India from a Non-Resident Indian (NRI) seller has traditionally been a slow and paperwork-heavy process for resident buyers. Budget 2026 has now brought much-needed relief by simplifying the way tax deducted at source (TDS) is handled in such transactions.
In an announcement made on February 1, Finance Minister Nirmala Sitharaman proposed removing the requirement for resident buyers to obtain a separate Tax Deduction and Collection Account Number (TAN) when purchasing immovable property from a non-resident. Instead, buyers will now be able to deduct and deposit TDS using a PAN-based challan, aligning NRI property sales with the simpler system already used for resident-to-resident transactions.
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Earlier, buyers were required to obtain a TAN, deduct tax under Section 195 of the Income Tax Act, deposit the amount using the TAN, and file TDS returns
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For most homebuyers, especially those involved in a one-time transaction, this process was confusing and often led to delays
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In many cases, buyers avoided dealing with NRI sellers altogether, which negatively affected sale timelines and bargaining power for NRIs
By removing the TAN requirement, Budget 2026 cuts down unnecessary procedural steps. Buyers can now comply with tax rules using only their PAN, making the process faster and easier. This change is particularly helpful for NRIs managing property sales from abroad or through a power of attorney.
Importantly, the Budget does not change the applicable TDS rates or the tax liability of the seller. Buyers must still deduct tax at non-resident rates, including surcharge and cess, and apply for lower or nil deduction certificates where eligible. For instance, TDS of 20% or 30% may still apply under Section 195, depending on the nature of the capital gains and PAN availability.
