February 04, 2026

Budget 2026: Major Relief for NRIs Selling Property in India – TDS Compliance Simplified

Union Budget 2026–27 has introduced a major and much-needed compliance reform for Non-Resident Indians (NRIs) selling immovable property in India. One of the most time-consuming requirements in TDS on sale of property by NRI—the obligation on the resident buyer to obtain a Tax Deduction and Collection Account Number (TAN)—has now been removed.

This reform significantly simplifies property sale transactions involving NRIs, reduces compliance burden, and speeds up execution and registration of sale deeds, while keeping the TDS rates unchanged.

TDS on Sale of Property by NRI: Position Before Budget 2026

Earlier, when a resident individual or Hindu Undivided Family (HUF) purchased immovable property from a non-resident Indian, the buyer was required to:

Apply for and obtain TAN
Deduct TDS using TAN
Deposit TDS through TAN-based challan
File quarterly TDS returns (Form 26Q)
Ensure TDS credit reflected in the NRI seller’s tax records

This process created a significant compliance burden, particularly because TAN had no use beyond this single transaction, leading to delays and hesitation in NRI property sale transactions.

Budget 2026 Amendment: Removal of TAN Requirement

To reduce procedural hurdles, Budget 2026 proposes an amendment to Section 397(1)(c) of the Income-tax Act.

What Has Changed Under Budget 2026?

Resident individual or HUF buyers are no longer required to obtain TAN
Applicable where TDS is deducted under Section 393(2) on transfer of immovable property by a non-resident
TDS will be deducted and deposited using the buyer’s PAN
Compliance will be PAN-based instead of TAN-based

Effective Date:
This amendment will apply from 1 October 2026.

Important Clarification: No Change in TDS Rates

Budget 2026 does not alter the TDS rates applicable on sale of property by NRI.

TDS will continue to be deducted at existing rates prescribed under the Income-tax Act
Applicable rates will depend on:
- Nature of property (long-term or short-term capital asset)
- Applicable surcharge and cess
- Availability of Lower / Nil TDS Certificate under Section 197, if obtained

The amendment is purely procedural and intended to simplify compliance under NRI taxation, not to reduce or increase the tax liability of NRIs.

Why This Change Is a Big Win for NRIs

This reform directly benefits NRIs selling property in India by:

Eliminating one of the biggest procedural bottlenecks in NRI property sale compliance
Reducing overall transaction and registration timelines
Improving buyer confidence in dealing with NRI-owned property
Ensuring faster and more accurate TDS credit to the NRI seller

New PAN-Based TDS Mechanism for NRI Property Sale

Earlier Process (Before 1 October 2026)

Buyer applies for TAN
Buyer deducts TDS using TAN
TDS deposited via TAN-based challan
Filing of quarterly TDS return (Form 26Q)
TDS credit reflects in seller’s Form 26AS

New Simplified Process Under Budget 2026

Step 1: PAN-Based Deduction

The resident buyer will quote PAN instead of TAN while deducting TDS.

Step 2: TDS Payment

TDS will be deposited through a challan-cum-statement mechanism, similar to Form 26QB used for property purchases from resident sellers.

Step 3: Automatic TDS Credit

The deducted tax will automatically reflect in:

Form 26AS
Annual Information Statement (AIS) of the NRI seller

No separate quarterly TDS return required

Key Points for NRIs and Buyers

Applicable only to resident individual or HUF buyers
No change in nri property sale TDS rates on sale of property by NRIs
Lower / Nil TDS Certificate process continues as earlier
Effective for transactions executed on or after 1 October 2026
Aimed solely at simplification of property-related compliance

Impact of Budget 2026 on NRI Property Transactions

By replacing the TAN requirement with a PAN-based TDS mechanism, Budget 2026 has delivered a practical, execution-focused reform for NRI property sales in India. This change improves ease of compliance, shortens transaction timelines, and enhances certainty for both buyers and sellers.

For NRIs planning to sell property in India, this is one of the most meaningful compliance simplifications introduced in recent years—without altering the underlying tax framework, and reinforces the importance of timely NRI advisory services.