TAN No Longer Needed for Individuals and HUFs Deducting TDS on NRI Property Purchases – Effective Oct 2026
From 1 Oct 2026, resident individuals and HUFs buying immovable property from non‑resident sellers can deduct TDS under Section 393(2) without obtaining a TAN (Section 397(1)(c)(iii), Income‑tax Act, 2025). Payment and reporting move to the challan‑cum‑statement Form 141 (new Schedule E), with the certificate in Form 132. The separate Form 145 report of the payment to the non-resident is still required.
CA Harun Raaj
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Legal basis: Income‑tax Act, 2025 – Section 397(1)(c)(iii) (substituted by Section 87 of the Finance Act, 2026) and Section 393(2) (Table Sl. No. 17); Income‑tax Rules, 2026 – Rules 215, 218(3) and 219(5) as amended by the Income‑tax (Fifth Amendment) Rules, 2026 — Effective: 1 Oct 2026. Source: Finance Act, 2026; CBDT Notification No. 121/2026. Last updated: October 2026
Resident individuals or Hindu Undivided Families (HUFs) buying immovable property from a non‑resident seller have long been required to deduct tax at source (TDS) under Section 393(2) and to obtain a Tax Deduction and Collection Account Number (TAN) for the purpose. From 1 Oct 2026, Section 397(1)(c)(iii) of the Income‑tax Act, 2025 (substituted by Section 87 of the Finance Act, 2026) removes the TAN requirement for a resident individual or HUF deducting this specific TDS. Alongside this, CBDT Notification No. 121/2026 (G.S.R. 830(E), dated 22 Sep 2026), which is itself the Income‑tax (Fifth Amendment) Rules, 2026, amends Rules 215, 218(3) and 219(5) of the Income‑tax Rules, 2026 and Forms 132 and 141 so that this TDS is paid and reported through Form 141. Both changes become operative on 1 Oct 2026.
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What the amendment changes
- TAN no longer mandatory for a resident individual or HUF buyer when deducting TDS on purchase of immovable property from a non‑resident seller (Section 397(1)(c)(iii)). Other buyers, such as companies and firms, still need a TAN.
- Form 141 is updated with a new Schedule E to capture the TDS details. Before this change, the TDS was reported in the quarterly TDS statement in Form 144 (Rule 219(1)).
- Form 132 is amended to cover transfers of immovable property by a non‑resident to a resident individual or HUF.
- The 30‑day window (within 30 days from the end of the month of deduction) is new for this TDS where the buyer is a resident individual or HUF. From 1 Oct 2026, such a buyer deposits the TDS using the challan‑cum‑statement Form 141 (Rules 218(3)(e) and 219(5)(e)). Before that, the tax was due by the 7th of the following month (Rule 218(2)(b)) and was reported in the quarterly Form 144. Company, firm and other buyers remain under Rule 218(2) and the quarterly Form 144 (Rule 219(1)).
These changes simplify the compliance workflow for resident individual and HUF buyers, especially high‑net‑worth individuals (HNIs) and NRI advisory clients involved in real‑estate transactions.
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How to comply after 1 Oct 2026
- Deduct TDS at the rates in force under Section 393(2). Under Part II of the First Schedule to the Finance Act, 2026, the rates for a non‑resident individual seller are 12.5% on long‑term capital gains and 30% on other income, which covers short‑term gains on property. These rates are before surcharge and cess, and tax treaty benefits may apply. If the whole sum would not be chargeable to tax, you can apply to the Assessing Officer under Section 395(2) so that tax is deducted only on the chargeable proportion.
- Prepare Form 141 with the newly introduced Schedule E. This schedule captures, among other things:
- Pay the TDS using the challan‑cum‑statement Form 141 within 30 days from the end of the month in which the deduction is made (Rule 218(3)).
- Report the payment to the non‑resident in Form 145. This is a separate requirement under Section 397(3)(d) and Rule 220(1). Part A applies where the payment, or the total of such payments in the tax year, does not exceed ₹5 lakh. Above ₹5 lakh, you file Part B (where a certificate or order from the Assessing Officer under Section 395(1) or (2) has been obtained) or Part C (backed by an accountant's certificate in Form 146). Not furnishing this information, or furnishing inaccurate information, can attract a ₹1,00,000 penalty under Section 462.
- Issue Form 132 to the seller, reflecting the same details as in Schedule E. Form 132 is generated and downloaded from the portal and must be furnished within 15 days from the due date for furnishing Form 141 (Rule 215(1), Table Sl. No. 3).
- Maintain records of the transaction, the TDS payment receipt, and copies of Form 141, Form 145 (and Form 146, if any) and Form 132, so you can answer any later query on the deduction.
- Inform the seller that the buyer will not be providing a TAN. The seller should make sure their PAN is correctly quoted in Schedule E. The seller's contact number, email ID and overseas address must be given whether or not they have a PAN (Form 141, Note 6(a)). If the seller has no PAN, they should also provide the tax residency certificate number and Tax Identification Number required under Rule 217 (Form 141, Note 6(b)).
While the procedural steps are streamlined, the underlying obligations—accurate deduction, timely payment, and proper documentation—remain fully enforceable. The consequences of non‑compliance are set out in the Income‑tax Act, 2025. Under Section 398(1), a buyer who fails to deduct or pay becomes an assessee in default. Section 398(3) charges interest at 1% a month for non‑deduction and 1.5% a month from deduction to payment. Filing the Form 141 statement late attracts a fee of ₹200 a day under Section 427(1), capped at the tax deductible, and failing to furnish Form 145 can attract a ₹1,00,000 penalty under Section 462.
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Before vs. after 1 Oct 2026 – quick comparison
| Aspect | Before 1 Oct 2026 | After 1 Oct 2026 |
|---|---|---|
| TAN requirement for buyer | Mandatory – buyer had to obtain a TAN before deducting TDS. | No TAN needed for a resident individual or HUF buyer (Section 397(1)(c)(iii)); other buyers still need a TAN. |
| Reporting form | Challan payment plus quarterly TDS statement in Form 144 (Rule 219(1)). | For resident individual/HUF buyers: challan‑cum‑statement Form 141 with new Schedule E for NRI property TDS (Rule 219(5)(e)). Other buyers continue with Form 144. |
| Additional form | TDS certificate in Form 131 (Rule 215(1), Table Sl. No. 2). | Form 132 (amended), furnished within 15 days from the due date for Form 141 (Rule 215(1), Table Sl. No. 3). |
| Compliance timeline | Tax due by the 7th of the following month (Rule 218(2)(b)). | For resident individual/HUF buyers: within 30 days from the end of the month of deduction (Rule 218(3)(e)). Other buyers remain under Rule 218(2). |
| Penalty triggers | Failure to apply for a TAN could attract a ₹10,000 penalty under Section 468(1). | Resident individual/HUF buyers are outside the TAN requirement; failure to deduct or pay still makes the buyer an assessee in default, with interest (Section 398). |
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Key point: Resident individuals and HUFs no longer need a TAN to deduct TDS on NRI property purchases from 1 Oct 2026. Other resident buyers still need one.
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Practical steps for resident buyers and their advisors
- Confirm the seller's PAN before starting the transaction. Schedule E asks for the PAN "if available". Collect the seller's contact number, email ID and overseas address in every case (Form 141, Note 6(a)). If the seller has no PAN, also collect the Rule 217 details (tax residency certificate number and Tax Identification Number) so that tax is not deducted at a higher rate (Form 141, Note 6(b)).
- Coordinate with the seller's tax advisor so the seller can claim credit for the TDS.
- Update internal checklists to replace the TAN verification step with a PAN verification step, and to include the Form 145 (and, where needed, Form 146) step.
- Leverage accounting software that supports the new Schedule E layout to avoid manual re‑keying errors.
- Engage a qualified CA to review the completed Form 141 and Form 132 before submission, ensuring that the amended rules (Rule 215, Rule 218(3), Rule 219(5)) are fully satisfied.
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Risks of overlooking the amendment
- Assessee in default: Under Section 398(1) of the Income‑tax Act, 2025, a buyer who fails to deduct or pay the TDS is treated as an assessee in default for that tax.
- Interest on delayed payment: Section 398(3) charges simple interest at 1% a month from the date tax was deductible to the date it is deducted, and 1.5% a month from the date of deduction to the date of actual payment.
- Late filing fee: Form 141 is a statement under Section 397(3)(b). Filing it late attracts a fee of ₹200 for every day of delay under Section 427(1), capped at the amount of tax deductible.
- Missing Form 145: Not furnishing the Form 145 information on the payment to the non‑resident, or furnishing inaccurate information, can attract a ₹1,00,000 penalty under Section 462.
- Incomplete filing: Form 141 now includes Schedule E for this TDS. Missing or incorrect details there can delay filing.
- Seller's credit claim issues: If the seller's PAN is not correctly reported, the seller may be unable to claim credit for the TDS, potentially resulting in double taxation.
Given the tight filing window and the technical nature of the new Schedule E, professional oversight is advisable to avoid costly errors.
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Bottom line – Removing the TAN requirement reduces administrative friction for resident individual and HUF buyers. The core obligations—accurate deduction and timely payment—remain, and from 1 Oct 2026 they are met by filing Form 141 (Schedule E) and furnishing Form 132, together with the separate Form 145 report of the payment to the non‑resident (Section 397(3)(d), Rule 220). Engaging a Chartered Accountant ensures that the amended rules are applied correctly and that the transaction proceeds without regulatory hiccups.
I'm CA Harun Raaj. If you're structuring India operations and this affects your setup, reach out.
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See Also
Frequently Asked Questions
Do I still need to obtain a TAN if I am a resident buyer of NRI property after 1 Oct 2026?+
Not if you are a resident individual or HUF. Section 397(1)(c)(iii) of the Income-tax Act, 2025, as substituted by Section 87 of the Finance Act, 2026, removes the TAN requirement from 1 Oct 2026 for a resident individual or HUF deducting TDS under Section 393(2) (Table Sl. No. 17) on NRI property purchases. Resident companies, firms and other buyers still need a TAN. The individual or HUF buyer deducts and pays TDS using Form 141 with the new Schedule E (Rule 218(3)(e)), and must still report the payment to the non-resident in Form 145 (Section 397(3)(d), Rule 220(1)).
What is the new Schedule E in Form 141 used for?+
Schedule E was introduced by the Income-tax (Fifth Amendment) Rules, 2026 (CBDT Notification No. 121/2026). It captures details of TDS deducted on immovable property purchases from non-resident sellers, including details of all buyers, the seller's PAN (if available) and overseas contact details, property details, the TDS amount and the acknowledgement number of the corresponding Form 145, if applicable.
Does the 30-day filing deadline apply to this TDS?+
Yes, from 1 Oct 2026, where the buyer is a resident individual or HUF, and it is new for this TDS. Such a buyer must deposit the TDS with the challan-cum-statement Form 141 (with Schedule E) within 30 days from the end of the month in which the deduction was made (Rule 218(3)(e)). Form 132 must be furnished to the seller within 15 days from the due date for Form 141 (Rule 215(1), Table Sl. No. 3). Company, firm and other buyers remain under Rule 218(2) and the quarterly Form 144 (Rule 219(1)). Deductions made before 1 Oct 2026 followed the earlier rules: tax by the 7th of the following month (Rule 218(2)(b)) and a quarterly statement in Form 144 (Rule 219(1)).
What penalties apply if I fail to deduct or pay TDS after the amendment?+
The consequences are in the Income-tax Act, 2025, not the Rules. Under Section 398(1), a buyer who fails to deduct or pay becomes an assessee in default. Under Section 398(3), interest runs at 1% a month for non-deduction and 1.5% a month from deduction to payment. Filing the Form 141 statement late attracts a fee of ₹200 a day under Section 427(1), capped at the tax deductible. Failing to furnish the Form 145 information on the payment to the non-resident, or furnishing inaccurate information, can attract a ₹1,00,000 penalty under Section 462. Removing the TAN requirement does not change these provisions.
Do I need to inform the non-resident seller about the TAN removal?+
It is not a statutory requirement, but it is prudent to tell the seller that the buyer will not be providing a TAN. The seller's PAN must be correctly quoted in Schedule E. The seller's contact number, email ID and overseas address must be given whether or not they have a PAN (Form 141, Note 6(a)). If the seller has no PAN, they should also provide the tax residency certificate number and Tax Identification Number required under Rule 217 (Form 141, Note 6(b)) to avoid credit claim issues.
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