Budget 2026 makes buying property from NRIs easier: Here’s how

• Budget 2026: PAN required instead of TAN for buying property from NRIs
• Buyers must verify seller's NRI status to ensure correct TDS deduction
• TDS rates differ for long-term (12.5%) and short-term (30%) property gains

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The Union Budget 2026 has provided relaxation to a resident buyer purchasing an immovable property from non-resident Indians (NRIs), as they will no longer be required to obtain a Tax Deduction and Collection Account Number (TAN) to deduct tax at source.

Earlier, if a resident individual or HUF bought immovable property from an NRI, they had to obtain a Tax Deduction and Collection Account Number (TAN) to deduct and deposit TDS, which only added an extra burden for buyers.

Now, the Budget 2026 has replaced the requirement of TAN with PAN (Permanent Account Number) for buyers when purchasing an immovable property from NRIs.

Finance Minister Nirmala Sitharaman, during her budget speech, said, “It is proposed to provide that resident individual, or HUF, shall not be required to obtain a tax deduction and collection account number (TAN) to deduct tax at source in respect of any consideration on transfer of any immovable property by non resident under section 393(2). Instead, the  deduction shall be reported by quoting the PAN in same.”

“Allowing TDS to be deducted and deposited using a PAN-based challan aligns the process with transactions involving resident sellers, and addresses a long-standing compliance bottleneck,” said Jidesh Kumar, Managing Partner, King Stubb & Kasiva, Advocates and Attorneys.

Tax analyst reasons that the practice of the TAN requirement had imposed a disproportionate burden on individual and one-time buyers, often leading to delays, procedural errors, and uncertainty around timelines for property registration.

Ankit Jain, Partner at Ved Jain and Associates, said, “Resident individuals and HUFs can now deduct tax using a simple PAN-based form, which is similar to regular domestic property sales, which will expedite property registrations and the transaction process.”

Buying property from NRIs? What buyers need to know about TDS

Although the requirement to avail of a TAN has been replaced with a PAN, buyers should be careful when buying property from NRIs.

The thumb rule is to identify the residential status of an NRI. An Indian citizen with a valid passport is treated as an NRI if they work abroad for more than 182 days in a financial year, with all their investments and transactions in India governed by the Foreign Exchange Management Act (FEMA).

If the seller fails to disclose his or her NRI status and the buyer treats them as a resident, TDS may be wrongly deducted at 1 percent of the total sale value under Section 194-IA, a provision that applies only to resident sellers.

Also, if the property is held for over two years, it is treated as a long-term asset and attracts 12.5 percent TDS on capital gains for buyers, plus surcharge and cess. For properties sold within two years, the gains are short-term, with TDS rising to 30 percent, along with surcharge and cess.

According to a tax analyst, a carefully drafted sale agreement is also essential, clearly outlining the TDS clause and the obligations of both parties.