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F-14/15, Orbit Mall, Civil Lines, Jaipur-302006 support@thetaxheaven.comBuying a property from a Non-Resident Indian (NRI) involves different TDS compliance compared with buying property from a resident seller.
From 1 October 2026, the compliance process for certain buyers purchasing immovable property from a non-resident seller is changing significantly.
The Central Board of Direct Taxes (CBDT), through Notification No. 121/2026 dated 22 September 2026, has amended the Income-tax Rules, 2026. The amendment introduces a new Schedule E in Form 141 for reporting TDS on consideration paid for transfer of immovable property by a non-resident to a resident Individual or Hindu Undivided Family (HUF).
The major relief is that a resident Individual or HUF buyer will not need to obtain a separate TAN for this transaction from 1 October 2026. Instead, TDS can be reported and deposited through the PAN-based Form 141.
However, buyers should not misunderstand this change.
The TDS obligation itself has not been removed. The change is primarily about the method of depositing and reporting TDS.
Under the new framework, where a resident Individual or HUF purchases immovable property from a non-resident, the TDS required under Section 393(2) of the Income-tax Act, 2025 can be reported through Form 141.
The new mechanism becomes effective from 1 October 2026.
The key changes are:
| Particular | Earlier Position | From 1 October 2026 |
|---|---|---|
| Buyer | Resident Individual/HUF | Resident Individual/HUF |
| Seller | Non-resident | Non-resident |
| TDS obligation | Applicable | Applicable |
| TAN | Required | Not required for eligible Individual/HUF buyer |
| TDS reporting | TAN-based mechanism | PAN-based Form 141 |
| Form | Existing non-resident TDS reporting mechanism | Form 141 – Schedule E |
| TDS certificate | Form 132 | Form 132 |
| Effective date | Up to 30 September 2026 | 1 October 2026 onward |
CBDT has amended Rules 215, 218 and 219 and the relevant forms to implement this change.
A property purchase is often a one-time transaction for an individual buyer.
Previously, when a resident Individual or HUF purchased immovable property from a non-resident, the buyer had to comply with the TDS mechanism applicable to payments to non-residents, including obtaining a TAN and following the prescribed reporting process.
This could be cumbersome for a person who was not otherwise involved in regular TDS compliance.
The new system moves the transaction to a PAN-based challan-cum-statement mechanism.
This means an eligible buyer can use their PAN-based e-Filing account to report and deposit the TDS rather than obtaining a separate TAN merely for this property transaction.
The change is intended to reduce the compliance burden while retaining the underlying TDS requirement.
The new Schedule E specifically covers a transaction where:
The seller is a non-resident
The property is an immovable property
The buyer is a resident Individual or HUF
TDS is required under Section 393(2)
The transaction takes place under the new framework applicable from 1 October 2026
The notification specifically refers to Section 393(2), Table Serial No. 17, where a resident Individual or HUF is required to deduct tax on consideration for transfer of immovable property.
Therefore, the new no-TAN facility should not be interpreted as applying to every buyer purchasing property from an NRI.
The notification specifically provides the new PAN-based mechanism for a resident Individual or HUF.
Therefore, a company, firm, LLP or another type of buyer should not automatically assume that the new Individual/HUF facility applies to it.
For such buyers, the applicable TDS and TAN requirements should be checked separately under the provisions applicable to the transaction.
Similarly, the new mechanism does not mean that every payment to an NRI can automatically be reported through Form 141.
The transaction must fall within the specific category covered by the amended rules.
Form 141 is a challan-cum-statement for TDS introduced under the Income-tax Act, 2025.
The Income Tax Department describes Form 141 as a consolidated PAN-based form for specified TDS transactions. It replaced multiple earlier transaction-specific forms under the previous framework.
The form contains different schedules for different types of transactions.
For example:
Schedule A – TDS on certain rent payments by Individual/HUF
Schedule B – TDS on transfer of immovable property involving a resident seller
Schedule C – TDS on specified payments to contractors/professionals
Schedule D – TDS on specified Virtual Digital Asset transactions
Schedule E – TDS on transfer of immovable property by a non-resident to a resident Individual/HUF
The new Schedule E is the important addition for NRI property transactions.
CBDT has inserted a new Schedule E in Form 141.
It is specifically titled for TDS on consideration for transfer of immovable property covered under Section 393(2), Table Serial No. 17.
The schedule collects substantially more information than a simple property-payment entry.
It requires information about:
Property address
Type of immovable property
Details of all buyers
PAN of buyers
Names of buyers
Percentage of consideration payable by each buyer
Details of all sellers
Seller's PAN, if available
Seller's name
Seller's status
Contact number
Email ID
Foreign address
Tax Residency Certificate number
Tax Identification Number
Seller's proportion of consideration
Stamp duty value
Sale consideration
Instalment details
Capital gains-related information
Applicable TDS rate
Lower deduction certificate details, where applicable
Tax deducted
Date of deduction
The detailed information requirements are prescribed in the amended Form 141.
Yes.
The removal of TAN does not mean that TDS has been removed.
The underlying obligation to deduct tax from consideration paid to a non-resident continues under Section 393(2).
The major change is the procedure for depositing and reporting the TDS for eligible resident Individual/HUF buyers.
Therefore, buyers should remember:
No TAN does not mean No TDS.
Instead:
No TAN + TDS through Form 141 Schedule E
is the new mechanism for the specified transaction from 1 October 2026.
The CBDT notification primarily changes the compliance and reporting mechanism.
It does not itself introduce a new universal TDS rate for NRI property transactions.
The applicable tax has to be determined under the provisions governing payments to non-residents and the relevant rates in force.
The Income Tax Department's Form 141 guidance also states that Form 141 itself does not prescribe one fixed TDS rate. The applicable rate can depend on the relevant provision, higher-rate provisions and an applicable certificate issued by the Assessing Officer.
Therefore, buyers should not simply assume that the rate is always 1%.
The commonly known 1% property TDS rule for resident sellers should not be automatically applied when the seller is a non-resident.
The resident-seller property TDS mechanism has a ₹50 lakh threshold under its applicable provision.
However, the NRI seller transaction is governed by the separate non-resident TDS provision.
Therefore, buyers should not apply the resident-seller ₹50 lakh threshold mechanically to an NRI seller.
For a non-resident seller, the TDS obligation can arise on consideration paid or credited even when the property value is below ₹50 lakh, subject to the applicable law.
This is an important difference between resident and non-resident property transactions.
The new Schedule E requires detailed information about the non-resident seller.
The buyer may need to collect:
The seller's PAN should be provided if available.
The form requires the address in the country or specified territory outside India where the deductee is resident.
The seller's contact number is required.
The seller's email address is also captured.
The Schedule E framework includes the Tax Residency Certificate details.
The seller's Tax Identification Number in the foreign jurisdiction is also relevant, particularly where the seller's PAN is not available.
Therefore, buyers should collect these details before completing the transaction and TDS filing.
This is an important compliance issue.
The new Schedule E provides fields for the seller's PAN, if available, along with Tax Residency Certificate and Tax Identification Number details.
The prescribed information is relevant to determining the applicable rate and avoiding the higher-rate consequences where the law requires a higher deduction in the absence of prescribed information.
Therefore, a buyer should not simply leave the seller's tax information unresolved.
If the seller does not have an Indian PAN, the buyer should obtain the required foreign tax information and consider the applicable higher-rate provisions before making the payment.
Where necessary, professional tax advice should be obtained before deduction.
Yes, the law provides a mechanism for lower or nil deduction in applicable cases.
The new Schedule E specifically asks whether a certificate under Section 395(1) is applicable.
If the non-resident seller has obtained an applicable lower or nil deduction certificate from the Assessing Officer, the buyer should use the certificate details while completing the TDS compliance.
The Form 141 guidance also provides for reporting the applicable certificate where relevant.
This is a common issue in NRI property transactions.
Suppose an NRI sells a property for ₹1 crore, but after considering the applicable cost and other provisions, the taxable capital gain is significantly lower than ₹1 crore.
The buyer may still face TDS based on the applicable non-resident TDS framework unless an appropriate lower/nil deduction certificate is available.
This can result in a substantial amount of tax being deducted upfront.
Therefore, the seller should consider obtaining an appropriate certificate where eligible instead of expecting the buyer to independently reduce the TDS.
Under the amended mechanism, the Form 141 filing/payment timeline is linked to the month in which tax is deducted.
The prescribed rule requires the Form 141 challan-cum-statement to be furnished within one month from the end of the month in which the tax was deducted.
For example, if TDS is deducted in October 2026, the relevant Form 141 compliance falls in the following month-based deadline.
Buyers should therefore track the actual date/month of TDS deduction rather than treating the property registration date as the only compliance date.
The new Schedule E specifically accommodates instalment-based property transactions.
The form asks whether the consideration is being paid:
In a lump sum
In instalments
Where instalments are involved, the buyer may have to identify whether the payment is:
First instalment
Subsequent instalment
Last instalment
For subsequent or last instalments, the form also asks for the previous acknowledgement information.
The amount paid or credited in the current transaction and relevant previous instalment information are captured in the schedule.
Therefore, buyers should preserve all previous Form 141 acknowledgement numbers and TDS payment records.
Suppose a property is purchased jointly by two resident Individuals.
The new Schedule E requires details of all buyers, including:
PAN
Name
Percentage of total sale consideration payable/credited by each buyer
The percentages should correspond to the transaction structure.
Buyers should maintain consistency between:
Sale agreement
Sale deed
Payment records
Buyer ownership
TDS records
Form 141
Incorrect allocation of the consideration can create reconciliation issues later.
If there are multiple sellers, Schedule E provides for details of all deductees/sellers.
The buyer needs to identify the relevant details for each seller, including their proportion of the sale consideration.
This is particularly important where a property is jointly owned by multiple family members or co-owners living outside India.
The TDS calculation and reporting should be reconciled with each seller's share.
Form 132 is the TDS certificate issued in relation to specified TDS transactions under the new framework.
CBDT has amended Form 132 to specifically recognise the transfer of immovable property by a non-resident to a resident Individual or HUF.
Therefore, after completing the relevant TDS compliance, the seller can receive the prescribed TDS certificate containing the tax deduction information.
These two forms have different purposes.
| Form | Purpose |
|---|---|
| Form 141 | Challan-cum-statement used by eligible buyer to report and deposit TDS |
| Schedule E | Part of Form 141 specifically covering NRI property transactions |
| Form 132 | TDS certificate issued to the deductee/seller |
In simple terms:
Form 141 = Report + Pay TDS
Form 132 = TDS Certificate
For transactions covered by the earlier mechanism, an eligible buyer dealing with a non-resident seller had to follow the TAN-based TDS compliance route.
This was different from the comparatively simpler PAN-based process used for certain resident-seller property transactions.
The CBDT's September 2026 amendment changes this for the specified resident Individual/HUF transactions from 1 October 2026.
Therefore, the date of the transaction and payment matters.
Transactions or payments falling before the effective date should not automatically be processed using the new Schedule E mechanism.
Suppose Rahul is a resident Individual in India.
He purchases a residential property in Jaipur from an NRI seller in October 2026.
Assume:
Buyer: Resident Individual
Seller: Non-resident
Property: Immovable property in India
Payment: October 2026
Buyer is required to deduct TDS
Under the new mechanism applicable from 1 October 2026, Rahul can use the PAN-based Form 141 with Schedule E for the specified transaction.
He does not need to obtain a separate TAN merely for this eligible NRI property transaction.
He would enter the required property, buyer and seller details, calculate the applicable TDS under the relevant provisions, deposit the tax and complete the Form 141 process.
The seller can subsequently use the TDS certificate for claiming appropriate tax credit.
Now consider a different situation.
Rahul purchases a property from a seller who is resident in India.
This is not an NRI property transaction.
The applicable resident-seller TDS provisions and Schedule B of Form 141 may apply, subject to the conditions of the relevant provision.
Therefore, buyers should first establish whether the seller is resident or non-resident before selecting the appropriate TDS mechanism.
Suppose an Indian company purchases a property from an NRI.
The company should not assume that the new Individual/HUF no-TAN facility applies.
The CBDT notification specifically refers to a transaction where a resident Individual or HUF is required to deduct tax under Section 393(2).
Therefore, companies and other entities should determine their own applicable TDS and TAN requirements.
Before making any payment to an NRI seller, the buyer should create a proper compliance checklist.
Do not rely only on the seller's statement that they are an NRI.
Confirm the relevant residential status for income-tax purposes.
Ask for the seller's Indian PAN, if available.
Where relevant, obtain:
Tax Residency Certificate
Foreign Tax Identification Number
Foreign address
Contact details
Email address
Ask whether the seller has obtained an applicable certificate under Section 395.
Do not automatically use the 1% resident-property TDS rate.
Determine the rate applicable to the non-resident transaction.
For an eligible resident Individual/HUF transaction from 1 October 2026, use Form 141 Schedule E.
For other cases, determine the applicable mechanism separately.
Maintain:
Agreement
Sale deed
Payment receipts
Bank statements
TDS challans
Form 141 acknowledgement
Form 132
Certificate under Section 395, if applicable
Seller's tax documents
The 1% property TDS rule associated with resident sellers should not be blindly applied to an NRI seller.
The resident-seller threshold should not automatically be applied to payments to a non-resident.
This is perhaps the biggest misconception.
The new rule removes the TAN requirement for eligible resident Individual/HUF buyers. It does not remove the TDS obligation.
The seller's tax information can be important for determining the correct rate and compliance.
NRI property transactions covered by Section 393(2) should use the newly prescribed Schedule E when the new mechanism applies.
Schedule B is for the resident-seller property TDS category under Section 393(1).
The notification specifically covers resident Individuals and HUFs.
Companies, firms and other entities should verify their own requirements.
| Date | Event |
|---|---|
| 22 September 2026 | CBDT Notification No. 121/2026 issued |
| 1 October 2026 | New Form 141 Schedule E mechanism becomes effective |
| From 1 October 2026 | Eligible resident Individual/HUF buyers can use PAN-based Form 141 instead of obtaining TAN for the specified transaction |
| Within prescribed period | Form 141 and TDS payment must be completed |
| After filing | TDS certificate Form 132 can be issued as prescribed |
CBDT's notification states that the Income-tax (Fifth Amendment) Rules, 2026 come into force from 1 October 2026.
The following comparison can help buyers understand why seller status matters:
| Particular | Resident Seller | Non-Resident Seller |
|---|---|---|
| Relevant TDS framework | Section 393(1) category | Section 393(2) category |
| Form 141 | Schedule B | Schedule E from 1 Oct 2026 for eligible Individual/HUF buyer |
| TAN for eligible Individual/HUF | Not required under applicable resident-property mechanism | Not required from 1 Oct 2026 for specified transaction |
| ₹50 lakh resident-property threshold | Applicable subject to law | Do not apply automatically |
| TDS rate | Rate prescribed for resident-property transaction | Rate applicable under non-resident provisions |
| Seller tax details | Standard details | More detailed NRI/foreign tax information may be required |
The distinction is important because the two transactions are governed by different provisions.
For a resident Individual or HUF covered by the specified Section 393(2) transaction, a separate TAN is no longer required from 1 October 2026. TDS can instead be reported through Form 141 Schedule E.
No. The TDS obligation remains. The change primarily removes the separate TAN requirement and introduces a PAN-based reporting mechanism for eligible Individual/HUF buyers.
Schedule E is the new section of Form 141 introduced specifically for TDS on consideration for transfer of immovable property by a non-resident to a resident Individual or HUF under Section 393(2).
The Income-tax (Fifth Amendment) Rules, 2026 are effective from 1 October 2026.
The notification specifically refers to resident Individuals and HUFs. A company should not assume that the same facility applies to it and should verify its separate TAN and TDS requirements.
The 1% rate applicable to specified resident-seller property transactions should not automatically be used for an NRI seller. Payments to non-residents are governed by the separate applicable provisions and rates.
The ₹50 lakh threshold applicable to resident-seller property TDS should not automatically be applied to a non-resident seller. The applicable non-resident TDS provisions need to be considered.
Schedule E can require PAN, name, status, contact number, email ID, foreign address, Tax Residency Certificate number, Tax Identification Number and the seller's share of the consideration, among other transaction details.
The applicable prescribed foreign tax details, including Tax Residency Certificate and Tax Identification Number information, should be furnished where required. The higher-rate provisions should also be checked before deduction.
Where eligible, the seller can use the prescribed lower or nil deduction certificate mechanism under Section 395. The certificate details are accommodated in the new Schedule E.
Form 132 is the prescribed TDS certificate that has also been amended to cover the transfer of immovable property by a non-resident to a resident Individual or HUF.
The notification discussed here specifically addresses the transfer of immovable property by a non-resident to a resident Individual or HUF. Rent payments to non-residents involve a different compliance analysis and should not automatically be treated as an NRI property-purchase transaction.
The CBDT's Notification No. 121/2026 brings an important procedural change for resident Individuals and HUFs purchasing immovable property from non-resident sellers.
From 1 October 2026, eligible buyers no longer need to obtain a separate TAN for the specified NRI property transaction. Instead, the TDS can be reported and deposited through Form 141 using the newly introduced Schedule E. Form 132 has also been amended to cover the transaction.
However, the most important point is:
TAN requirement removed does not mean TDS requirement removed.
The buyer still has to deduct the applicable tax under the non-resident TDS provisions, deposit it within the prescribed timeline and complete the required reporting.
Buyers should also remember that the new facility is specifically designed for resident Individual/HUF buyers. Companies, firms, LLPs and other buyers should independently verify the TDS and TAN requirements applicable to their transactions.
Anyone purchasing property from an NRI after 1 October 2026 should therefore verify the seller's residential status, collect the required tax information, determine the correct TDS rate, check whether a lower/nil deduction certificate applies, and complete Form 141 Schedule E correctly.
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