By Arosh John, Founder, John Real Estate (MahaRERA Reg. No. A51700001835) | Editor-in-Chief, Thane Real Estate News (TREN)
India | 6 February 2026
Mumbai–MMR has always been an NRI-heavy market. In resale transactions, complexity is rarely about intent—it is about execution: timelines, documentation, banking coordination, and tax compliance.
One practical compliance bottleneck has repeatedly slowed genuine homebuyers: obtaining a TAN (Tax Deduction and Collection Account Number) solely to complete TDS formalities when the seller is a non-resident.
Budget 2026 proposes a meaningful simplification. From 1 October 2026 (proposed effective date), resident individuals and HUFs purchasing immovable property from non-residents are proposed to be allowed to deduct and report TDS using PAN, without obtaining a TAN, through a PAN-based challan-cum-statement mechanism (to be notified).
The Proposed Change In Simple Terms
Proposed from 1 October 2026:
If you are a resident individual or HUF buying immovable property from a non-resident seller, you may be able to complete TDS deduction and reporting using PAN, without first obtaining TAN—subject to the notified reporting process.
Why This Small Change Improves Real Transactions
For most retail buyers, a TAN is not a normal identifier. It is typically associated with recurring TDS compliance, yet in an NRI property purchase, it becomes a one-time requirement. That single step often causes:
- extra compliance steps and documentation
- avoidable delays close to agreement or registration dates
- coordination issues between the buyer, CA, the lawyer, and the bank
- last-minute stress in loan-linked registrations and disbursement timelines
A PAN-based route reduces friction and makes the buyer-side reporting workflow materially smoother—especially in time-bound Mumbai–MMR registrations.
Who This Is Proposed To Cover
This proposal is targeted.
It applies to:
- Resident Individuals
- Resident HUFs
It applies when:
- the asset is immovable property, and
- the seller is a non-resident, and
- the buyer is required to deduct TDS on the consideration.
If the buyer is not an individual/HUF (for example, an entity purchase), applicability should be validated case by case.
What Does Not Change
This is a reporting simplification, not a change in the underlying tax framework.
1) The TDS Section Logic Remains Different For NRI Sellers
Buyers often assume that “easier reporting” means “lower TDS.” It does not.
- Purchases from resident sellers typically fall under Section 194-IA (the 1% property TDS framework many retail buyers recognise).
- Purchases from non-resident sellers are generally governed by Section 195, which operates on a different logic and requires more careful tax determination.
So, even if PAN-based reporting removes the TAN step for certain buyers, NRI transactions remain different for TDS computation and compliance approach.
2) Correct Computation Still Matters
Non-resident seller transactions remain sensitive to facts and documentation—holding period, nature of gains, applicable provisions, and supporting papers—before finalising the deduction and reporting trail.
3) Lower / Nil Deduction Certificates Still Matter (Form 13 / Section 197)
For many NRI resales, the seller can apply for a Lower or Nil Deduction Certificate (LDC) by filing Form 13, resulting in a certificate issued under Section 197.
Where an LDC is issued:
- the buyer should deduct TDS as per the certificate direction, and
- the compliance record should preserve the certificate reference details clearly (the notified PAN-based challan-cum-statement is expected to accommodate such reporting specifics).
This remains one of the most effective levers to avoid excessive TDS deduction and prolonged refund cycles for genuine NRI sellers.
Practical Notes For Buyers Planning 2026 Closings
If Your Transaction Is Closing Before 1 October 2026
Assume the current workflow continues until the proposed date becomes operative. Plan the TDS path early—ideally at the token stage—so registration timelines do not get compromised.
If Your Transaction Is Closing On/After 1 October 2026
Build your checklist around the proposed PAN-based challan-cum-statement route, subject to the final notified procedure, and ensure your advisor maps:
- seller residency confirmation,
- the correct TDS framework (including Section 195 logic), and
- LDC handling (if applicable) well before registration.
Frequently Asked Questions (FAQs)
Q1: Does the PAN-based payment mean NRI property TDS is now only 1%?
No. This is a common misconception. The 1% TDS rate applies to certain resident-to-resident transactions under Section 194-IA (generally where the consideration exceeds ₹50 lakh). Transactions involving non-resident sellers are covered by Section 195. The reporting process is being simplified to a PAN-based route (proposed), but the tax rate logic remains different and is typically higher for NRI sellers.
Q2: What is the current TDS rate for an NRI selling property?
For property held for more than 24 months (generally treated as long-term), the base tax rate for LTCG under Section 112 is 12.5% (post the capital gains regime change introduced from 23 July 2024). For non-residents, the indexation benefit is not available under this updated structure. After adding 4% Health & Education Cess and considering the surcharge (capped at 15% on such capital gains), the effective TDS rate for LTCG typically works out to:
- 13.00% (12.5% + cess) at the lower end, and
- up to 14.95% where the 15% surcharge cap applies, plus cess.
Important: Actual TDS applicability depends on facts—especially whether the gain is long-term or short-term, and whether any certificate/order applies.
Q3: Can I use my PAN for an NRI Transaction closing next month?
Not yet. The PAN-based mechanism is proposed to start from 1 October 2026. For transactions closing before that date, the buyer must follow the current TAN-based compliance process for Section 195 reporting. Trying to shortcut the process can create compliance exposure.
Q4: How can the NRI seller avoid high TDS on the total sale value?
In practice, many buyers deduct TDS on the gross consideration to stay safe, because Section 195 compliance can be complex and “income chargeable” determination is not always straightforward at the buyer level. To reduce unnecessary deductions, the NRI seller should apply for a Lower Deduction Certificate (LDC) through Form 13 (Section 197). Once issued, the buyer can deduct tax at the lower rate or on the basis specified in the certificate, rather than applying a higher blanket deduction on the full price.
Q5: Will the new process be similar to the resident TDS (Form 26QB)?
The exact PAN-based challan-cum-statement is yet to be notified. However, the stated intent is to make the deduction and reporting process similar regardless of whether the seller is resident or non-resident, suggesting a move toward a one-time, PAN-linked compliance workflow rather than a heavy, periodic return-driven process. Final operational steps will depend on the notified procedure.
Bottom Line
This is a “quiet reform”: it won’t dominate headlines, but it improves transaction execution.
If implemented as proposed, it will reduce compliance friction for resident homebuyers, improve predictability for registrations, and make NRI-linked purchases in Mumbai–MMR materially easier to execute—from 1 October 2026 (proposed)—while keeping the Section 195 tax framework and computation logic unchanged.
Also READ: Buyer’s Step-by-Step TDS Compliance Checklist (NRI Seller – Section 195)
Also READ: NRI Property Sale in India (2026): Updated TDS Rates & How to Reduce Deductions
About The Author
Arosh John is the Founder of John Real Estate—a MahaRERA-registered, Thane-based real estate consultancy (MahaRERA Reg. No. A51700001835) with 12+ years of on-ground transaction experience across Thane and the wider Mumbai Metropolitan Region. As Editor-in-Chief of Thane Real Estate News (TREN), he combines market intelligence with compliance-first execution to help buyers and sellers navigate high-stakes decisions with clarity.
Arosh is especially recognised for premium resale advisory, NRI-focused resale transactions, and villa sales—including structured transaction planning, documentation discipline, and coordination with legal and tax professionals for smooth closures. His work spans Thane’s key residential and villa micro-markets, with a focus on verification-led advisory, clean titles, and transaction-ready processes.
Disclaimer
This article is for general informational purposes only and does not constitute tax or legal advice. The proposal’s final applicability and operating procedure will depend on enacted provisions and the notified reporting mechanism. Tax outcomes vary based on the facts, residency, documentation, and applicable rules on the date of execution. Consult your chartered accountant and legal counsel for transaction-specific guidance.
