Income Tax Department Eases TDS Rules for Property Bought from NRIs
Real Estate

Income Tax Department Eases TDS Rules for Property Bought from NRIs

The Central Board of Direct Taxes (CBDT) has amended the Income-tax Rules, 2026, to simplify tax deducted at source (TDS) compliance for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-residents. The changes will take effect from October 1, 2026, under the Income-tax (Fifth Amendment) Rules, 2026, notified on September 22.

The revised framework covers transactions under Section 393(2) of the Income-tax Act, 2025. It removes the requirement for the buyer to obtain a separate Tax Deduction Account Number (TAN) for the transaction, allowing TDS to be deposited and reported through a PAN-based challan-cum-statement.

Form 141, used for specified TDS payments, has been expanded to include deductions under Section 393(2). A new Schedule E will capture information on the property, buyers and sellers, sale consideration and tax deducted. Form 132 has also been amended to include transfers of immovable property by a non-resident to a resident individual or HUF.

Buyers will have to provide the property address and type, the names and Permanent Account Numbers of buyers, and each buyer’s proportion of the sale consideration. Details required for a non-resident seller include the name, PAN where available, status, contact number, email address and overseas address. The form will also seek the seller’s Tax Residency Certificate number and Tax Identification Number, where applicable.

The reporting will cover the agreement and registration dates, stamp duty value, total consideration and whether payment is made in a lump sum or instalments. For instalments, buyers must identify the first, subsequent or final payment and provide earlier acknowledgement details in relevant cases. Schedule E will also record the applicable capital gains category, amounts paid, payment date, TDS rate, tax deducted and deduction date.

The notification clarifies that reported TDS must include surcharge and cess where applicable. Each deductor must file a separate form when there is more than one deductor. Although the payment and reporting process is simpler, buyers remain responsible for deducting the correct tax and collecting overseas tax details from sellers before completing the transaction.

The Central Board of Direct Taxes (CBDT) has amended the Income-tax Rules, 2026, to simplify tax deducted at source (TDS) compliance for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-residents. The changes will take effect from October 1, 2026, under the Income-tax (Fifth Amendment) Rules, 2026, notified on September 22. The revised framework covers transactions under Section 393(2) of the Income-tax Act, 2025. It removes the requirement for the buyer to obtain a separate Tax Deduction Account Number (TAN) for the transaction, allowing TDS to be deposited and reported through a PAN-based challan-cum-statement. Form 141, used for specified TDS payments, has been expanded to include deductions under Section 393(2). A new Schedule E will capture information on the property, buyers and sellers, sale consideration and tax deducted. Form 132 has also been amended to include transfers of immovable property by a non-resident to a resident individual or HUF. Buyers will have to provide the property address and type, the names and Permanent Account Numbers of buyers, and each buyer’s proportion of the sale consideration. Details required for a non-resident seller include the name, PAN where available, status, contact number, email address and overseas address. The form will also seek the seller’s Tax Residency Certificate number and Tax Identification Number, where applicable. The reporting will cover the agreement and registration dates, stamp duty value, total consideration and whether payment is made in a lump sum or instalments. For instalments, buyers must identify the first, subsequent or final payment and provide earlier acknowledgement details in relevant cases. Schedule E will also record the applicable capital gains category, amounts paid, payment date, TDS rate, tax deducted and deduction date. The notification clarifies that reported TDS must include surcharge and cess where applicable. Each deductor must file a separate form when there is more than one deductor. Although the payment and reporting process is simpler, buyers remain responsible for deducting the correct tax and collecting overseas tax details from sellers before completing the transaction.

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