Budget 2026 Removes TAN Requirement For NRI Selling Property In India

A major relief for NRIs selling property in India has come into effect. However, the amendment primarily eases compliance for resident buyers purchasing property in India; for NRI sellers, it has a relevant impact, especially on seamless NRI property transactions and reduced delays.

The honorable Finance Minister, Smt Nirmala Sitharaman, in the Union Budget 2026-2027, has announced that resident buyers will no longer be required to obtain a TAN to deduct TDS on property purchases from NRI sellers.

This change is solely to simplify the entire NRI property sale transaction by removing the mandatory TAN requirement for TDS compliance under Section 195. However, this reform has nothing to do with the TDS rate on the NRI property sale; they remain unchanged.

In this blog, we will explore in detail what this reform means for NRI sellers and what has been proposed in Budget 2026-2027.

Mandatory TAN Needed For NRI Property Purchase - The Old Rule

To understand why this change is helpful, let us first examine how buying property from NRIs worked before the budget changes.

When an NRI resident buys a property that is worth Rs 50 lakh from an NRI seller, the previous tax rules make it the buyer's responsibility to collect the taxes on behalf of the seller. The aim is to ensure that the government of India receives its share of tax on NRIs' property sales.

For this, the buyer was required to:

• Apply for and get a TAN
• Deduct TDS using the TAN
• Deposit TDS through TAN-based challan
• File the quarterly TDS returns (Form 26Q)
• Ensure that the TDS is credited and reflected in the NRI seller's tax records.

This entire process has a significant compliance burden, particularly because TAN is of no use beyond this single transaction, which delays the entire NRI property sale transactions.

Budget 2026 Update: No TAN Needed For TDS On NRI Property Deals

To eliminate the procedural hurdles, the Budget 2026 has initiated an amendment under Section 397(1)(c) of the Income Tax Act.

While presenting the Union Budget 2026-27, our honourable Finance Minister, Smt Nirmala Sitharam, announced a proposal to remove the requirement for resident buyers to get a TAN for deducting Tax Deducted at Source (TDS) on property purchase from NRIs.

The Proposed Change States:

TDS (tax deducted at source) on the sale of an immovable property by an NRI will be deducted and then deposited with the government using the buyer's PAN card.

The buyer of the property no longer needs to obtain a TAN solely for this transaction.

After the change comes into effect, here's what you should do now.

• You calculate the TDS amount with respect to the applicable rate (20% of the sale consideration, unless the NRI seller provides you with a special certificate called Form 13 that allows lower or no TDS deduction.
• Using your existing PAN card, prepare a TDS challan.
• Report the TDS amount through this challan, then file the return, including the challan details and other relevant documents.

In a nutshell, under the new rules, buyers of property from an NRI no longer need to apply for a separate TAN. After the Budget 2026 introduced the TAN, the process has been more straightforward, similar to filing your regular income tax form.

Effective Date: This amendment document will apply from October 1, 2026.

What Should The Buyer Know Before Buying Property From an NRI Seller (After Budget 2026)

Property buyers and sellers must know that this new rule is making the entire property transaction paperwork easy. The government's aim in making this change was to remove unnecessary steps from the process to make it more effective.

Secondly, this change will significantly speed up the entire property transaction process. Buying a property in India from an NRI involves multiple registrations and compliance checks. By eliminating the TAN step, the budget has cut weeks from the entire process, making everything quick and efficient.

Lastly, this change reduces the risk of legal trouble and fines. Under the old system, many buyers made minor technical mistakes because the process was quite complicated. Some buyers fill out the TAN forms incorrectly, while others miss the deadline, and some just do not understand the rules. These unintentional errors led to hefty penalties and, in the worst court cases.

Thanks to the 2026-27 budget, the PAN method has eliminated all these peculiar hassles and headaches.

An Important Clarification

With respect to the budget 2026-27, the TDS rates under Section 195 of the Income Tax Act remain unchanged on the sale of property by an NRI.

• The TDS on sale of property by an NRI will continue to be deducted at the same rates as those imposed under the Income Tax Act.
• The TDS applicable rates will depend on the nature of the property, that is, whether it is a long-term asset or a short-term capital asset.
• Applicable surcharge and cess.
• Availability of the Lower/Nil TDS Certificate under Section 197, if obtained.
• This procedural change is purely procedural and is aimed at simplifying compliance under NRI taxation, not at increasing or reducing NRI tax liability.

Budget 2026 Impact On NRI Transactions

By substituting the requirement for TAN with a PAN-based TDS mechanism, the Budget 2026-2027 has successfully rolled out a practical reform, focused on execution, for NRIs selling property in India. This amendment has enhanced compliance, reduced transaction times, and improved certainty for both resident buyers and NRI sellers.

For NRIs planning to sell a property in India, this change is one of the most meaningful simplifications of compliance introduced in recent years, without changing any underlying tax framework.

As an NRI, if you are seeking professional assistance for consulting on selling your property in India, then Savetaxs is the name to trust. Our experts will act as a specialized intermediary, advising you on financial and logistical considerations for selling real estate in India while residing abroad. We provide end-to-end consultation services for property valuation, TDS compliance, and the repatriation of sale proceeds for NRIs.

Connect with us as we serve our clients 24/7 across all time zones.