News: Budget 2026 Removes TAN Need for NRI Property Buyers-01-02-2026

Resident Indians buying property from non-resident sellers will face far less paperwork under a compliance change proposed by Finance Minister Nirmala Sitharaman in the Budget on February 1.

The proposal lets resident buyers deduct and deposit TDS on such purchases through a PAN-based challan, removing the need to obtain a separate Tax Deduction and Collection Account Number (TAN). That brings NRI property deals closer to the mechanism already used for sales between two residents.

Until now, a resident purchasing from an NRI had to apply for a TAN, deduct tax under Section 195, deposit it against that TAN and file TDS returns. A TAN is a 10-digit alphanumeric number issued by the Income Tax Department to anyone required to deduct or collect tax, and must be quoted when deducting, depositing and reporting TDS or TCS.

Experts say this was a long-standing hurdle for what are usually one-off transactions. Buyers unfamiliar with tax procedure often saw deals delayed or avoided NRI sellers altogether, leaving NRIs with longer sale timelines and weaker bargaining power despite holding marketable assets. The change should particularly help NRIs who handle sales remotely or through a power of attorney.

What the proposal does not touch is the tax itself. The TDS rate for non-resident sellers and the underlying liability are unchanged. Buyers must still deduct at the applicable non-resident rates, with surcharge and cess, and take account of lower or nil deduction certificates where they exist. Under Section 195, TDS of 20% (where the seller has no PAN and the asset is a long-term capital gains asset) or 30% applies on the entire sale proceeds.

Alay Razvi, Managing Partner at Accord Juris, said compelling buyers to get a TAN for a single TDS payment created needless friction and compliance risk. PAN-based payment brings parity with Section 194-IA transactions and cuts delays and inadvertent non-compliance without weakening collection, he said, calling it a shift towards outcome-oriented tax administration.

Raheel Patel, Partner at Gandhi Law Associates, described the TAN rule as a purely procedural irritant that produced delays and technical defaults without adding compliance value. S. Vasudevan, Executive Partner at Lakshmikumaran & Sridharan attorneys, said the change will speed up and simplify such purchases by consolidating compliance responsibility with the resident buyer.