Budget 2026 Removes TAN Requirement for TDS on NRI Property Purchases, Easing Compliance for Buyers

The Union Budget 2026 has reportedly introduced a significant procedural reform aimed at simplifying tax compliance for Indian residents purchasing property from Non-Resident Indians (NRIs). According to reports, the amendment eliminates a long-standing requirement that previously created delays and complexity in such transactions, potentially enabling faster and smoother property deals involving NRI sellers.

Key Change: PAN Replaces TAN for TDS Deposits

Prior to Budget 2026, any Indian resident buying property from an NRI was reportedly required to deduct Tax Deducted at Source (TDS) on the sale amount and obtain a Tax Deduction and Collection Account Number (TAN) to deposit the deducted amount with the Income Tax Department. Industry experts suggest this requirement often added significant complexity and delays, particularly for first-time or individual buyers who were unfamiliar with such tax formalities.

The new provision reportedly allows buyers to use their existing Permanent Account Number (PAN) to deposit TDS directly with the Income Tax Department, eliminating the need for a separate TAN application. This simplification is expected to reduce paperwork and accelerate property transactions in India involving NRI sellers.

Comparison: Before and After Budget 2026

How TDS on NRI Property Sales Works Under the New Rules

While the TAN requirement has been removed, buyers are still required to deduct TDS when purchasing property from an NRI. Industry sources indicate that the process now follows a simplified workflow:

Step 1: Determine Seller's Residential Status

Buyers must first confirm whether the seller qualifies as an NRI under Indian tax laws. Understanding NRI property sale TDS rules is essential before initiating any transaction.

Step 2: Calculate the TDS Amount

TDS is typically deducted at 20 percent plus applicable surcharge and cess on capital gains. In many cases, sellers may apply for a lower TDS certificate under Section 197 from the tax department to reduce the deduction amount.

Step 3: Deduct TDS on Payment

The buyer must deduct TDS from the total sale consideration unless instructed otherwise through a lower or nil TDS certificate obtained by the seller.

Step 4: Deposit TDS Using PAN

Buyers are now required to fill Form 26QB, which is specific to property transactions, and use their PAN instead of TAN to make the payment. Those unfamiliar with such procedures may benefit from reviewing the NRI resale property purchase guide for detailed documentation requirements.

Step 5: Issue Form 16B to the Seller

After depositing TDS, the buyer must generate and provide Form 16B to the seller as proof of deduction.

Sample TDS Calculation Under Post-Budget 2026 Rules

It is important to note that if the seller obtains a lower TDS certificate, the buyer will deduct tax at the prescribed lower rate.

Who Benefits Most from This Reform

The removal of TAN requirement is expected to benefit multiple stakeholders in the real estate ecosystem:

• First-time homebuyers can now navigate compliance without the additional step of TAN registration
• Buyers of resale NRI properties may experience faster execution timelines
• Real estate brokers and consultants could see reduced administrative overhead
• NRIs may benefit from quicker settlements and improved buyer confidence

For those considering buying property in India as an NRI, understanding these procedural changes is crucial for smooth transactions.

Broader Tax Reform Context

This amendment is reportedly part of the government's ongoing strategy to enhance ease of doing business and tax compliance for individuals. Other Budget 2026 reforms are said to include digitization of income tax assessments, faster refunds, and rationalization of compliance procedures for high-value transactions. These changes align with earlier budget measures such as those outlined in key factors that impact homebuyers.

Buyers should also be aware of the hidden costs of buying a home in India beyond TDS, including stamp duty, registration charges, and other transaction fees.

What This Means for the Indian Real Estate Market

Industry analysts suggest that the removal of the TAN requirement could increase transaction volumes in the NRI property segment. With NRIs driving India's real estate boom and their share in property sales reportedly reaching significant levels, simplifying compliance procedures could further accelerate this trend.

For Indian homebuyers considering properties owned by NRIs, Budget 2026 has reportedly made the process easier, faster, and significantly less bureaucratic. Those interested in understanding the complete legal framework should refer to property sale agreement guidelines before finalising any transaction.

Disclaimer: This article is intended for informational purposes only and should not be construed as financial, tax, or legal advice. Readers are advised to consult qualified professionals such as chartered accountants, tax consultants, or legal advisors before making any property purchase decisions. The information presented here is based on publicly available reports and may be subject to change based on official government notifications and amendments. Ghar.tv does not guarantee the accuracy, completeness, or timeliness of the information provided.