Acquiring property from a non-resident Indian (NRI) will reportedly involve less paperwork starting from October 1, 2026. The Indian income tax department is set to simplify the Tax Deduction at Source (TDS) requirements for resident buyers, including individuals and Hindu Undivided Families (HUFs). This adjustment aims to streamline the transaction process, making it more accessible for those engaged in buying immovable assets from non-resident sellers.

Under the revised system, purchasers will no longer need to secure a separate Tax Deduction and Collection Account Number (TAN) specifically for property transactions involving NRIs. Instead, they will utilise their existing Permanent Account Number (PAN) for all TDS-related activities, which includes deducting, depositing, and reporting the tax. This transition is part of broader reforms in the income tax framework that seek to ease compliance burdens for individuals engaged in property deals with non-residents.

Current regulations require buyers to obtain a TAN, which adds an extra layer of complexity to property transactions. The change is intended to alleviate this compliance burden, allowing for a more streamlined reporting process. The Income Tax Department has confirmed that the requirement for a separate TAN will be abolished, simplifying the overall transaction procedure for buyers.

Implications for Compliance and Transactions

While the process for obtaining TDS compliance is becoming simpler, it is important to note that the tax implication remains unchanged. Buyers will still be responsible for determining the applicable TDS based on the sale transactions involving NRI sellers. This means that while the paperwork surrounding TAN is minimised, the obligation to deduct, deposit, and report TDS remains intact. Thus, those engaging in such transactions must still navigate the existing tax obligations.

Buyers will need to correctly evaluate the TDS applicable to their transaction and ensure that it is deducted at the required time. After deduction, they are required to deposit the tax and report it as per the established procedures. The shift to using a PAN for these purposes aims to make the process less burdensome for those involved in property transactions with NRIs.

Furthermore, it must be emphasised that although the changes facilitate a more manageable process, buyers cannot entirely equate the purchase of property from an NRI with a standard transaction involving resident sellers. Each transaction will still carry its unique fiscal responsibilities related to TDS, albeit in a more streamlined manner.

Conclusion on New Regulations

The upcoming changes to TDS regulations are a significant development for those engaged in property transactions involving non-resident sellers. Starting October 1, 2026, the requirement to secure a separate TAN will cease, while buyers will be permitted to make TDS deductions using their PAN. This adjustment is expected to reduce the compliance strain on individuals and HUFs, potentially encouraging more residents to consider property purchases from NRIs.

Despite the reduction in paperwork, it is crucial for buyers to remain vigilant regarding their TDS obligations and ensure they are fully compliant with the tax regulations applicable to property transactions. The initiative is aimed at simplifying processes while maintaining the necessary checks and balances within the tax system.

As the October deadline approaches, stakeholders in the property market, including real estate agents, buyers, and financial advisors, will need to be educated about the new protocols to ensure a smooth transition to the revised system. This includes understanding the ongoing necessity of TDS compliance, which remains a critical aspect of property transactions involving NRIs.

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