The Budget removes the TAN requirement for resident buyers in NRI property deals, easing a long-standing compliance burden without compromising tax collection.
TDS Compliance Finally Meets Common Sense
Budget 2026 delivered a quiet but impactful fix for resident Indians buying property from non-resident sellers (NRIs): no more mandatory TAN registration. Instead, TDS can now be deducted and paid using the buyer’s PAN, just like in domestic transactions.
This streamlines compliance under Sections 194-IA and 195 of the Income Tax Act and corrects what many experts long called a “procedural roadblock.”
“This change removes a compliance formality that had no real tax benefit, only delays,” said Raheel Patel, Partner at Gandhi Law Associates.
Until now, even in one-time NRI property purchases, resident buyers had to obtain a Tax Deduction and Collection Account Number (TAN) to deposit TDS—an added step that caused confusion, delays, and technical defaults. Buyers unfamiliar with tax processes often struggled, while non-resident sellers faced prolonged closing cycles.
PAN-Based TDS Filing Levels the Playing Field
With this reform, resident buyers can now use their Permanent Account Number (PAN) to both deduct and deposit TDS, just as they would in a property purchase from a fellow Indian resident.
Why this matters:
- Eliminates TAN registration for one-off buyers
- Reduces administrative friction for genuine homebuyers
- Avoids errors in e-TDS filings, issuance of Form 16A, and mismatches
- Improves transaction timelines, benefiting both buyer and seller
“This change brings parity in compliance, without compromising tax oversight,” noted Alay Razvi, Managing Partner, Accord Juris.
A Win for the Real Estate Market
From a broader market perspective, this shift does more than cut red tape—it boosts transaction efficiency and reduces holding costs for NRI sellers.
- Faster closings mean lower idle capital costs
- Easier compliance lowers the barrier for resident buyers
- The move reflects a wider reform intent: simplify without weakening enforcement
As Rajarshi Dasgupta of AQUILAW put it:
“This reform reflects a maturing tax administration—one that values ease of doing business over ritualistic processes.”
Expect this to improve buyer sentiment in urban and NRI-preferred markets like Bengaluru, Pune, Hyderabad, and NCR, where cross-border property sales are common.
TL;DR
Budget 2026 removes the requirement for resident buyers to obtain a TAN for purchasing property from NRIs. Buyers can now deduct and pay TDS using their PAN, aligning the process with domestic property deals and easing long-standing compliance hurdles.
AI summary:
- Resident buyers no longer need TAN for NRI property purchases
- TDS can now be paid using PAN, simplifying compliance
- Cuts delays, procedural errors, and Form 16A burden
- Boosts transaction efficiency, reduces holding costs for NRIs
- Reflects shift to practical, user-friendly tax administration
