Buying Property From an NRI? October 1 Brings a Key Tax Rule Change

Are you planning to buy a house, flat or plot from an NRI? Have you already agreed on the price, paid the advance and fixed a date for registration?

Then there is one more thing you need to think about — tax and TDS.

Buying the property may be one part of the deal. But when the seller is an NRI, the tax process can make things a little complicated. The buyer has to deduct TDS from the payment made to the NRI and deposit it with the government. Until now, the buyer also had to get a TAN for this process.

But there is some relief coming.

From October 1, 2026, an important rule will change for people buying property from NRIs.

So, what exactly is changing?

Why does TDS apply when buying an NRI property?

Let us take a simple example.

Suppose you are buying a property in India from an NRI. You cannot simply pay the entire amount directly to the seller. You have to deduct the applicable TDS and deposit that amount with the government.

This is different from buying property from a resident Indian.

One important point to remember is that the ₹50 lakh threshold that applies in certain property transactions involving resident sellers does not apply in the same way when the seller is an NRI.

So, don’t assume that there is no TDS just because the property value is below ₹50 lakh.

Why was TAN needed?

Until now, a resident individual or HUF buying property from an NRI had to obtain a TAN (Tax Deduction and Collection Account Number) to deduct and deposit TDS.

That means a buyer had to think about more than just the property price, loan and registration.

They also had to ask:

“Have I got my TAN?”

The buyer had to apply for TAN, complete the required formalities and then follow the TDS payment and filing process.

For a large property transaction, leaving all this until the last minute could create problems, especially around the time of registration.

But from October 1, things change

Here is the important part.

From October 1, 2026, in specified cases, a resident individual or HUF buying immovable property from an NRI can use their PAN to deposit TDS without obtaining a separate TAN.

In simple words, one extra step is being removed.

Remember it this way:

Until September 30, 2026 — TAN is required.

From October 1, 2026 — PAN can be used to deposit TDS in eligible cases.

But don’t misunderstand this change.

No TAN does not mean no TDS.

The TDS obligation will continue. The buyer still has to deduct the applicable TDS from the amount payable to the NRI and deposit it with the government.

The change is mainly about how the buyer complies with the TDS requirement.

Is the NRI seller facing the problem?

Not really. The main relief from this change is for the buyer.

The NRI seller will still be subject to the applicable TDS rules. The buyer is responsible for deducting the TDS and depositing it with the government.

So, the October 1 change should not be understood as “TDS on NRI property is being removed.”

TDS stays. The separate TAN requirement is what changes for eligible buyers.

There is one more important thing to check

Whenever you are dealing with an NRI property, don’t look only at the sale price.

You should also check when the NRI bought the property and when it is being sold.

If the property is held for more than two years, it will generally qualify as a long-term capital asset. In such cases, the TDS rate is generally 12.5%, along with applicable surcharge and cess.

If the property is sold within two years, it is generally treated as a short-term capital asset. In that case, the applicable tax rate can depend on the NRI’s tax slab, along with applicable surcharge and cess.

So, don’t simply say:

“The property costs this much, so TDS must be this much.”

The calculation can depend on several factors.

What should you do if you are planning to buy an NRI property?

If you are already negotiating a property deal with an NRI, check the registration and payment dates carefully.

If the transaction takes place before October 1, 2026, the existing TAN requirement applies.

If it takes place on or after October 1, 2026, eligible buyers can use their PAN to deposit TDS under the new rules.

However, don’t change the registration date only to avoid getting a TAN. A property transaction involves several things — the sale agreement, payment schedule, registration, TDS calculation and other tax requirements.

For a high-value transaction, it is better to speak to a chartered accountant or tax professional before making the payment.

After all, when buying an NRI property, the big change from October 1 is not that TDS disappears.

It is that, for eligible buyers, the extra TAN step does.

—Surya Prakash Josyula