TDS on Property Bought from an NRI: No TAN from 1 Oct 2026 (Form 141)
A resident buying a flat from an NRI used to face one odd requirement that a buyer from a resident seller never did: apply for a TAN, deposit tax under it, file a quarterly return and issue a certificate, all for one transaction. From 1 October 2026, TDS on property purchase from an NRI can be paid and reported on the buyer's own PAN, without a TAN, where the buyer is a resident individual or HUF. The tax itself has not changed, and the new form asks for far more than the familiar 1% property form. This article explains what changed, what did not, and where buyers are most likely to go wrong.
- Quick Read
- Simple Explanation: Vijay and Hadhya
- Professional Deep-Dive
- The legal trail: what changed and from when
- "Same as normal PAN filing?" Only half right
- Who can use the PAN route, and who cannot
- Rate, base and the certificate route
- When the NRI seller has no PAN: section 397(2) and Rule 217
- Filing Form 141 Schedule E, step by step
- Payments made before 1 October 2026
- Worked example
- Interest, fee, penalty and prosecution
- Cross-law checks: FEMA, GST, stamp duty value
- Open points and conflicting positions
- Buyer's checklist
- Frequently asked questions
- Official references
⚡ Quick Read
- 1. No TAN, but only for resident individuals and HUFs. Section 397(1)(c) of the Income-tax Act, 2025, as amended by the Finance Act, 2026, removes the TAN requirement from 1 October 2026 when a resident individual or HUF deducts tax on consideration paid to a non-resident for immovable property. Companies, firms, LLPs, trusts and non-resident buyers still need a TAN. Who qualifies →
- 2. It is not the 1% property TDS. The 1% rate and the ₹50 lakh threshold apply only when the seller is resident. A non-resident seller is covered by section 393(2) [Table: Sl. No. 17], the successor to section 195, with no threshold at all. The differences →
- 3. The rate is the seller's capital gains rate. 12.5% for long-term gains (property held more than 24 months) or 30% for short-term gains, plus surcharge and 4% cess, on the full amount paid unless the seller or buyer holds a lower-deduction certificate under section 395. In practice that is 13% to 15% of the price for long-term gains. Rates and base →
- 4. No PAN with the seller means at least 20%. Section 397(2) applies the higher rate, unless the seller's overseas address, contact details, tax residency certificate number and tax identification number are furnished under Rule 217. Rule 217 →
- 5. The form is Form 141, Schedule E. Notification No. 121/2026 dated 22 September 2026 inserted a new Schedule E in Form 141, filed from the buyer's PAN login. Each joint buyer files separately. Filing steps →
- 6. Due dates. Form 141 and the tax within 30 days from the end of the month of deduction; Form 132 certificate to the seller within 15 days after that. Due-date table →
- 7. Payments before 1 October 2026 stay on the TAN route. A token advance paid in August or September belongs to quarterly Form 144 under a TAN. Deals that straddle 1 October need care. Transition →
- 8. The buyer carries the risk. Interest at 1% or 1.5% a month, ₹200 a day late fee, penalty equal to the tax not deducted, and prosecution for tax deducted but not paid. Consequences →
☕ Simple Explanation: Vijay and Hadhya
Evening tea on the house lawn. Vijay has his phone in one hand and a cup in the other. His daughter Hadhya, a CA student, has her books on the cane chair beside her.
Vijay: Hadhya, finally some good news from the tax people. Thaman, Meera aunty's son who settled in Dubai, is selling me his flat in Basaveshwaranagar for ₹85 lakh. And Koushi at the shop says the government has removed the TAN headache. Pay the TDS online on PAN like any flat purchase, 1%, finished.
Hadhya: Half of what Koushi said is right, Appa. From 1 October you don't need a TAN. You file Form 141 from your own PAN login. But the 1% part is wrong. 1% is only when the seller is a resident. Thaman is an NRI. Why →
Vijay: Then how much?
Hadhya: Thaman has owned the flat for six years, so his profit is a long-term gain. TDS is 12.5%, plus 10% surcharge on that because the deal is above ₹50 lakh, plus 4% cess. That comes to 14.3% of what you pay him. On ₹85 lakh, about ₹12.16 lakh. Rate table →
Vijay: Twelve lakh! On his profit or on the full price?
Hadhya: On the full price, unless Thaman gets a lower-deduction certificate from the department before you pay. If his real profit is small, he gets the extra back as a refund, but only after filing his return. If he wants less cut upfront, he must apply now, not after registration. Certificate route →
Vijay: And the ₹50 lakh limit? There's no TDS below that, no?
Hadhya: For an NRI seller there is no limit at all. Even token money attracts TDS.
Vijay: (putting the cup down) I gave him ₹5 lakh token on 20 August. I didn't cut anything.
Hadhya: That's the tricky part. That payment was before 1 October, when the TAN rule still applied, and interest has been running on the missed TDS since August. We sort that out first, before the main payment. Transition →
Vijay: Fine. What does this new form ask?
Hadhya: Much more than the resident form. Thaman's address in Dubai, his email and phone, compulsory even if he has a PAN. Property address, agreement date, stamp duty value, each buyer's share, whether he is in the new tax regime or the old one, long-term or short-term gain, and every instalment separately. Field list →
Vijay: He told me he never took a PAN. He doesn't earn anything here.
Hadhya: Then the rate jumps to at least 20%, which is ₹17 lakh. Unless he gives his tax residency certificate number and his tax identification number, or the number his government identifies him by. Then you fill those details in the form in place of his PAN and deduct at the normal rate. Rule 217 →
Vijay: So the residency certificate saves him tax?
Hadhya: It saves him from the higher no-PAN rate. It does not bring the normal rate down, because our tax treaties generally let India tax gains on property located here. And honestly, he should get a PAN anyway. Without it he cannot file his return here or claim his refund. Why PAN still matters →
Vijay: Deadline?
Hadhya: Deduct when you pay. File Form 141 and pay the tax within 30 days from the end of that month. If you pay on 15 October, the last date is 30 November. Then download Form 132 from TRACES and give it to Thaman within 15 days after that. And if Amma is also a buyer on the deed, each of you files your own form for your share. Due dates →
Vijay: And if I miss something?
Hadhya: 1% a month for not deducting, 1.5% a month for deducting and not paying, ₹200 a day for a late form, and a penalty equal to the tax if you don't deduct at all. The buyer pays all of it, not the seller. Full list →
Vijay: So they made it easier, or not?
Hadhya: Easier paperwork, same tax, Appa. The TAN is gone. The homework isn't.
📘 Professional Deep-Dive
- The legal trail
- "Same as normal PAN filing?"
- Who can use the PAN route
- Rate, base and certificates
- No PAN: section 397(2) and Rule 217
- Filing Form 141 Schedule E
- Payments before 1 October 2026
- Worked example
- Interest, fee, penalty, prosecution
- FEMA, GST, stamp duty value
- Open points and conflicts
- Buyer's checklist
1. The legal trail: what changed and from when
The statute. Section 397(1)(a) of the Income-tax Act, 2025 requires every person deducting tax at source to obtain a Tax Deduction and Collection Account Number (TAN); section 397(1)(c) lists who is excused. A buyer from a resident seller was already excused. The Finance Act, 2026 (Act No. 4 of 2026, assented on 30 March 2026) amended section 397(1)(c) so that a resident individual or Hindu undivided family deducting tax under section 393(2) [Table: Sl. No. 17] on consideration for the transfer of immovable property is also not required to obtain a TAN. The Memorandum explaining the Finance Bill, 2026 (Clause 75) states that this amendment takes effect from 1 October 2026.
The rules. The CBDT operationalised it through the Income-tax (Fifth Amendment) Rules, 2026, Notification No. 121/2026 [G.S.R. 830(E)] dated 22 September 2026, in force from 1 October 2026, issued under section 533 read with sections 395(4)(a) and 397(3)(a) and (b). The amendments are:
| Provision of the Income-tax Rules, 2026 | Amendment | Effect |
|---|---|---|
| Rule 215(1), Table Sl. No. 3 | Adds deduction under section 393(2) [Table: Sl. No. 17] by a resident individual or HUF on consideration for immovable property | TDS certificate is issued in Form 132, as for resident-seller property deals |
| Rule 218(3), new clause (e) | Brings such consideration within the challan-cum-statement payment rule | Tax is paid with Form 141 within 30 days from the end of the month of deduction |
| Rule 219(5), new clause (e) | Adds section 393(2) [Table: Sl. No. 17] deductions by resident individuals and HUFs on immovable property | The statement is Form 141, transaction-wise, instead of a quarterly return |
| Form 132 | New option: "Transfer of immovable property by a non-resident to a resident individual or Hindu undivided family" | Certificate format aligned |
| Form 141 | Heading extended to section 393(2) [Table: Sl. No. 17]; new option in Part A; new Schedule E in Part B | One PAN-based form for payment and reporting |
Old law and new law side by side. Three periods must be kept apart, because a single property deal can touch more than one of them.
| Item | Payment or credit up to 31 March 2026 (Income-tax Act, 1961) | 1 April to 30 September 2026 (Income-tax Act, 2025) | On or after 1 October 2026: resident individual or HUF buyer |
|---|---|---|---|
| TDS provision | Section 195 | Section 393(2) [Table: Sl. No. 17] | Section 393(2) [Table: Sl. No. 17] |
| TAN | Required (section 203A) | Required (section 397(1)(a)) | Not required (section 397(1)(c), as amended) |
| Deposit | Challan under TAN by the 7th of the next month | Challan under TAN (Rule 218) | With Form 141 within 30 days from month-end (Rule 218(3), as extended by clause (e)) |
| Statement | Form 27Q, quarterly | Form 144, quarterly | Form 141 Schedule E, per transaction (Rule 219(5)(e)) |
| Certificate to seller | Form 16A | Form 131 | Form 132 (Rule 215(1)) |
| Seller without PAN | Section 206AA, relief under Rule 37BC | Section 397(2), relief under Rule 217 | Section 397(2), Rule 217 details in Schedule E |
| Payment information | Form 15CA / 15CB (Rule 37BB) | Form 145 / 146 (Rule 220) | Form 145 / 146; Form 145 acknowledgement quoted in Schedule E where applicable |
2. "Same as normal PAN filing?" Only half right
The common summary of this change is that a buyer from an NRI can now "file it like a normal PAN-based property TDS". The filing channel is the same form, Form 141, but the substance is a different provision with a different schedule. Treating it as the 1% route is the single most expensive mistake a buyer can make, because the shortfall, interest and penalty fall on the buyer.
| Point | Seller is resident | Seller is non-resident |
|---|---|---|
| Provision | Section 393(1) [Table: Sl. No. 3(i)] (old section 194-IA) | Section 393(2) [Table: Sl. No. 17] (old section 195) |
| Schedule of Form 141 | Schedule B | Schedule E |
| Threshold | ₹50 lakh | None |
| Rate | 1% | Rates in force: 12.5% (long-term) or 30% (short-term) |
| Surcharge and cess | Not added | Added; Note 10 of Form 141 says the TDS amount includes them |
| Base | Higher of consideration and stamp duty value | Amount paid or credited, in full unless a section 395 certificate exists |
| Seller details | PAN and name | PAN if available, status, phone, email, overseas address, TRC number, TIN, share |
| Who may use PAN instead of TAN | Any buyer liable to deduct | Only a resident individual or HUF |
3. Who can use the PAN route, and who cannot
The buyer must be a resident individual or HUF. Residence is tested under section 6 of the Income-tax Act, 2025 for the tax year, not by citizenship. An OCI cardholder who is resident in India for Tax Year 2026-27 qualifies. An NRI buying from another NRI does not, because the exemption is limited to resident deductors.
| Buyer | PAN route (Form 141, Schedule E)? | What applies instead |
|---|---|---|
| Resident individual | Yes | — |
| Resident HUF | Yes | — |
| Company, firm, LLP, AOP, trust, society | No | TAN, deposit under TAN, quarterly Form 144, certificate in Form 131 |
| Non-resident individual buyer | No | TAN route as above |
Property. Schedule E offers three property types: land (other than agricultural land), building or part of a building, or both. See open points for urban agricultural land and for assignment of booking rights in an under-construction flat, where the route is not clear.
Power of attorney sales. An NRI often sells through a relative in India holding a power of attorney. The deductee is still the NRI owner, so section 393(2), Schedule E and the non-resident rates apply; the attorney's residence is irrelevant.
Co-owners with different residential status. Where one co-owner is resident and another is an NRI, as often happens with inherited property, each share follows its own provision. The resident's share goes under section 393(1) [Table: Sl. No. 3(i)] in Schedule B at 1%, with the ₹50 lakh threshold tested on the total consideration for the property across all buyers and sellers. The NRI's share goes under section 393(2) in Schedule E at the rates in force. See open points on how Schedule E handles this.
Individual buyers who already hold a TAN. A proprietor with a business TAN should still use Form 141 for this purchase. Rule 218(3), as extended by clause (e), and Rule 219(5)(e) prescribe the challan-cum-statement route for this class of deduction, in the same way that Form 26QB was required for resident-seller purchases under the old rules even where the buyer held a TAN.
4. Rate, base and the certificate route
Rate. Section 393(2) [Table: Sl. No. 17] requires deduction at the "rates in force", which for Financial Year 2026-27 are in Part II of the First Schedule to the Finance Act, 2026. The Memorandum to the Finance Bill, 2026 confirms these TDS rates are unchanged from FY 2025-26.
- Long-term capital gain (property held for more than 24 months; section 2(67), read with section 2(101), of the Income-tax Act, 2025): 12.5% under section 197, without indexation. The option of 20% with indexation for land or buildings acquired before 23 July 2024 is available only to resident individuals and HUFs, so it does not help a non-resident seller.
- Short-term capital gain (held for 24 months or less): 30%.
- Surcharge on the TDS depends on the amount paid or likely to be paid and subject to deduction: 10% above ₹50 lakh, 15% above ₹1 crore. On long-term gains under section 197 surcharge is capped at 15%. On short-term gains it rises to 25% above ₹2 crore and 37% above ₹5 crore, but the 37% applies only if the seller has opted out of the default regime under section 202. That is why Schedule E asks whether the seller has opted out of the section 202(1) regime.
- Health and education cess: 4% on tax plus surcharge.
| Amount paid or likely to be paid | Long-term gain: effective TDS | Short-term gain: effective TDS |
|---|---|---|
| Up to ₹50 lakh | 13.00% | 31.20% |
| Above ₹50 lakh up to ₹1 crore | 14.30% | 34.32% |
| Above ₹1 crore up to ₹2 crore | 14.95% | 35.88% |
| Above ₹2 crore up to ₹5 crore | 14.95% | 39.00% |
| Above ₹5 crore | 14.95% | 39.00% (default regime) / 42.744% (opted out) |
Figures are for a non-resident individual seller, before marginal relief.
Base. In GE India Technology Centre (P) Ltd. v. CIT [2010] 327 ITR 456 (SC), the Supreme Court held that the obligation under section 195 extends only to the portion of a payment that is chargeable to tax in the recipient's hands. A property buyer, however, cannot know the seller's cost or the gain. Unless a certificate fixes a lower amount or rate, the safe course is to deduct on the full amount paid or credited, and to compute it instalment by instalment.
Certificates. Two routes exist, and the certificate number goes into Schedule E:
- Seller's certificate under section 395(1), applied for in Form 128 (successor to Form 13). From 1 April 2026 the Finance Act, 2026 also allows the application to be filed electronically before a prescribed income-tax authority, whose certificate is referred to in section 395(6); Note 3 of Form 141, which governs the rate field in Schedule E, now refers to such a certificate as well.
- Buyer's application under section 395(2), in Form 129 (successor to Form 15E), for determining the portion of the sum that is chargeable.
Tax treaties rarely reduce this TDS. Article 13(1) of India's tax treaties, following the OECD and UN models, generally allows the country where immovable property is situated to tax gains from its alienation. A tax residency certificate therefore matters here mainly for the PAN relief discussed next, not for a lower treaty rate.
5. When the NRI seller has no PAN: section 397(2) and Rule 217
The higher rate. Section 397(2) (successor to section 206AA) requires every deductee to furnish a PAN. If it is not furnished, section 397(2)(b) requires tax to be deducted at the highest of the rate in the relevant provision, the rates in force, or 20%. The CBDT's FAQs on section 397(2) confirm that the provision does not apply to non-residents in respect of the specified payments under Rule 217. Rule 217, which prescribes the conditions under section 397(2)(c) for non-application of the higher rate to non-residents, is the successor to Rule 37BC, which covered payments on transfer of any capital asset.
What Schedule E requires. The notes to Form 141, as substituted by Notification No. 121/2026 and referenced in Schedule E, set out the position directly:
- Note 6(a): the seller's contact number, email and address in the country of residence must be given whether or not the seller has a PAN.
- Note 6(b): where the seller's PAN is not available, the tax residency certificate number (column H) and tax identification number (column I) must be furnished as per Rule 217 so that tax is not deducted at the higher rate.
- Note 8: the tax residency certificate is one issued by the government of the country of residence, where that country's law provides for issuing one.
- Note 9: the tax identification number is the seller's number in the country of residence; where no such number exists, a unique number by which that government identifies the seller.
On the portal. The e-filing portal's Form 141 user manual states that the higher rate is applied automatically where the deductee's PAN is not available. Where the seller has no PAN, the Rule 217 details in columns H and I of Schedule E are therefore what keeps the deduction at the rates in force, and they must be complete. An invalid PAN is treated in the same way as no PAN, so check the seller's PAN on the portal's verification service before the first payment.
6. Filing Form 141 Schedule E, step by step
When to deduct. At the time of credit or payment, whichever is earlier, on every payment including token advances, because there is no threshold.
Before the first payment, collect:
- For each seller: PAN (or Rule 217 details), name, status, phone, email, overseas address, tax residency certificate number, tax identification number and share of consideration.
- Date of acquisition (long-term or short-term), whether the seller has opted out of the section 202 regime, and any section 395 certificate.
- Agreement date, registration date if known, stamp duty value and total consideration.
Filling the form. From the buyer's PAN login on the e-filing portal, open Form 141. In Part A, choose "Transfer of any immovable property by a non-resident to a resident individual or Hindu undivided family". In Schedule E, fill:
- Property address and type (land other than agricultural land, building or part, or both).
- All buyers with PAN and share (total 100%), and all sellers with columns A to J (total 100%). The status code in column D follows Note 7: 01 company other than domestic company, 02 individual, 03 HUF, 04 AOP (other than one consisting only of companies), 05 AOP of companies only, 06 co-operative society, 07 firm, 08 BOI, 09 artificial juridical person, 10 others.
- Agreement date, registration date, stamp duty value and total consideration.
- Lumpsum or instalment. For a subsequent or last instalment, quote the previous acknowledgement number; for the last, the total paid including this instalment.
- Transaction details for each seller: regime option, type of gain, proportionate stamp duty value, earlier instalments, present payment, date of payment or credit, amount on which tax is deductible, rate, certificate numbers under section 395(1) or 395(2), TDS amount including surcharge and cess, date of deduction, and the Form 145 acknowledgement number where applicable.
Joint buyers. Note 11 of Form 141 requires each deductor to file a separate form. A husband and wife buying 50:50 file two Forms 141, each for half the consideration.
| Step | Due date | Authority |
|---|---|---|
| Deduct tax | On payment or credit, whichever is earlier | Section 393 |
| Pay tax and file Form 141 | Within 30 days from the end of the month of deduction | Rule 218(3) read with clause (e); Rule 219(5)(e) |
| Issue Form 132 to seller | Within 15 days from the due date of Form 141, downloaded from TRACES | Rule 215(1) |
Housing loan disbursements. Banks usually release the loan straight to the seller and do not deduct TDS on the buyer's behalf. Ask the bank to release the net amount, or pay the TDS from your own funds within the due date; the obligation stays with you either way.
Form 145 and 146. Schedule E asks for the acknowledgement number of the corresponding Form 145 "if applicable". Rule 220 (successor to Rule 37BB) requires Form 145 from a person paying a sum to a non-resident, with an accountant's certificate in Form 146 where the sum is chargeable and exceeds ₹5 lakh in the year, or Part B where a section 395 certificate has been obtained. Where the money is credited to the seller's NRO account in India, practice differs on whether the buyer must file Form 145. Since Schedule E now links to it, the conservative course is to file Form 145 (with Form 146 where required) before each payment.
7. Payments made before 1 October 2026
Both the section 397(1)(c) amendment and the Fifth Amendment Rules take effect on 1 October 2026. Neither has retrospective effect.
- Payment or credit up to 31 March 2026: Income-tax Act, 1961, section 195; TAN, Form 27Q, Form 16A.
- Payment or credit from 1 April to 30 September 2026: Income-tax Act, 2025, section 393(2), but with TAN. Tax deducted in July to September 2026 is reported in Form 144 for the second quarter, due 31 October 2026, and the certificate is Form 131.
- Payment or credit on or after 1 October 2026: Form 141, Schedule E, without TAN.
8. Worked example
Vijay, a resident individual, buys a flat in Bengaluru from Thaman, a non-resident living in Dubai, for ₹85,00,000. Thaman bought it six years ago, so the gain is long-term. No section 395 certificate is in place. Vijay paid a ₹5,00,000 token on 20 August 2026 and will pay ₹80,00,000 on registration on 15 October 2026. Total payment exceeds ₹50 lakh but not ₹1 crore, so surcharge is 10%.
| Particulars | Token (20 Aug 2026) | Balance (15 Oct 2026) | Total |
|---|---|---|---|
| Payment | ₹5,00,000 | ₹80,00,000 | ₹85,00,000 |
| Rate (12.5% + 10% surcharge + 4% cess) | 14.30% | 14.30% | 14.30% |
| TDS | ₹71,500 | ₹11,44,000 | ₹12,15,500 |
| Route | TAN route (paid before 1 Oct 2026); deduction missed, see note below | Form 141 Schedule E and payment by 30 Nov 2026; Form 132 by 15 Dec 2026 | — |
If Thaman has no PAN and gives no Rule 217 details, the rate is at least 20%, so TDS on ₹85,00,000 is ₹17,00,000, which is ₹4,84,500 more than necessary.
If Thaman's actual long-term gain is ₹30,00,000 and he has no other Indian income, his tax is ₹3,75,000 plus 4% cess, ₹3,90,000. Without a certificate, ₹12,15,500 is withheld and ₹8,25,500 waits for a refund after he files his return. A section 395(1) certificate obtained before the agreement avoids that.
The token. Vijay did not deduct on 20 August. He is an assessee in default for ₹71,500, with interest at 1% per month or part of a month from 20 August until the date he actually deducts, and 1.5% per month or part from deduction until payment. Withholding the ₹71,500 from the October payment fixes the cash but not the route; see section 7 above.
9. Interest, fee, penalty and prosecution
All consequences fall on the buyer as deductor. References are to the Income-tax Act, 2025, with the 1961 Act equivalents in brackets.
| Default | Consequence | Provision |
|---|---|---|
| Failure to deduct, wholly or partly | Assessee in default for the tax not deducted | Section 398(1) [201(1)] |
| Late deduction | Interest at 1% per month or part, from the date deductible to the date deducted | Section 398(3)(a)(i) [201(1A)(i)] |
| Deducted but paid late | Interest at 1.5% per month or part, from the date of deduction to the date of payment; interest must be paid before the statement is furnished | Section 398(3)(a)(ii) [201(1A)(ii)] |
| Failure to deduct | Penalty equal to the tax not deducted | Section 448 [271C] |
| Late Form 141 | Fee of ₹200 per day, capped at the tax deductible, payable before filing | Section 427 [234E] |
| Form 141 not filed or incorrect | Penalty of ₹10,000 to ₹1,00,000; not levied if tax, fee and interest are paid and the statement is filed within one month of the due date | Section 461 [271H] |
| Form 132 not issued in time | ₹500 per day while the failure continues, capped at the tax deductible | Section 465(2)(g) read with section 465(3) [272A(2)(g)] |
| Tax deducted but not paid to the Government | As amended by the Finance Act, 2026 from 1 April 2026: simple imprisonment up to 2 years, or fine, or both, where the tax exceeds ₹50 lakh; up to 6 months, or fine, or both, where it exceeds ₹10 lakh but not ₹50 lakh; fine in other cases | Section 476 [276B] |
Mitigation. Under section 398(2), the buyer is not treated as an assessee in default if the seller has furnished his return, included the amount and paid the tax, supported by an accountant's certificate in the prescribed form. Interest at 1% still runs up to the date the seller furnishes the return. For how a default looks on TRACES after payment, see our earlier post, I Paid the TDS Default: Why Is TRACES Still Showing the Demand?, and How to Resolve TDS Outstanding Defaults.
10. Cross-law checks: FEMA, GST, stamp duty value
FEMA. Under Rule 24 of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, an NRI or OCI may transfer immovable property in India to a person resident in India, so the sale itself needs no RBI approval. The sale proceeds are credited to the seller's NRO account. Repatriation from NRO balances, including sale proceeds, is permitted up to USD 1 million per financial year under the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, at which point the seller's Form 145 and Form 146 come into play. The buyer's FEMA responsibility is mainly to pay into the correct account.
GST. The sale of a completed building is neither a supply of goods nor of services under paragraph 5 of Schedule III to the CGST Act, 2017, so a resale by an NRI carries no GST. Where the NRI is assigning booking rights in an under-construction flat, the Karnataka High Court in Rohan Corporation India Pvt. Ltd. v. Union of India (WP No. 12700/2023, decided 10 September 2024, NC: 2024:KHC:37691) held that no GST arises where the transferor carries no construction obligation after the agreement: Entry 5(b) of Schedule II is not attracted and the transfer falls within Schedule III. The position is consistent with Larsen & Toubro Ltd. v. State of Karnataka (2014) 1 SCC 708.
Stamp duty value. Schedule E captures the stamp duty value because the seller's capital gain is computed under section 78 of the Income-tax Act, 2025 (old section 50C): where the consideration is below the stamp duty value and the stamp duty value exceeds 110% of the consideration, the stamp duty value is taken as the full value of consideration. The buyer's TDS is still computed on the sum paid or credited. On the buyer's side, if the price is below the stamp duty value by more than the higher of ₹50,000 and 10% of the price, the difference is taxable as the buyer's income under section 92(2)(m) of the Income-tax Act, 2025 (old section 56(2)(x)). NRI sales below guidance value need this check before the price is fixed.
11. Open points and conflicting positions
- Act versus form on agricultural land. Section 397(1)(c) refers to "any immovable property", but Schedule E offers only land other than agricultural land, buildings, or both. Rural agricultural land is not a capital asset, so no gain or TDS arises. Urban agricultural land is a capital asset, and its sale by a non-resident attracts TDS, yet Schedule E has no option for it. Until the form is revised or the CBDT clarifies, such a buyer has no workable PAN route and should use the TAN route.
- Booking rights in an under-construction flat. The TDS obligation under section 393(2) [Table: Sl. No. 17] is not in doubt, since it covers any sum chargeable. What is unclear is whether an assignment of rights before the building exists is a "transfer of immovable property" reportable under Schedule E as "building or part of a building". No clarification exists. Document the position taken, and prefer the TAN route where the amount is large.
- Straddling instalments. As explained in section 7, the link between pre-October TAN filings and a post-October Form 141 series is not prescribed.
- Form 145 on NRO credits. Rule 220 and the Schedule E field point towards filing; practice for payments that stay in India differs. The conservative course is to file.
- Surcharge slab with joint buyers. Surcharge on TDS depends on the amount paid or likely to be paid to the seller. If two buyers each pay half of an ₹85 lakh price, neither pays more than ₹50 lakh, but the seller receives ₹85 lakh. There is no specific guidance. The reading that avoids a short deduction is to apply the slab on the total consideration payable to the seller.
- Resident and non-resident co-sellers. Schedule E's seller table totals 100%, with no instruction for a property where a resident co-owner's share is reported in Schedule B. Whether the portal accepts a seller total below 100% in Schedule E when a resident co-seller is reported in Schedule B is not addressed in the notes or FAQs; confirm it on the portal before relying on a split filing.
- Seller's residential status. Residence is determined for the whole tax year under section 6, while TDS is due on the payment date. Where a seller is moving to or from India during the year, obtain a written declaration with supporting travel and tax documents before choosing between Schedule B and Schedule E.
12. Buyer's checklist
Before the agreement: confirm the seller's residential status in writing; obtain PAN (or Rule 217 details, including tax residency certificate and tax identification number); ask whether a section 395(1) certificate has been applied for; if a power of attorney holder or a resident co-owner is involved, identify each owner's status and share; fix the TDS clause and payment schedule in the agreement; check whether any payment was already made before 1 October 2026.
At each payment: compute TDS including surcharge and cess; file Form 145 (and Form 146 where required) before paying; pay the net amount into the seller's NRO account, and make sure any housing loan disbursement is also net of TDS; file Form 141 Schedule E and pay the tax within 30 days from month-end; keep every acknowledgement number.
After: download Form 132 from TRACES and give it to the seller within 15 days of the Form 141 due date; keep the agreement, registered deed, stamp duty valuation, seller declarations and all acknowledgements together.
Frequently asked questions
Do I need a TAN to buy property from an NRI after 1 October 2026?
Not if you are a resident individual or HUF. From 1 October 2026, section 397(1)(c) of the Income-tax Act, 2025 exempts you from obtaining a TAN, and you deposit and report the TDS on your own PAN through Form 141, Schedule E. Companies, firms, LLPs, trusts and non-resident buyers still need a TAN.
Is the TDS 1% as in a normal property purchase?
No. The 1% rate and the ₹50 lakh threshold apply only when the seller is resident. For a non-resident seller, TDS under section 393(2) is 12.5% for long-term gains or 30% for short-term gains, plus surcharge and 4% cess, on every payment from the first rupee, and on the full amount paid unless a lower-deduction certificate exists.
Which form is used and what is the due date?
Form 141 with Schedule E, filed from the buyer's PAN login, together with payment of the tax, within 30 days from the end of the month in which tax is deducted. The TDS certificate in Form 132 must be downloaded from TRACES and issued to the seller within 15 days from that due date.
What if the NRI seller does not have a PAN?
Furnish the seller's overseas address, contact details, tax residency certificate number and tax identification number as required by Rule 217, in place of the PAN. If these are not furnished, tax must be deducted at the higher rate under section 397(2), which is at least 20%. The seller will still need a PAN to file his return and claim credit or refund.
We are buying jointly. Do we file one Form 141?
No. Each buyer is a separate deductor and files a separate Form 141 for his or her share of the consideration, as stated in the notes to Form 141.
I paid an advance to the NRI seller before 1 October 2026. Which route applies?
Payments or credits before 1 October 2026 fall under the TAN-based route: deposit under TAN and report in quarterly Form 144 (Form 27Q if the payment was made before 1 April 2026). Only payments on or after 1 October 2026 qualify for Form 141, Schedule E. If no tax was deducted on the advance, interest has been running from the payment date and the default should be regularised immediately.
The NRI is selling through a power of attorney holder in India. Do I still deduct at NRI rates?
Yes. The deductee is the owner, not the attorney. If the owner is non-resident, deduct under section 393(2) through Form 141, Schedule E at the rates in force, even though a resident relative signs the documents.
Can the TDS be reduced?
Yes, only through a certificate: the seller can apply under section 395(1) in Form 128, or the buyer under section 395(2) in Form 129, and the certificate number is entered in Schedule E. A tax treaty rarely helps, because India's treaties generally allow India to tax gains from immovable property situated in India.
Official references
- Notification No. 121/2026 [G.S.R. 830(E)] dated 22 September 2026: Income-tax (Fifth Amendment) Rules, 2026
- Memorandum explaining the provisions of the Finance Bill, 2026 (Clause 75: TAN relaxation; Clause 74: electronic lower-deduction certificates)
- CBDT FAQs on Form No. 141
- CBDT FAQs on Form No. 132
- E-filing portal user manual: Form 141
- CBDT FAQs on higher rate of TDS under section 397(2)
- FAQs and guidance notes on forms under the Income-tax Rules, 2026
This article is for general information and reflects the law as on 3 October 2026: the Income-tax Act, 2025 as amended by the Finance Act, 2026, and the Income-tax Rules, 2026 as amended by Notification No. 121/2026. Provisions of the Income-tax Act, 1961 apply to payments or credits up to 31 March 2026. It is not a substitute for advice on specific facts.
Comments
Post a Comment