Income Tax Department Changes TDS Reporting Rules for Non-Resident Property Transactions
The Income Tax Department has changed the TDS reporting framework for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers. The new rules will reduce the compliance requirement by removing the need to obtain a separate TAN for such transactions from October 1, 2026.
The Central Board of Direct Taxes (CBDT) has notified changes to the Income-tax Rules, 2026, relating to the deduction and reporting of tax at source on property transactions involving non-resident sellers.
According to the Income Tax Department, the revised framework will allow eligible resident buyers to use their PAN instead of obtaining a separate Tax Deduction and Collection Account Number (TAN).
What is changing from October 1, 2026?
Under the earlier framework, a resident individual or HUF purchasing immovable property from a non-resident was required to obtain a TAN for deducting and reporting TDS.
From October 1, 2026, this additional requirement will be removed.
The buyer can instead use their PAN for deducting and reporting the TDS on the property transaction.
The Income Tax Department had already outlined this change in its Budget 2026 FAQs, stating that the process for property purchases from non-residents would be brought closer to the PAN-based reporting mechanism used for transactions involving resident sellers.
How will TDS reporting work?
Under the revised mechanism, the buyer will use a PAN-based challan-cum-statement for reporting the TDS.
The buyer will quote:
- The buyer’s PAN
- The seller’s PAN
- Details of the property transaction
- TDS details and other prescribed information
The change is intended to make the compliance process simpler for individual buyers and HUFs who purchase property from non-resident sellers.
The Income Tax Department’s latest information also confirms that CBDT issued Notification No. 121/2026 on September 24, 2026, relating to TDS reporting requirements for non-resident property transactions and updates to the prescribed forms.
Why is the change important for property buyers?
Buying property from a non-resident seller has traditionally involved additional TDS compliance compared with a transaction involving a resident seller.
The requirement to obtain a separate TAN could add another procedural step for individual buyers who may otherwise have limited exposure to the TAN system.
The new framework removes this additional registration requirement.
The Income Tax Department said the change is intended to reduce the compliance burden on resident individuals and HUFs.
Important: TDS obligation does not disappear
The removal of the TAN requirement does not mean that TDS itself has been removed.
The buyer still has to comply with the applicable TDS provisions when purchasing immovable property from a non-resident.
Only the mechanism for obtaining TAN and reporting the deduction has been simplified.
This distinction is important because a buyer should not interpret the new rule as an exemption from TDS.
New rules effective from October 1
The amendment will apply from October 1, 2026.
Therefore, buyers involved in property transactions with non-resident sellers around the transition date should check the applicable rules based on the date of the transaction and the relevant tax provisions.
The Income Tax Department’s Budget 2026 FAQ specifically states that the amendment removing the TAN requirement for these transactions will be effective from October 1, 2026.
What buyers should keep in mind
Even though the process is becoming simpler, property buyers should continue to verify the seller’s residential status and ensure that the correct TDS provisions are applied.
A seller having a foreign address or being described as an NRI does not by itself replace the need to determine the applicable tax status under the Income-tax law.
Buyers should also maintain proper documentation relating to the property transaction, payment, TDS deduction and reporting.
Key takeaway
The latest CBDT changes simplify TDS compliance for resident individuals and HUFs purchasing immovable property from non-resident sellers.
From October 1, 2026, eligible buyers will no longer need to obtain a separate TAN for this purpose and will instead be able to use their PAN for the prescribed TDS reporting mechanism.
The change is primarily a compliance and reporting simplification; it does not remove the underlying TDS obligation on property purchases from non-residents.
Official Sources
Income Tax Department: CBDT’s latest-news section records Notification No. 121/2026, issued on September 24, 2026, concerning TDS reporting requirements for non-resident property transactions and changes to Forms 132 and 141.
Income Tax Department – Budget 2026 FAQs: The department’s official FAQ explains the removal of the TAN requirement, PAN-based reporting and the October 1, 2026 effective date.
Income Tax Department – e-Pay Tax FAQs: The department also guides TDS forms and reporting for transactions involving non-resident deductees.
Disclaimer: This article is for informational purposes only and should not be considered tax or legal advice. Property buyers should verify the applicable provisions and consult a qualified tax professional where required.
Source: Income Tax Department (CBDT) – Notification No. 121/2026, dated September 24, 2026.
