Buying a home from an NRI just became simpler on paper. From 1 October 2026, a resident individual or HUF who buys property from a non-resident no longer needs a TAN to handle TDS. A PAN is enough.
That is good news. But TDS on property purchase is still the buyer’s duty. Deduct it late, deposit it late or skip it, and you face interest, late fees and tax notices.
This guide explains what changed, who gets the relief and what every buyer must still do.
Short Summary: TDS on property purchase is 1% when the seller is a resident and the price is ₹50 lakh or more. For NRI sellers, no ₹50 lakh limit applies and the rate follows capital gains rules. From 1 October 2026, resident individual and HUF buyers can report NRI purchases on Form 141 using only their PAN.
What Changed on 1 October 2026?
The Central Board of Direct Taxes (CBDT) notified the Income-tax (Fifth Amendment) Rules, 2026 on 22 September 2026 through Notification 121/2026. The rules took effect on 1 October 2026.
Here are the key changes:
- A resident individual or HUF buying immovable property from a non-resident can deposit and report TDS with a PAN. No separate TAN is needed.
- Form 141 now carries a new Schedule E for these purchases.
- Form 132, the TDS certificate, now covers transfers of property by a non-resident to a resident individual or HUF.
- Resident-seller rules stay as they were. The 1% rate and the ₹50 lakh limit did not change.
The relief has limits. Companies, firms and other buyers still need a TAN when they buy from an NRI. The PAN route works only for resident individuals and HUFs.
Before and After: A Quick Comparison
| Point | Up to 30 September 2026 | From 1 October 2026 |
|---|---|---|
| Buyer | Resident individual or HUF buying from an NRI | Same buyer |
| TAN | Required | Not required, PAN is enough |
| Reporting | TAN-based quarterly statement (Form 144) and a separate challan | Form 141 with Schedule E |
| Certificate to seller | Form 131 | Form 132 |
| Companies and firms | TAN required | TAN still required |
Why does this matter? Many individual buyers had never held a TAN. Getting one meant extra forms and delay, often just before a registry date. That hurdle is now gone.
Why the Section Numbers Look Different in 2026
The Income-tax Act, 2025 came into force on 1 April 2026. It replaced the 1961 Act and merged most TDS provisions into one section, Section 393.
You may still hear people say “Section 194-IA” or “Section 195”. Those names apply to payments made up to 31 March 2026. After that date, the new numbers apply.
| Item | Old name (1961 Act) | New name (2025 Act) |
|---|---|---|
| TDS on property from a resident seller | Section 194-IA | Section 393(1), Table Sl. 3(i) |
| TDS on property from an NRI seller | Section 195 | Section 393(2) |
| Challan-cum-statement | Form 26QB | Form 141 |
| TDS certificate (resident seller) | Form 16B | Form 132 |
The tax logic stayed largely the same. Only the labels, forms and a few procedures changed.
TDS on Property Purchase From a Resident Seller
Most property deals involve a resident seller. These are the rules that apply.
Rate and Threshold
You must deduct TDS at 1% if the value of the property is ₹50 lakh or more. The check uses the higher of the sale price or the stamp duty value.
Rural agricultural land is outside this rule. Flats, houses, plots, shops and offices are inside it.
Who Deducts?
The buyer deducts. The seller does not. You hold back 1% from each payment and pay the balance to the seller.
A buyer does not need a TAN for a resident-seller deal. The PAN of the buyer and the seller is enough.
Joint Owners and Joint Buyers
Since Budget 2024, the ₹50 lakh test applies to the full property value. It does not depend on how many sellers share it.
Take a ₹60 lakh flat owned by two people. Each gets ₹30 lakh. Some buyers once skipped TDS because each share fell below ₹50 lakh. That gap is closed. TDS applies on the whole ₹60 lakh.
Instalments
TDS applies to every payment, not just the last one. If you pay in four tranches, deduct 1% from each tranche.
Missing PAN
If the seller gives no valid PAN, the TDS rate rises to 20%. That is a heavy cut from the seller’s money. Collect the PAN before you pay anything.
Examples
| Sale value | Is TDS due? | TDS at 1% | Seller receives from you |
|---|---|---|---|
| ₹45,00,000 | No | ₹0 | ₹45,00,000 |
| ₹50,00,000 | Yes | ₹50,000 | ₹49,50,000 |
| ₹80,00,000 | Yes | ₹80,000 | ₹79,20,000 |
| ₹1,20,00,000 | Yes | ₹1,20,000 | ₹1,18,80,000 |
TDS on Property Purchase From an NRI Seller
The rules for NRI sellers work differently. This is the group the 1 October 2026 change targets.
No ₹50 Lakh Limit, No Flat 1% Rate
The ₹50 lakh threshold and the 1% rate apply only to resident sellers. When the seller is a non-resident, TDS applies under Section 393(2) on the capital gain, whatever the price.
Even a ₹20 lakh plot bought from an NRI can attract TDS.
Rates for NRI Sellers
| Holding period | Type of gain | TDS rate |
|---|---|---|
| More than 24 months | Long-term capital gain | 12.5% |
| 24 months or less | Short-term capital gain | Applicable slab rate, up to 30% |
Surcharge and health and education cess may be added to these rates.
Gain or Full Price?
The TDS rate applies to the gain, not the whole sale price. But buyers rarely know the seller’s purchase cost.
So many buyers end up deducting on the full consideration. A seller can avoid this by applying for a lower or nil deduction certificate from the tax department before the sale. Ask the seller early whether they have one.
What Is Schedule E in Form 141?
Schedule E is the new part of Form 141 built for purchases from non-residents. It asks for these details:
- Property address and type
- Buyer names, PANs and each buyer’s share of the consideration
- Seller name, status and PAN, if available
- Seller’s overseas address, phone number and email ID
- Tax Residency Certificate number and foreign tax identification number, where applicable
- Agreement and registration dates
- Stamp duty value and total sale consideration
- Whether payment is a lump sum or in instalments
- Capital gains category, payment date, TDS rate, amount deducted and deduction date
One point deserves attention. The seller’s foreign contact number, email and address are compulsory, even if the NRI has a PAN. Collect these before you register the deal.
If two or more people buy together, each eligible buyer must follow the reporting rules. You cannot treat all buyers as a single filer.
How to Complete TDS on Property Purchase: Step by Step
- Confirm the seller’s residential status. This decides the section, the rate and the form schedule.
- Collect PANs. Get the buyer and seller PANs. For NRI sellers, also collect the overseas contact details and tax identification number.
- Calculate TDS. Use 1% for resident sellers above ₹50 lakh. Use the capital gains rate for NRI sellers, or the rate on any lower deduction certificate.
- Deduct at the time of payment. Hold back the amount from every instalment.
- Log in to the income tax portal with your PAN. Open Form 141. Use Schedule B for resident sellers and Schedule E for NRI sellers.
- Pay and submit. Form 141 works as both challan and statement, so payment and reporting happen together.
- Download Form 132. After processing, get the TDS certificate from TRACES and give it to the seller.
Keep the acknowledgement and challan details safe. You will need them if a mismatch notice arrives.
Due Dates, Interest and Late Fees
Time limits matter as much as the rate.
| Task | Deadline or charge |
|---|---|
| Deposit TDS and file Form 141 | Within 30 days from the end of the month of deduction |
| Issue Form 132 to the seller | Within 15 days from the due date of Form 141 |
| Late deduction | Interest at 1% per month |
| Late payment after deduction | Interest at 1.5% per month |
| Late filing of Form 141 | Fee of ₹200 per day, capped at the TDS amount |
Here is a worked example. You deduct TDS on 10 October 2026. The month ends on 31 October. Your Form 141 and payment are due by 30 November 2026. Form 132 is due by 15 December 2026.
Interest runs by month, and part of a month counts as a full month. A delay of a few days can still cost you.
Common Mistakes Buyers Make
- Paying the full amount first. Once the money reaches the seller, recovering TDS gets awkward.
- Ignoring the stamp duty value. If it is higher than the price, TDS applies to the higher figure.
- Skipping TDS on early instalments. Every tranche needs a deduction.
- Using the old forms. Form 26QB and Form 16B belong to the 1961 Act. Payments from 1 April 2026 use Form 141 and Form 132.
- Assuming the PAN relief covers everyone. Companies and firms still need a TAN for NRI purchases.
- Entering a wrong PAN. A wrong or invalid PAN can push TDS to 20% and cause credit problems for the seller.
- Forgetting Form 132. Sellers need this certificate to claim credit in their return.
FAQs on TDS on Property Purchase
1. What is the rate of TDS on property purchase in 2026?
The rate is 1% when you buy from a resident seller and the value is ₹50 lakh or more. If the seller has no valid PAN, the rate is 20%. For NRI sellers, the rate follows capital gains rules, such as 12.5% for long-term gains, plus surcharge and cess.
2. Do I need a TAN to buy property from an NRI after 1 October 2026?
Not if you are a resident individual or HUF. You can use your PAN and file Form 141 with Schedule E. Companies, firms and other buyers still need a TAN.
3. Does the ₹50 lakh limit apply to property bought from an NRI?
No. The ₹50 lakh limit and the 1% rate apply only to resident sellers. For NRI sellers, TDS applies at capital gains rates whatever the price.
4. What is the due date for depositing TDS on property purchase?
Deposit the tax and file Form 141 within 30 days from the end of the month in which you deduct TDS. Issue Form 132 to the seller within 15 days from that due date.
5. Which form replaces Form 26QB?
Form 141 replaces Form 26QB for payments made on or after 1 April 2026. Form 132 replaces Form 16B as the TDS certificate.
Final Thoughts
The 1 October 2026 update makes TDS on property purchase simpler for resident individuals and HUFs who buy from NRIs. A PAN now replaces the TAN, and Schedule E in Form 141 sets out what you must report.
The core duties have not changed. Know your seller’s status, deduct the right amount, deposit it on time and issue Form 132. Handle these steps before the registry, and the process stays smooth.
This guide is for general information. Rules and forms can change, so confirm your case with a chartered accountant before you pay.
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