TDS on NRI Property Sale From 1 October 2026: No TAN for Buyers, New Form 141 and Form 132 Explained
A Quick Note Before You Begin Reading: Usually, I don’t start any blog with a special note. But for this topic, I’m starting with a very clear message: this blog is for general information only and does not constitute legal or tax advice. With recent rules streamlining TDS compliance—such as removing the TAN requirement for individual buyers—please consult a qualified advocate or CA for advice on your specific deal.
TDS on NRI property sale has always been the step that slows down the deal. A resident buyer purchasing from an NRI had to get a separate TAN, deposit TDS under the non-resident rules, file a quarterly TDS return and issue a certificate — paperwork most first-time buyers had never done. Many buyers simply walked away from NRI-owned properties.
From 1 October 2026, that changes for most buyers. Under CBDT Notification No. 121/2026 (the Income-tax (Fifth Amendment) Rules, 2026, dated 22 September 2026), a resident individual or HUF buyer no longer needs a TAN. TDS can be deposited and reported with the buyer’s PAN, through the revised Form 141 and its new Schedule E. This guide answers the six questions NRI sellers and their buyers are asking.
| Quick answer
• What changed: from 1 October 2026, resident individual / HUF buyers can deduct and pay TDS on property bought from an NRI using their PAN — no TAN — through Form 141 (Schedule E). • What did not change: TDS must still be deducted. For a long-term sale it is usually 12.5% plus surcharge and cess — on the full price unless the NRI gets a lower-deduction certificate. • NRI seller must give: PAN, Tax Residency Certificate (TRC), foreign Tax Identification Number (TIN), overseas address, email and phone. • Joint buyers: each buyer files a separate Form 141 for their share. • Form 132: the TDS certificate the buyer must give the NRI seller — the seller’s proof of tax paid, needed for the tax return, refund and repatriation. |
1. What changes from 1 October 2026?
| Before 1 October 2026 | From 1 October 2026 (resident individual / HUF buyer) | |
| TAN | Buyer had to apply for a TAN just for this one deal | Not required — buyer uses own PAN |
| Paying TDS | Challan under TAN | Through Form 141 (challan-cum-statement) with Schedule E |
| Reporting | Quarterly non-resident TDS return | Reported in the same Form 141 |
| Due date | Monthly deposit and quarterly return | Form 141 within 30 days from the end of the month in which TDS is deducted |
| Certificate to seller | Issued after the quarterly return | Form 132, downloaded after Form 141 is processed |
| TDS obligation and rate | Must deduct | Unchanged — must still deduct |
The change applies to transactions covered by Section 393(2) of the Income-tax Act, 2025 (Table, Serial No. 17) — payments to non-residents on transfer of immovable property — where the buyer is a resident individual or HUF. Rules 215, 218 and 219 of the Income-tax Rules, 2026 were amended to bring these transactions into the PAN-based challan-cum-statement system already used for resident sellers.
Companies, firms and other non-individual buyers still follow the TAN-based process.
2. How will TDS deduction work?
The buyer — not the NRI seller — is responsible for deducting TDS before paying the seller. Unlike a purchase from a resident, there is no ₹50 lakh threshold: TDS applies to a sale by an NRI whatever the price.
| Type of gain | Holding period | Base TDS rate | Approx. effective rate |
| Long-term capital gain | More than 24 months | 12.5% (no indexation) | 13% with 4% cess; about 14.3% with 10% surcharge; about 14.95% with 15% surcharge |
| Short-term capital gain | 24 months or less | Applicable slab rate (TDS usually at 30%) | 30% plus surcharge and cess |
Surcharge depends on the size of the amount (10% above ₹50 lakh, 15% above ₹1 crore for capital gains). The TDS figure must include surcharge and cess.
On the full price or only on the gain?
Tax is payable only on the NRI’s capital gain. But without a certificate from the Income Tax Department, buyers deduct on the full sale price to stay safe — which often locks up far more money than the NRI actually owes. The fix is a lower or nil deduction certificate: the NRI applies to the tax officer before the sale, showing the real gain, and the buyer deducts at the rate in that certificate. Its number is entered in Schedule E. Apply early — it can take several weeks.
Step-by-step for the buyer (resident individual / HUF)
- Collect the NRI seller’s details (see question 3) and any lower-deduction certificate.
- Work out the TDS — on the full price at the applicable rate, or at the certificate rate.
- Deduct the TDS from the payment to the seller (on each instalment, if paying in parts).
- File Form 141 with Schedule E and pay the TDS using your PAN — within 30 days from the end of the month of deduction.
- After processing, download Form 132 from the TRACES portal and give it to the seller.
Paying in instalments? Deduct TDS on each payment. Schedule E asks whether it is the first, a later or the final instalment, and the acknowledgement number of the earlier filing.
3. What details must the NRI seller give — and why?
| Detail | Why it is needed |
| PAN | Links the TDS to the seller so it shows in their tax statement; needed to file a return and claim a refund. Without PAN, a higher TDS rate can apply |
| Tax Residency Certificate (TRC) | Proves the country where the seller is tax resident — relevant for treaty benefits and for the rate applied |
| Foreign Tax Identification Number (TIN) | Identifies the seller in their country of residence |
| Overseas address | Required in Schedule E; part of the details that identify a non-resident |
| Email and phone | Required in Schedule E, especially where the seller has no PAN |
| Proportion of consideration | Where there are several sellers, each one’s share decides how much TDS is deducted from whom |
Under the old rules, a non-resident without a PAN could avoid the higher no-PAN TDS rate on payments for transfer of a capital asset by providing exactly these details — name, email, phone, overseas address, TRC and TIN. Schedule E now captures the same information. NRIs should still get a PAN before selling: without it, filing a return, claiming a refund and repatriating money become much harder.
4. What is the revised Form 141 and Schedule E?
Form 141 is the single challan-cum-statement through which individuals and HUFs pay and report TDS on certain transactions using their PAN — such as property purchases and rent. The 2026 amendment updated its heading and Part A, and added Schedule E in Part B for property bought from a non-resident.
Schedule E asks for:
- Property: address, type of property, date of agreement, date of registration, stamp duty value, total sale consideration.
- Parties: names and PAN of all buyers and sellers, seller status, each person’s proportion of the consideration.
- Non-resident seller: overseas address, email, phone, TRC and foreign TIN, where applicable.
- Payment: lump sum or instalment, which instalment, and earlier acknowledgement numbers.
- TDS: amount paid or credited, amount on which TDS applies, rate, tax deducted, type of capital gain, and any lower / nil deduction certificate.
Some fields will be pre-filled from the department’s records where possible. Amounts are reported in rupees.
5. What about joint buyers or joint sellers?
- Joint buyers: each buyer is a separate deductor and must file a separate Form 141 for the TDS on their share of the payment. Two buyers paying 50:50 means two Form 141 filings.
- Joint sellers: Schedule E lists every seller and their proportion; TDS is calculated and reported for each seller’s share. Collect details (PAN, TRC, TIN, address) from every NRI co-owner.
- Mixed sellers (one resident, one NRI): the resident co-owner’s share follows the resident-seller TDS rules; the NRI co-owner’s share follows the non-resident rules.
6. Why is Form 132 important?
Form 132 is the TDS certificate under the Income-tax Act, 2025 — the new-law equivalent of the old Form 16B certificate for property purchases — and the 2026 amendment added an option for transfers by a non-resident to a resident individual or HUF. The buyer downloads it from TRACES after Form 141 is processed and must give it to the seller (generally within 15 days).
For the NRI seller, Form 132 is proof that tax was paid on their behalf. Keep it because it is needed to:
- Match the TDS with the annual tax statement (formerly Form 26AS) and the Annual Information Statement;
- File the Indian income-tax return and claim a refund if more TDS was deducted than the actual tax;
- Claim foreign tax credit in the country of residence, where the treaty allows;
- Repatriate the sale money — the chartered accountant certifying the remittance will want proof that tax has been paid.
For the buyer, Form 132 and the Form 141 acknowledgement are proof that the TDS duty was met. If TDS is not deducted or deposited, the buyer can face interest and penalties and may be treated as an assessee in default.
| Mistakes to avoid
• Thinking “no TAN” means “no TDS”. The deduction obligation is unchanged. • Applying the ₹50 lakh threshold or the 1% resident rate to an NRI seller — both are wrong. • Deducting only on the gain without a certificate — the buyer carries the risk if it is wrong. • Paying the full price first and deducting later — deduct before or at the time of payment. • Not collecting every co-owner’s details in a joint sale. • Forgetting to download and hand over Form 132. |
| Checklist for the NRI seller
• Get or update your PAN with your non-resident status and overseas address. • Keep your TRC and foreign TIN ready for the buyer. • If your actual gain is much lower than the sale price, apply for a lower / nil deduction certificate well before the sale. • Use a specific power of attorney if a relative will sign the sale deed for you; the TDS details must still be yours. • After the sale, collect Form 132, check the TDS in your tax statement, and file your Indian return. • Route the money through your NRO account and repatriate within the USD 1 million per financial year limit, with a chartered accountant’s certificate. |
Frequently Asked Questions
Does a buyer need a TAN to buy property from an NRI after 1 October 2026?
Not if the buyer is a resident individual or HUF. They can pay and report TDS directly using their PAN through Form 141 (Schedule E). Companies, LLPs, partnership firms, and other non-individual buyers still require a TAN.
Does the ₹50 lakh threshold limit apply when buying from an NRI?
No. The ₹50 lakh threshold and standard 1% rate apply only when buying from resident sellers. TDS applies to NRI sellers regardless of the transaction value.
What if there are multiple buyers or multiple NRI sellers?
Each buyer must file a separate Form 141 (Schedule E) for their proportionate share of the transaction. Similarly, if there are joint NRI sellers, TDS must be calculated and reported separately based on each seller’s ownership share.
How can an NRI seller reduce the heavy TDS burden?
The seller can apply online on TRACES for a Lower Deduction Certificate before the deal is completed. Once the Assessing Officer issues the certificate, the seller provides it to the buyer, who then deducts tax strictly as per the reduced rate.
What is the deadline to file Form 141 and deposit TDS?
TDS must be deposited, accompanied by the Form 141 (Schedule E) challan-cum-statement, within 30 days from the end of the month in which the tax was deducted.
What is Form 132?
Form 132 is the official TDS certificate issued to the NRI seller. After depositing TDS via Form 141, the buyer downloads Form 132 from the TRACES portal and gives it to the NRI seller as legal proof of tax deposited.
How soon must the buyer issue Form 132 to the NRI seller?
The buyer must download and provide Form 132 to the seller within 15 days from the due date of filing Form 141.
Can an NRI sell property without a PAN?
Technically, reporting can occur using foreign credentials (Tax Identification Number/TRC), but having an Indian PAN is strongly advised. Without a PAN, higher TDS rates may apply, and the seller will face major difficulties claiming a tax refund or repatriating funds abroad.
What happens if the buyer fails to deduct or deposit TDS on time?
The buyer is personally liable. Delay in deduction or deposit attracts penal interest (typically 1% to 1.5% per month) under income tax rules, along with potential late fees and penalties.
Can the sale proceeds be transferred abroad (repatriated) without TDS compliance?
No. Banks will not process outward remittance of sale proceeds to an NRE/FCNR account or foreign bank account without Form 132 and CA certificates verifying full tax compliance.
Can I use Form 141 if I am buying property from an NRI after 1 October 2026?
Yes. A resident individual or Hindu Undivided Family (HUF) can use Form 141, Schedule E, through the Income Tax e-Filing portal to report TDS on a property purchased from an NRI. The buyer can use their PAN instead of obtaining a TAN for this transaction.
Do I need to deduct TDS when paying a property token or advance to an NRI?
TDS obligations can arise when payment is made or credited to the NRI seller, including advance instalments. Buyers should not assume that TDS can wait until the final sale deed or registration. The timing and amount of deduction should be confirmed for the specific transaction.
What happens if I pay the NRI seller the full amount without deducting TDS?
The buyer may face tax liability, interest and other consequences for failing to deduct or deposit the required TDS. The buyer should seek professional tax advice promptly to determine the corrective steps and applicable deadlines.
Can I deduct TDS at a lower rate if the NRI seller has made little or no profit?
Yes, potentially. The NRI seller can apply to the Income Tax Department for a lower or nil deduction certificate based on the estimated taxable capital gain and applicable tax provisions. The buyer should obtain and follow a valid certificate before applying the reduced rate.
Can an NRI seller claim a refund if the buyer deducts more TDS than the actual tax payable?
Yes. If the TDS deducted exceeds the seller’s final tax liability, the NRI seller can generally claim the excess as a refund by filing an applicable Indian income-tax return, subject to the relevant filing and eligibility rules.
Can an NRI seller use the sale proceeds to buy another property in India?
Yes, subject to the applicable tax and reinvestment conditions. Certain capital-gains exemptions may be available when the seller reinvests in a qualifying residential property or other eligible asset. The exemption depends on the nature of the asset sold, the gain and the applicable legal conditions; it is not automatic.
What documents should a buyer collect from an NRI seller for TDS compliance?
The buyer should coordinate with the seller to collect the relevant details, which may include:
-
PAN and identity details, where applicable.
-
Overseas address and contact information.
-
Tax Residency Certificate (TRC) and foreign Tax Identification Number (TIN), where required.
-
Property details, sale consideration and payment schedule.
-
Details of co-owners and their respective ownership shares.
-
A valid lower or nil deduction certificate, if applicable.
What if the NRI seller owns the property jointly with another person?
The buyer should establish each seller’s ownership share and residential status. TDS obligations must be assessed with reference to the relevant seller and payment details; the treatment should not automatically be assumed to be identical for every co-owner.
Does buying property from an OCI cardholder mean the seller is an NRI for TDS purposes?
Not necessarily. An Overseas Citizen of India (OCI) cardholder is not automatically a non-resident for Indian income-tax purposes. The seller’s residential status under the applicable tax law must be established independently of their citizenship or OCI status.
Can an NRI seller receive the entire sale amount in an overseas bank account?
Not automatically. Repatriation of property-sale proceeds is subject to applicable RBI and FEMA requirements, documentation and banking procedures. The seller should confirm the permitted route, limits and supporting documents with an authorised dealer bank before transferring the funds abroad.
Is property registration enough to complete TDS compliance?
No. Registration of the sale deed and compliance with TDS requirements are separate matters. The buyer must also deduct the applicable tax, deposit it with the government, file the prescribed statement and provide the seller with the relevant TDS certificate.
Can I correct Form 141 if I enter the wrong PAN or property details?
An incorrect entry should be addressed promptly. The correction process depends on the type of error, the status of the filing and the facilities available on the Income Tax e-Filing portal. Check the current portal instructions or consult a tax professional before making a correction.
What is the default TDS rate on an NRI property sale?
-
Long-Term Capital Assets (Held > 24 months): Deducted at 12.5% plus applicable surcharge and cess (effective TDS rate typically ranges from 13% to 14.95%).
-
Short-Term Capital Assets (Held $\le$ 24 months): Deducted at 30% plus applicable surcharge and cess.
Is TDS deducted on the full sale price or only on capital gains?
By default, the buyer is legally required to deduct TDS on the entire sale consideration (gross agreement value). It is not automatically calculated on the profit alone unless a special tax certificate is produced.
How can an NRI seller avoid paying TDS on the full sale amount?
The NRI seller can apply online via TRACES for a Lower or Nil Deduction Certificate (Form 13) from the Income Tax Department before completing the sale. Once approved, the buyer deducts TDS strictly on the actual capital gains (or at the reduced percentage stated in the certificate).
Is there a minimum ₹50 lakh exemption threshold for NRI sales?
No. Unlike property purchases from resident Indian sellers (where 1% TDS applies only if the property value exceeds ₹50 lakh), TDS on an NRI property sale applies on every rupee of the transaction, regardless of the sale value.
Need Further Legal Guidance?
Advocate Junction offers flexible consultation options to help you understand your legal rights and options.
- Online / Telephonic Consultation or Office Visit (Delhi): ₹499 for 30 minutes.
- Priority Doorstep Consultation – Delhi: ₹1,499 for 45 minutes.
- Priority Doorstep Consultation – Noida, Gurugram & Ghaziabad: ₹1,999 for 45 minutes.
Consultation Fee Adjustment: If you retain the advocate for further legal services, your consultation fee will be fully adjusted against the agreed advocate’s professional fees. Court fees and third-party expenses are excluded.
Call / WhatsApp: +91 98189 00704 Website: www.advocatejunction.com
Appointments are subject to availability and location confirmation. Additional legal services are charged separately. AdvocateJunction’s doorstep legal services are currently available only in Delhi NCR.
AdvocateJunction – Find Your Advocate Anytime Anywhere.
