Budget 2026: TAN Requirement Eliminated for NRI Property Transactions from October 2026
The Union Budget for the fiscal year 2027 has introduced a significant simplification for property transactions involving non-resident Indians (NRIs). Finance Minister Nirmala Sitharaman announced during her Budget speech that residents purchasing properties from NRIs will no longer need to obtain a Tax Deduction and Collection Account Number (TAN) from October 1, 2026.
Streamlining Property Purchases from NRIs
Under the current regulations, when buying immovable property from a resident seller, the buyer does not require TAN for tax deduction at source (TDS). However, if the seller is an NRI, the buyer must obtain TAN specifically for that transaction. This created an unnecessary compliance burden, particularly for individuals engaging in single transactions with NRIs.
The new proposal will route TDS payments through the resident buyer's Permanent Account Number (PAN)-based challan instead. According to Gautam Nayak, partner at CNK & Associates LLP, "The new proposals will make property buying simpler when the seller is an NRI." This change is expected to ease the process significantly, reducing paperwork and administrative hurdles.
Clarification from the Finance Minister
Finance Minister Nirmala Sitharaman clarified in her Budget speech, "TDS on the sale of immovable property by a non-resident is proposed to be deducted and deposited through resident buyer's PAN-based challan, instead of requiring TAN." This move aligns with the government's ongoing efforts to simplify tax compliance and promote ease of doing business in the real estate sector.
Additional Compliance Easing Measures
In another significant step to reduce compliance burdens, the Budget has proposed simplifying the filing of Form 15G and Form 15H for investors. Currently, investors holding securities in multiple companies and earning dividend or interest income must submit these forms to each company individually.
The new proposal allows investors to submit Form 15G or Form 15H directly to the depository, rather than to each company. Form 15H is used by senior citizens to claim exemption from TDS on dividend income, while Form 15G serves the same purpose for non-senior citizens. Both forms are self-declaration documents stating that the individual's total income is below the taxable limit.
Impact on Real Estate and Investment Sectors
Experts believe that removing the TAN requirement for NRI property deals will have several positive impacts:
- Reduced Administrative Burden: Buyers will no longer need to apply for TAN for single transactions, saving time and effort.
- Faster Transaction Processing: The use of PAN-based challans is expected to streamline the TDS payment process.
- Increased Attractiveness of NRI Properties: Simplified procedures may encourage more residents to consider purchasing properties from NRIs.
- Enhanced Compliance: The centralized submission of Form 15G and Form 15H will make it easier for investors to manage their tax exemptions.
These measures are part of a broader initiative to modernize India's tax infrastructure and make it more user-friendly. The changes reflect the government's responsiveness to feedback from taxpayers and industry stakeholders, aiming to create a more efficient and transparent system.
The implementation of these proposals from October 2026 is expected to bring relief to both individual buyers and investors, fostering a more conducive environment for property transactions and investments in the country.
