Budget 2026 Revolutionizes Property Acquisition from NRIs for Resident Indians
For years, purchasing property from a non-resident Indian (NRI) has been a daunting and complex process for resident Indians, filled with bureaucratic hurdles and tax complications. However, the Union Budget 2026 has dramatically transformed this landscape with a single, significant regulatory adjustment that promises to streamline transactions and empower Indian buyers.
Finance Minister's Proposal: A Game-Changer for Property Transactions
Finance Minister Nirmala Sitharaman has introduced a pivotal proposal that will fundamentally alter how resident Indians handle tax obligations when acquiring property from NRIs. Under the new framework, resident buyers can now deduct and deposit the mandatory Tax Deduction at Source (TDS) through their own resident Permanent Account Number (PAN)-based challan. This upfront tax, set at 1% of the property value, must be deposited by the buyer in all immovable property transactions.
The Previous Nightmare: TAN Requirements and Professional Dependence
Prior to this groundbreaking announcement, the process was considerably more cumbersome. Buyers were required to specially obtain a Tax Deduction and Collection Account Number (TAN) specifically to pay this TDS. Karan Batra, managing partner at KN Global Consultants, explains the challenges: "One had to acquire a TAN, which is typically issued only to corporate entities. After obtaining the TAN, the resident individual had to deposit the tax through this mechanism and even file a separate TDS return. This process was difficult to navigate independently, often forcing buyers to engage tax professionals for assistance."
It's important to note that TDS on the sale of immovable property by a non-resident is levied at 1% when the PAN is available, but this rate escalates to a substantial 20% in the absence of PAN, highlighting the critical importance of proper documentation.
Simplified Procedure: Empowering Indian Buyers
"Too far into the deal, one would realize that tax deduction at source, which is mandatory for all immovable property sales, required too many steps and professional help," says Batra. "The procedure has now been simplified, and Indians would be easily able to acquire properties owned by NRIs in India."
Under the new system, resident Indians can simply deposit the TDS using their own PAN, similar to how they handle rental income deductions. They can then account for this in their regular tax returns, eliminating the need to file an additional, separate TDS return. This reduction in paperwork and procedural complexity represents a significant victory for homebuyers and investors alike.
Additional Protection: Immunity for Foreign Asset Disclosure
The Budget 2026 proposals extend beyond property transactions to offer protection for resident Indians with certain foreign assets. Another important move provides immunity from prosecution for resident individuals who owned foreign non-immovable property valued up to ₹20 lakh and failed to disclose these assets in their tax returns. This immunity will be applicable starting from October 1, 2024.
"Here, resident individuals who were working for foreign companies and had employee stock options from foreign firms, US stocks, or foreign bank assets would have to pay tax on the assets, but the reporting requirement has been done away with," clarifies Batra.
This means that harsh punishments, including potential imprisonment, will not be imposed for failing to disclose income from foreign assets such as ESOPs, bank accounts, and stocks, provided the total value does not exceed ₹20 lakh. Currently, there are no penalties for such non-disclosure, but this formal immunity provides additional security and clarity for taxpayers with modest foreign holdings.
The Union Budget 2026 thus delivers a dual benefit: simplifying property acquisition from NRIs while offering sensible protections for Indians with limited foreign assets, marking a progressive step toward more accessible and less intimidating financial regulations for resident Indians.
