Buying property from a Non-Resident Indian (NRI) has always been complicated from a tax point of view. On the other hand, purchasing property from a resident has been much easier.
Now, this situation is going to change from October 1, 2026. In the Union Budget 2026, the government has proposed new rules to simplify the tax process for buying property from NRIs.
Current Rules for Property Purchase
Buying Property from a Resident
At present, when a person buys property from a resident, the process is simple. The buyer can deposit TDS by filing Form 26QB, which is a challan-cum-statement form.
In this case, the buyer does not need to get a separate Tax Deduction and Collection Account Number (TAN).
Buying Property from an NRI
If the seller is an NRI, the rules are stricter. The buyer has to:
Apply for a TAN
Deduct TDS at the prescribed rate
Deposit the tax
File TDS returns, similar to business taxpayers
Because of these requirements, individual buyers face a heavy compliance burden, especially since TAN is needed for just one property transaction.
Changes from October 1, 2026
To make the process easier, the government has proposed new rules in Budget 2026.
From October 1, 2026, a resident individual or Hindu Undivided Family (HUF) buying property from an NRI will not need to obtain a TAN to deduct TDS.
Instead, the government will introduce a challan-cum-statement or return form, similar to the system used when buying property from a resident.
This means the procedure for buying property from an NRI will become much simpler and almost similar to buying property from a resident.
Proposed Legal Amendments
Currently, under Section 397(1)(a) of the Income Tax Act, 2025, anyone who deducts or collects tax must apply for a TAN. Some exemptions exist under Section 397(1)(c), but buying property from an NRI was not included in these exemptions.
To solve this problem, the government has proposed to amend Section 397(1)(c). The amendment will exempt resident individuals and HUFs from obtaining TAN under Section 393(2) when purchasing property from an NRI.
Why This Change Matters
This proposed amendment is an important step because it will:
Reduce unnecessary compliance for individual taxpayers
Make property transactions more transparent and easier
Align tax procedures with the government’s goal of simplifying tax rules
By removing the requirement to obtain TAN for a single transaction, the government has addressed a major difficulty faced by people buying property from NRIs.
