You may have seen news: from October 2026, you no longer need a TAN to buy property from an NRI. It's true, and it's genuinely good news.
But a headline can only carry so much. And in this case, what it leaves out is exactly part that lands people with a tax notice — or costs an NRI seller lakhs they didn't need to lose.
So before you're on either side of one of these deals, here's whole picture, calmly and completely.
Why buying from an NRI was never an ordinary purchase
Most buyers assume property tax works same regardless of who's selling. It doesn't — and gap is wide enough to matter.
Buy from a resident, and you deduct a straightforward 1% — and only if property crosses ₹50 lakh.
Buy from an NRI, and you step into a different rule entirely. Higher rate. No ₹50 lakh cushion. And one detail that catches almost everyone:
Tax is calculated on entire sale price — not seller's profit.
On a ₹1 crore flat, that means you, as buyer, set aside roughly ₹13 to ₹15 lakh and pay it to government before handing seller rest. This sits under provision most people still call Section 195 — now renumbered Section 393(2) under Income Tax Act, 2025.
And here's part worth sitting with: if you get that deduction wrong, government doesn't chase seller. It comes to you.
That's why TAN requirement felt so heavy — and why removing it genuinely helps.
What actually changes in October 2026
Until now, a resident buyer had to apply for a TAN — a separate tax registration, distinct from your PAN — just to deposit that deduction. It's an unfamiliar step, it takes time, and it's precisely kind of friction that made buyers hesitate over NRI properties or let payments drift for weeks.
From October 1, 2026, that step disappears — for resident individual and HUF buyers. You'll deposit TDS using your PAN, same simple way it already works when you buy from a resident.
Less paperwork. Faster closings. A wider pool of buyers who won't flinch at an NRI seller. Real, and welcome.
But — and this is where care matters — "no more TAN" is a smaller statement than it sounds.
Three things good news quietly leaves out
It's only for individuals and HUFs. If buyer is a company, a firm, or an LLP, nothing changes — TAN requirement stays. This relief was written narrowly, and on purpose.
It changes paperwork, not tax. This is one that costs people. Rate hasn't moved. Deduction is still on full sale price. Your responsibility to get number right — and your liability if you don't — is exactly as it was. If a seller reassures you, "just deduct it from my profit, not whole price," and you listen, shortfall becomes your problem, with interest. Only method of depositing got easier. Obligation didn't soften at all.
It doesn't start a day early. If your deal closes in September 2026, you still need a TAN. Reaching for PAN route before October 1 isn't a harmless head-start — it's treated as a defective filing, which means getting a TAN anyway and doing it again, with interest for delay. Date is a line, not a ramp.
Quieter, more expensive mistake — this one's seller's
Everything above is about buyer. But costliest error in these deals usually sits on other side of table.
Because tax is withheld on full sale price rather than actual gain, amount taken is almost always far more than seller truly owes. On that ₹1 crore flat, ₹13–15 lakh is set aside — even if NRI's real capital gain, and real tax, is a fraction of that.
That money isn't gone. But it's stuck — parked with government until NRI files a return after year-end and claims it back. In practice, that's often twelve to eighteen months of waiting for your own money to come home, earning you nothing.
There's a clean fix, and it's almost always missed: a Lower Deduction Certificate — Form 13, filed by seller before sale. It tells buyer to deduct on actual gain instead of full price — releasing those lakhs at moment of sale rather than a year later.
Catch is entirely in timing. Filed before you find a buyer, it changes economics of a whole sale. Discovered after deal has closed, it's simply a lesson — money's already on its slow journey through refund queue.
This single step is difference between an NRI who sells smoothly and keeps their cash, and one who unknowingly hands government an interest-free loan for a year. It's first thing worth sorting out, long before a buyer is even in picture.
And once it's sold — getting money out
After sale, proceeds sit in seller's NRO account. From there, they can be moved abroad — up to USD 1 million per financial year — using Form 15CA and Form 15CB (now renumbered Form 145 and Form 146 for deals under new Act).
Done in right order, with right paperwork, money moves cleanly. Done in a rush, it invites exactly kind of bank or RBI query that can hold funds for months. Like most of this, it rewards being handled early rather than fixed later.
Honest summary
October 2026 change is real, and it makes life easier. But it's a convenience, not a tax cut — and it's narrower than headlines suggest:
- It starts October 1, 2026, and only for resident individual and HUF buyers. Companies and firms still need a TAN.
- Rate, full-price deduction, and buyer's liability are unchanged. Buyer still carries risk of getting it wrong.
- For seller, real money is still in one move: Form 13, filed before sale.
Buyer or seller, outcome of an NRI property deal is decided in paperwork — usually long before anyone signs. People who come out ahead are simply ones who looked at it early.
If you're on either side of one of these, this is exactly kind of thing worth mapping out before anything is committed — book a consultation, or get a feel for numbers first with our free Property Sale TDS calculator.
General information, not individual tax advice. Section references are to Income-tax Act, 2025 (in effect from 1 April 2026); deals completed earlier fall under Income-tax Act, 1961. Rules change, and your situation is your own. Written by Shivam Agrawal, Chartered Accountant, Founder of Tax Salahkars. Last reviewed August 2026.