TDS on Property Purchase From NRI Without TAN From October 1, 2026: Form 141 Schedule E Under CBDT Notification 121/2026
From 1 October 2026, a resident individual or HUF buying property from a non-resident (NRI) seller no longer needs a TAN to deduct and deposit the TDS. CBDT Notification No. 121/2026 (G.S.R. 830(E), dated 22 September 2026) notifies the Income-tax (Fifth Amendment) Rules, 2026. It moves TDS on property purchased from an NRI into the same PAN-based challan-cum-statement, Form No. 141, that buyers already use when buying from a resident seller. This advisory covers what changed, who it applies to, the new deadlines and what a buyer (and the CA advising the buyer) should do for any payment made on or after 1 October 2026.
Key Takeaways
- No TAN for resident individual or HUF buyers: the Finance Act, 2026 substituted section 397(1)(c) of the Income-tax Act, 2025 with effect from 1 October 2026. The TAN requirement no longer applies to a resident individual or HUF deducting tax on consideration for transfer of immovable property under section 393(2) [Table: Sl. No. 17].
- One form instead of a TAN, a challan and a quarterly return: the tax is paid through a challan-cum-statement in Form No. 141, now carrying a new Schedule E for property bought from a non-resident.
- Deadline: payment and Form No. 141 are due within 30 days from the end of the month in which the tax is deducted (amended rules 218(3) and 219(5) of the Income-tax Rules, 2026).
- Certificate to the seller: Form No. 132, within 15 days from the due date of the Form No. 141 (amended rule 215(1), Table Sl. No. 3).
- What did not change: the rate (the rates in force on the NRI’s capital gain, with no threshold), the lower or nil deduction certificate route under section 395, and the higher-rate rule where the NRI seller has no PAN and does not furnish the rule 217 details.
What Did CBDT Notification 121/2026 Change?
Buying a flat or plot from an NRI has always been the harder version of a property purchase. When the seller is a resident, the buyer deducts 1% and files a PAN-based challan-cum-statement; no TAN is needed. When the seller is a non-resident, the buyer has been treated like any other deductor making a payment to a non-resident: apply for a TAN, deduct tax at the rates in force, pay it by challan, file a quarterly TDS statement and issue a certificate. For an individual buying one home, that meant registering as a deductor for a single transaction.
The fix comes in two layers:
- The Act. The Finance Act, 2026 substituted clause (c) of section 397(1) of the Income-tax Act, 2025 with effect from 1 October 2026. The TAN requirement in section 397(1)(a) now does not apply to “(iii) a resident individual or Hindu undivided family in respect of a transaction where he is required to deduct tax on any consideration for the transfer of any immovable property under section 393(2) [Table: Sl. No. 17]”.
- The Rules. Notification No. 121/2026 amends rules 215, 218 and 219 of the Income-tax Rules, 2026 and Forms 132 and 141, so the machinery exists to deposit and report the tax without a TAN. The Rules state in rule 1(2) that “They shall come into force on the 1st day of October, 2026.”
The four rule amendments at a glance
| Provision (Income-tax Rules, 2026) | What the amendment does |
|---|---|
| Rule 215(1), Table Sl. No. 3 | Adds deduction under section 393(2) [Table: Sl. No. 17] by a resident individual or HUF on immovable property. The TDS certificate is Form No. 132, due within fifteen days from the due date of the Form No. 141. |
| Rule 218(3), new clause (e) | Tax on “any consideration for transfer of any immovable property” paid by a resident individual or HUF to a non-resident must be paid “within a period of thirty days from the end of the month in which the deduction is made” with a challan-cum-statement in Form No. 141. |
| Rule 219(5), new clause (e) | The Form No. 141 is furnished within thirty days from the end of the month of deduction, in place of a quarterly statement. |
| Forms 132 and 141 (Appendix III) | Form No. 132 gets a new option: “Transfer of immovable property by a non-resident to a resident individual or Hindu undivided family”. Form No. 141 gets section 393(2) [Table Sl. No. 17] in its heading and a new Schedule E. |
Who Can Use the No-TAN Route for TDS on Property Purchase From an NRI?
The relief is narrow by design. Both conditions must be met:
- The buyer is a resident individual or a resident HUF. A company, LLP, firm, trust or non-resident buyer buying from an NRI still needs a TAN and follows the regular route: payment by challan and a quarterly non-resident TDS statement (Form No. 144, which replaced Form 27Q from FY 2026-27).
- The payment is consideration for transfer of immovable property to a non-resident seller. Schedule E asks the buyer to classify the property as land (other than agricultural land), a building or part of a building, or both.
Where there are joint buyers, each buyer is a separate deductor. Note 11 to Form No. 141 says: “In case of more than one deductor, each deductor has to file separate form.” Schedule E then captures every buyer’s PAN and share of the total consideration, and every seller’s details and share.
Old Route vs New Route: TDS on NRI Property Purchase From October 1, 2026
| Step | Tax deducted up to 30 September 2026 | Tax deducted on or after 1 October 2026 (resident individual / HUF buyer) |
|---|---|---|
| TAN | Required (section 397(1)(a)) | Not required (section 397(1)(c)(iii)) |
| Deposit of tax | By challan, on or before seven days from the end of the month of deduction (30 April for March), rule 218(2) | Within 30 days from the end of the month of deduction, with Form No. 141 (rule 218(3)(e)) |
| Statement | Quarterly TDS statement for non-resident payments (Form No. 144) | Transaction-wise Form No. 141, Schedule E (rule 219(5)(e)) |
| Certificate to seller | Form No. 131, within 15 days of the quarterly statement due date | Form No. 132, within 15 days of the Form No. 141 due date |
| Rate | Rates in force on the sum chargeable (section 393(2) Sl. No. 17) | Unchanged |
What Rate of TDS Applies When You Buy Property From an NRI?
Nothing in Notification 121/2026 changes the rate. Section 393(2) [Table: Sl. No. 17] of the Income-tax Act, 2025 covers “any other sum chargeable under the provisions of this Act” paid to a non-resident, and prescribes deduction at the “rates in force”. Three points matter in practice:
- There is no threshold. Unlike the resident-seller route, which starts at Rs 50 lakh and deducts 1%, Sl. No. 17 has no minimum. A Rs 30 lakh flat bought from an NRI still attracts TDS.
- The rate follows the character of the NRI’s gain. Schedule E asks whether the gain is long-term (section 197(1), where the Act sets the long-term capital gains rate at 12.5%) or short-term. Note 10 to the form confirms that the tax deducted “shall include surcharge, if applicable, and cess”.
- The base is the sum chargeable, not automatically the full price. In practice buyers deduct on the full consideration unless there is a certificate. The seller can apply for a lower or nil deduction certificate under section 395(1), which since 1 April 2026 may also be filed with the prescribed income-tax authority under section 395(6). The buyer can separately apply under section 395(2) for the Assessing Officer to determine the chargeable proportion. Schedule E has fields for both certificate numbers.
What if the NRI seller has no PAN?
Section 397(2)(b)(i) requires deduction at the higher of the specified rate, the rates in force or 20% where the payee has not furnished a PAN. Rule 217 switches this off for a non-resident without a PAN on payments for transfer of a capital asset if the seller gives the buyer: name, e-mail id and contact number; address in the country of residence; a tax residency certificate (where that country issues one); and the tax identification number in that country. Note 6 to Form No. 141 now makes the seller’s contact number, e-mail and overseas address mandatory in Schedule E whether or not the seller has a PAN.
What Schedule E of Form 141 Asks For
Collect these before the payment date, not after:
- Address and type of the property.
- PAN, name and percentage share of every buyer.
- For every seller: PAN (if available), name, status code, contact number, e-mail, overseas address, TRC number, tax identification number and percentage share.
- Date of agreement and date of registration (if available).
- Total stamp duty value and total sale consideration.
- Whether payment is lump sum or in instalments, and for a subsequent or last instalment, the acknowledgement number of the earlier Form No. 141.
- For each seller: type of capital gain, amount paid now, amount paid earlier, amount on which tax is deducted, rate, section 395 certificate numbers, tax deducted and date of deduction.
How Does This Affect Buyers, NRI Sellers and CAs?
Resident individual and HUF buyers
The compliance burden drops from four steps (TAN application, challan, quarterly return, certificate) to two (Form No. 141 and Form No. 132). The legal duty to deduct is unchanged. If you pay without deducting, section 448 of the Income-tax Act, 2025 allows a penalty “equal to the tax which such person failed to deduct or pay”, on top of interest.
NRI sellers
Credit for the tax depends on the buyer filing Schedule E correctly with your PAN (or the rule 217 details). Give the buyer your TRC and tax identification number early. If your actual gain is small compared with the sale price, apply for a section 395 certificate well before completion so that tax is deducted on the gain rather than the full price.
CAs and advisers
Update engagement checklists for property closings from 1 October 2026. For clients who have already been allotted a TAN for an NRI purchase, check which route applies to each instalment. The Rules do not spell out how a transaction that began under a TAN switches to Form No. 141 midway. Confirm the portal treatment before the first post-October instalment is paid.
Compliance Checklist for a Property Purchase From an NRI After October 1, 2026
- Confirm the seller’s residential status for the tax year of transfer, and your own status (resident individual or HUF).
- Obtain the seller’s PAN, or the full rule 217 set: contact details, overseas address, TRC and tax identification number.
- Ask whether the seller holds a section 395(1) or 395(6) certificate. If the gain is small, consider a section 395(2) application yourself.
- Fix the rate: long-term (12.5% plus surcharge and cess) or short-term (rates in force), based on the holding period.
- Deduct tax on every instalment, including the token advance, not only on the final payment at registration.
- File Form No. 141 with Schedule E and pay the tax within 30 days from the end of the month of deduction. Each joint buyer files separately.
- Download and issue Form No. 132 to the seller within 15 days from the Form No. 141 due date. Keep the acknowledgement for the next instalment.
Frequently Asked Questions
Do I still need a TAN to buy property from an NRI after October 1, 2026?
Not if you are a resident individual or HUF. Section 397(1)(c)(iii) of the Income-tax Act, 2025, as substituted by the Finance Act, 2026 with effect from 1 October 2026, removes the TAN requirement for that deduction. Companies, firms, LLPs and non-resident buyers still need a TAN.
What is the due date for Form 141 when buying from a non-resident?
Within 30 days from the end of the month in which the tax is deducted. For a deduction on 10 October 2026, Form No. 141 and the payment are due by 30 November 2026.
Is there a Rs 50 lakh threshold for TDS on property bought from an NRI?
No. The Rs 50 lakh threshold and the 1% rate belong to the resident-seller entry, section 393(1) [Table: Sl. No. 3(i)]. Purchases from a non-resident fall under section 393(2) [Table: Sl. No. 17], which has no threshold and applies the rates in force.
Which certificate do I give the NRI seller?
Form No. 132, generated from the income-tax portal, within fifteen days from the due date for furnishing the Form No. 141 (rule 215(1), Table Sl. No. 3, as amended).
What if I paid part of the price in September 2026 under a TAN?
Tax deducted before 1 October 2026 follows the TAN route: challan, the quarterly Form No. 144 for the July to September quarter, and Form No. 131. For later instalments the Form No. 141 route becomes available. Because the Rules do not address the switch-over expressly, confirm the portal position before filing.
The Bottom Line
Notification 121/2026 removes the most complex step in buying a home from an NRI: registering as a deductor. The duty to deduct, the rate and the certificate route are unchanged, and the new 30-day clock is strict. Collect the seller’s PAN or rule 217 documents before the payment date and file Schedule E correctly. The payment then becomes a single online filing. For related changes under the new Act, see our guides to the new TDS and TCS return forms from FY 2026-27, the capital gains transition under the Income-tax Act 2025 and the top 10 changes under the Income-tax Act 2025.
Buying from an NRI, or advising a client who is? Tax Update India can help you work out the rate, the certificate route and the Schedule E filing for your transaction before the payment date. Get expert guidance on a quick call.
Sources
- CBDT Notification No. 121/2026 [F. No. 370142/29/2026-TPL], G.S.R. 830(E), New Delhi, 22 September 2026, Income-tax (Fifth Amendment) Rules, 2026. Source: https://www.incometaxindia.gov.in/documents/d/guest/notification-no-121-2026-pdf, retrieved 25 September 2026.
- Income-tax Act, 2025 as amended by the Finance Act, 2026 (sections 393(2) Table Sl. No. 17, 395, 397(1)(c) with footnote “Substituted by the Finance Act, 2026, w.e.f. 1-10-2026”, 397(2), 448). Source: https://www.incometaxindia.gov.in/documents/d/guest/income_tax_act_2025_as_amended_by_fa_act_2026-pdf, retrieved 25 September 2026.
- Income-tax Rules, 2026, consolidated text (rules 215, 217, 218, 219), Income Tax Department. Source: https://www.incometaxindia.gov.in/income-tax-rule-2026.
- Status per rule: Income-tax (Fifth Amendment) Rules 2026 = IN FORCE (1 October 2026; Regulatory Status Ledger row 2026-09-25).
Disclaimer: This article is for general information only and does not constitute tax or legal advice. Statutory provisions have been cited from primary sources as retrieved on 25 September 2026. The tax treatment of a property transaction depends on the facts, including residential status, holding period and any certificate issued under section 395. Please consult a qualified professional before acting.
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