Purchasing property from a non-resident seller has traditionally involved additional tax at source (TDS) compliance for resident individual buyers and Hindu Undivided Family (HUFs), including the requirement to obtain a Tax Deduction and Collection Account Number (TAN). A resident individual or HUF purchasing immovable property from a non-resident seller was previously required to obtain a Tax Deduction and Collection Account Number (TAN), deduct the applicable TDS, deposit the tax with the government, file the prescribed TDS statement, and issue a TDS certificate.
For most individuals and HUFs, property purchases are occasional transactions rather than regular business activities. Obtaining a TAN and completing the associated compliance formalities for a single transaction could therefore be cumbersome and time-consuming. This created an additional compliance burden compared with purchasing property from a resident seller, where eligible individual and HUF buyers could deduct and report TDS using their Permanent Account Number (PAN). Effective 1 October 2026, a significant relaxation has been introduced for resident individual buyers and Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers. The change aims to simplify the TDS deduction, payment, and reporting process, bringing it closer to the procedure applicable to purchases from resident sellers.
Under the simplified framework, eligible individual and HUF buyers can deduct TDS using their PAN without obtaining a separate TAN. The change has been implemented through amendments to the Income-tax Rules, 2026. Under the revised provisions, TDS deducted under Section 393(2) of the Income-tax Act, 2025, can be deposited and reported through Form 141, a PAN-based challan-cum-statement. A new Schedule E has been introduced in Form 141 specifically for reporting TDS on property purchases from non-resident sellers.
The revised mechanism brings payment and reporting requirements under a single prescribed form, reducing the procedural complexity previously associated with such transactions. By aligning the process more closely with that applicable to resident sellers, the change makes compliance more convenient for individual buyers who may not be familiar with the procedures followed by businesses and regular TDS deductors.
However, the relaxation simplifies the compliance process; it does not eliminate the buyer’s responsibility to comply with the applicable TDS provisions. Buyers must correctly determine the seller’s residential status, identify the applicable withholding requirements, calculate the tax deductible, and deposit and report it within the prescribed timelines. The applicable TDS rate and other substantive tax requirements have not been changed by this procedural relaxation. The simplified mechanism is specifically available to eligible resident individuals and HUFs and does not extend to companies, firms, or other entities purchasing property form non-resident sellers.
The introduction of a PAN-based TDS mechanism for purchases of immovable property from non-residents is a welcome step towards simplifying tax administration for resident individual and HUF buyers.
By removing the requirement to obtain a separate TAN for eligible transactions and introducing a dedicated reporting mechanism through Form 141, the change reduces paperwork and makes compliance more straightforward. It is a practical step towards ensuring that tax compliance for occasional property transactions is less cumbersome without compromising the underlying tax obligations. Seeking professional tax guidance can help buyers understand the applicable TDS provisions, ensure accurate deductions and timely compliance, and navigate the simplified process with confidence.