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Purchasing property from a Non-Resident Indian (NRI) has long been considered a complicated process due to strict tax deduction and compliance requirements. However, this is set to change significantly from 1 October 2026, as the Union Budget 2026 has proposed a major relaxation in Tax Deducted at Source (TDS) compliance rules. The move is expected to bring much-needed relief to individual homebuyers and Hindu Undivided Families (HUFs), making property transactions with NRIs far more straightforward.

The proposed amendment aims to reduce unnecessary procedural burdens and align NRI property transactions more closely with those involving resident sellers. Experts believe this change will improve transparency, ease of doing transactions, and overall taxpayer convenience.

Why Buying Property from NRIs Has Been Difficult So Far

Under the current tax framework, buying property from a resident seller is relatively simple. The buyer can deduct TDS and deposit it using Form 26QB, which functions as a challan-cum-statement. Importantly, in such cases, the buyer is not required to obtain a Tax Deduction and Collection Account Number (TAN).

However, the situation has been very different when the seller is an NRI. In such transactions, the buyer is treated similarly to a business deductor and must follow multiple compliance steps, including:

• Applying for a TAN

• Deducting TDS at prescribed rates

• Depositing the deducted tax with the government

• Filing regular TDS returns

For most individual buyers purchasing a single residential property, these requirements have been excessive and time-consuming. The need to obtain a TAN solely for one property transaction has been a major pain point.

What Will Change from 1 October 2026?

To address these challenges, the government has proposed a key reform in Budget 2026. From 1 October 2026, if a resident individual or HUF purchases property from an NRI, they will no longer need to apply for a TAN for deducting TDS.

Instead, the government plans to introduce a simplified challan-cum-statement or return form, similar to the mechanism currently used for transactions involving resident sellers. This will allow buyers to deduct and deposit TDS without undergoing business-style compliance procedures.

In practical terms, this means the procedural complexity involved in NRI property transactions will be significantly reduced, making the process far more user-friendly for individual taxpayers.

Legal Amendments Behind the Change

At present, Section 397(1)(a) of the Income Tax Act, 2025 mandates that any person responsible for deducting or collecting tax must apply for a TAN. While Section 397(1)(c) provides certain exemptions, transactions involving property purchases from NRIs were not included in these exceptions.

Recognising the hardship faced by individual buyers, the government has proposed amending Section 397(1)(c). The amendment aims to exempt resident individuals and HUFs from the requirement of obtaining a TAN when buying property from an NRI, as long as the transaction falls under Section 393(2).

This legal change forms the backbone of the simplified compliance framework and reflects the government’s intent to rationalise tax procedures.

Why This Reform Is Important for Homebuyers

The proposed amendment is being widely welcomed for several reasons:

• It removes unnecessary compliance for one-time property buyers

• It reduces administrative and procedural delays

• It improves ease of property transactions involving NRIs

• It aligns with the government’s broader goal of simplifying tax laws

• It encourages transparency and smoother real estate dealings

By eliminating the need to obtain a TAN for a single transaction, the government has addressed one of the most common concerns raised by individuals purchasing property from NRIs.

What Buyers Should Keep in Mind

While the compliance process will become simpler, buyers will still be responsible for deducting TDS at applicable rates and depositing it within the prescribed timelines. Detailed operational guidelines and the new challan-cum-statement format are expected to be notified closer to the implementation date.

Tax experts advise buyers to stay updated with official notifications and consult professionals if required, especially for high-value transactions.

The Bottom Line

The proposed changes effective from October 2026 mark a significant step toward making NRI property purchases more accessible for resident individuals and HUFs. By reducing compliance burdens and aligning procedures with resident property transactions, the government has demonstrated a clear intent to simplify tax laws and improve taxpayer experience.

For prospective homebuyers dealing with NRIs, this reform could mean fewer hurdles, faster transactions, and greater clarity—making property ownership a smoother journey than before.