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Buying property from a Non-Resident Indian (NRI) is set to become significantly easier from a tax compliance perspective. The Union Budget 2026 has proposed a key reform that will reduce procedural burdens for resident buyers. From October 1, 2026, resident individuals and Hindu Undivided Families (HUFs) purchasing property from NRIs will no longer be required to obtain a Tax Deduction and Collection Account Number (TAN) for deducting Tax Deducted at Source (TDS).

Instead, the government plans to introduce a simplified challan-cum-statement or return form, similar to the one currently used when purchasing property from resident sellers. This move is being seen as a major step toward simplifying property transactions involving NRIs.

Why Buying Property from NRIs Has Been Complicated So Far

Under the existing tax framework, the rules for purchasing property differ significantly depending on whether the seller is a resident or a non-resident.

When a buyer purchases property from a resident seller, TDS can be deposited easily using Form 26QB, which is a challan-cum-statement. In this case, the buyer does not need to apply for a separate TAN, making the process relatively straightforward for individual taxpayers.

However, the situation is very different when the seller is an NRI. In such cases, the buyer is treated almost like a business deductor and must comply with multiple formalities, including:

• Applying for a TAN

• Deducting TDS at the prescribed rates

• Depositing the deducted tax with the government

• Filing regular TDS returns, similar to business taxpayers

For most individual buyers, this process becomes cumbersome, especially because the TAN is required only for a single property transaction. Many buyers have long argued that this compliance burden is disproportionate for one-time, non-commercial purchases.

What Will Change from October 1, 2026

The Budget 2026 proposal aims to remove this long-standing pain point. Once the new rules come into effect:

• Resident individuals and HUFs buying property from NRIs will not need to obtain a TAN

• TDS compliance will be completed using a single challan-cum-statement or return form

• The procedure will closely mirror the process followed when buying property from resident sellers

In essence, while the requirement to deduct TDS will remain, the procedural complexity involved in complying with tax laws will reduce drastically.

Alignment with the Government’s Ease of Compliance Agenda

This proposed reform is part of the government’s broader effort to simplify tax laws and reduce unnecessary compliance, particularly for individual taxpayers. Over the past few years, several initiatives have focused on making tax procedures more transparent, digital, and user-friendly.

By removing the need for a TAN in NRI property transactions, the government is ensuring that tax compliance does not become a deterrent for genuine property buyers.

Proposed Legal Amendments Explained

Currently, 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. Although Section 397(1)(c) provides certain exemptions, transactions involving the purchase of property from NRIs were not included in those exceptions.

Recognizing the challenges faced by individual buyers, the government has proposed an amendment to Section 397(1)(c). This amendment seeks to exempt resident individuals and HUFs from obtaining a TAN when purchasing property from NRIs under Section 393(2).

If implemented as proposed, this legal change will formally place NRI property transactions on similar procedural footing as resident-to-resident property deals.

Why This Change Matters

The proposed amendment is being widely welcomed for several reasons:

• It reduces unnecessary compliance for individual taxpayers

• It simplifies property transactions involving NRIs

• It promotes greater transparency and ease of doing transactions

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

By eliminating the need to obtain a TAN for a single transaction, the government has addressed a long-standing issue faced by property buyers dealing with NRI sellers.

Final Takeaway

From October 1, 2026, buying property from an NRI is expected to become far less complex from a tax compliance standpoint. While TDS obligations will continue, the removal of TAN requirements and the introduction of a simplified filing mechanism will make the process smoother, faster, and more taxpayer-friendly.

For individual buyers and HUFs, this reform marks a meaningful shift toward practical and hassle-free property transactions, reinforcing the government’s commitment to ease of compliance in taxation.