Budget 2026 Simplifies Property Purchase from NRIs by Removing TAN Requirement
The Union Budget 2026-27 has introduced a significant relaxation for resident individuals and Hindu Undivided Families (HUFs) planning to purchase property from non-resident Indians (NRIs). In a move aimed at reducing compliance burdens, the government has proposed that these buyers will no longer need to obtain a Tax Deduction and Collection Account Number (TAN) for such transactions.
Current vs. Proposed Framework: A Major Shift
Under the existing regulations, when a resident individual or HUF buys immovable property from another resident, they can report Tax Deducted at Source (TDS) by simply quoting their Permanent Account Number (PAN). However, if the seller is a non-resident Indian, the buyer is required to obtain a TAN to deduct tax at source under Section 195 of the Income Tax Act.
The proposed amendment, which is set to take effect from October 1, 2026, will align the process for NRI property sales with that of resident-to-resident transactions. This means resident buyers can now report TDS using their PAN, eliminating the need for a separate TAN registration specifically for this purpose.
Expert Insights: Welcoming the Change
Ameet Patel, partner at Manohar Chowdhry & Associates, highlighted the complexities of the current system. "At present, if a resident were to purchase an immovable property from an NRI, there is no separate relaxation regarding compliance with TDS responsibilities. As a result, in such cases, the buyer needs to obtain a TAN, register on the portal, and then deduct TDS under Section 195, and pay to the government. Under Section 195, as with all other regular TDS sections, a quarterly e-TDS statement is required. A buyer would need professional help for all this," he explained.
Hinesh Doshi, a Chartered Accountant, welcomed the government's decision. "There used to be an unnecessary compliance burden due to this. While the process to obtain TAN is simple, people used to obtain TAN for just one transaction. So, this is a good riddance," he stated, emphasizing how the change will streamline property transactions involving NRIs.
Broader Implications and Benefits
The removal of the TAN requirement is expected to have several positive impacts:
- Reduced Administrative Hassle: Buyers will no longer need to navigate the TAN application process, which involves registration and quarterly filings.
- Cost Savings: Eliminating the need for professional assistance in TAN-related compliance can reduce transaction costs.
- Increased Efficiency: Simplifying the TDS process may encourage more property purchases from NRIs, boosting real estate activity.
- Alignment with Resident Transactions: This move creates a uniform system, making it easier for individuals to understand and comply with tax regulations.
This proposal is part of the government's ongoing efforts to ease compliance burdens and promote a more taxpayer-friendly environment. It reflects a responsive approach to addressing practical challenges faced by common citizens in real estate transactions.
