Buying property in India from a non-resident seller has long come with a hidden complication: paperwork. In a significant compliance relief measure announced on February 1, Finance Minister Nirmala Sitharaman proposed a change that could make such transactions far smoother for resident buyers.
Under the Budget proposals, Tax Deducted at Source (TDS) on the sale of immovable property by non-residents will now be deducted and deposited by resident buyers using their PAN-based challan. Crucially, this removes the earlier requirement for buyers to obtain a Tax Deduction and Collection Account Number (TAN).
While the move may appear technical, it addresses a long-standing procedural irritant that often delays or complicates one-time property purchases involving Non-Resident Indians (NRIs).
What Has Changed And Why It Matters
Until now, resident buyers purchasing property from non-resident sellers were required to apply for a TAN solely to deposit TDS under Section 195 of the Income Tax Act. For many individuals involved in single transactions, such as buying a house, this additional compliance requirement felt excessive and confusing.
The new proposal aligns the process more closely with Section 194-IA, which governs property purchases from resident sellers. Under the revised system, resident buyers will be able to deduct and deposit TDS directly using their Permanent Account Number (PAN), eliminating the need to obtain a separate TAN.
Importantly, the reform streamlines the operation of Sections 194-IA and 195 of the Income Tax Act without altering substantive tax rates. It also removes ancillary burdens such as e-TDS filings and the issuance of Form 16A, significantly reducing procedural friction.
In simple terms, the tax liability framework remains intact, but the paperwork becomes lighter and more manageable.
A Boost for Real Estate Transactions
Industry stakeholders say the measure could improve sentiment in NRI property transactions by cutting unnecessary red tape.
Shivam Budhiraja, Finance & Automotive Content Creator and Co-Founder of Team Car Delight & Detailing Notch, welcomed the move, stating, “By removing the TAN requirement for NRI property deals and letting buyers use just their PAN for TDS, the government has cut out a lot of unnecessary paperwork. Moreover, foreigners can now buy Indian stocks directly (with a higher 10 per cent limit) is a big win – it’s going to bring more global money into India and make our markets stronger and more active.”
The reform is seen as particularly helpful for individuals engaging in one-off property purchases rather than frequent investors familiar with tax compliance processes.
Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, emphasised the broader impact on investor confidence and noted, “Importantly, the Budget also eases compliance for non resident Indians, by waiving the requirement for a separate TAN for TDS on immovable property sales and allowing resident buyers to use PAN based challans, procedural friction in NRI property transactions is meaningfully reduced. At the same time, broader diaspora friendly tax measures like rationalised TCS on overseas remittances, further reinforce investor confidence and make Indian real estate a more attractive asset class for global Indians.”
How the Burden Shifts
Legal experts note that the amendment also simplifies the compliance load for non-resident sellers.
S. Sriram, Executive Partner, Lakshmikumaran & Sridharan Attorneys, explained, “The burden of non-resident individuals who are selling their immovable property located in India is eased by shifting the tax payment and compliance liability to a resident buyer. This would enable NRIs to sell their properties in India without going through the trouble of obtaining TAN, filing TDS return, etc. Separately, certain taxpayers (students, employees of technology companies, relocated NRI, etc.) who had not disclosed their foreign assets or income have been provided with an additional window for disclosure. Though this would have additional tax liability, it would provide immunity from penalty and prosecution.”
This shift effectively centralises compliance with the resident buyer, who is already part of the domestic tax system, reducing duplication and confusion.
A Wider Compliance Push
The change forms part of a broader attempt in Budget 2026 to simplify tax administration and encourage smoother cross-border transactions. While tax rates remain unchanged, the emphasis has clearly moved towards reducing compliance complexity, especially in areas involving diaspora participation.
For many middle-class families purchasing property from an NRI relative or seller, the earlier TAN requirement often felt disproportionate to the scale of the transaction. By allowing PAN-based TDS payments, the government appears to be acknowledging that compliance processes should match the practical realities faced by ordinary taxpayers.
In a real estate market increasingly shaped by global Indians and cross-border capital flows, even small procedural reforms can have an outsized psychological impact. Less paperwork means fewer delays, reduced professional fees, and greater clarity.
As property markets remain sensitive to transaction costs and ease of doing business, this compliance simplification could quietly play a meaningful role in keeping the NRI investment channel active and efficient.
