A buyer can now complete an eligible NRI property transaction without obtaining a separate tax deduction account number. For a seller abroad, however, the amount withheld at payment can still determine how much money is available after completion. The NRI property TDS change that took effect on 1 October 2026 simplifies a filing route. It does not turn a non-resident sale into a resident sale or cancel the seller’s capital gains tax.
The distinction matters before the first instalment, rather than only at registration. Buyer and seller need to agree who will calculate withholding, which documents support that calculation and how the deducted amount will be recorded against the seller. A simpler form cannot repair an incorrect residence classification or a payment made before an applicable lower-deduction certificate is in place.
Who can use the new NRI property TDS route?
A resident individual or resident Hindu undivided family buying immovable property from a non-resident can use the new PAN-based route. The Budget 2026 explanation addresses the exemption from obtaining a Tax Deduction and Collection Account Number, known as TAN. The September rules amendment supplies the corresponding payment, reporting and certificate arrangements from 1 October.
The Central Board of Direct Taxes added Schedule E to Form 141, the challan-cum-statement used for specified deductions. It also amended Form 132, the certificate issued to the seller. The changes appear in Notification 121/2026, dated 22 September 2026, which expressly states the commencement date.
Eligibility attaches to the buyer’s status as well as the seller’s. A company, partnership or other purchaser should not assume that a form available to a resident individual applies to it. Joint purchasers should establish the status of each buyer separately. The change concerns consideration for immovable property paid to a non-resident, not every payment a buyer might make to someone overseas.
Does PAN-based filing mean less tax is payable?
No. PAN identifies the taxpayer, while TAN identifies a person deducting or collecting tax. Removing the requirement for an eligible buyer to obtain TAN changes administration. Tax deducted at source remains a collection mechanism, and the seller’s eventual liability must still be calculated under the applicable tax rules.
What should happen before the sale agreement?
The parties should establish the seller’s Indian tax residence before choosing a withholding route. A foreign address, an Indian passport and an OCI card do not by themselves settle residence under Indian income-tax law. The relevant status must be checked against the tax rules for the transaction.
This is also the point to assemble the ownership records. The new schedule asks for the property’s address, its type, the agreement date, consideration and stamp duty value. It distinguishes land other than agricultural land, a building, and both. That wording is a reason to check the asset’s classification rather than treat every parcel of land as an ordinary apartment sale.
For an inherited property or a jointly owned home, establish the ownership shares from the documents. Buyer and seller shares are separately recorded, with each side adding up to 100 per cent. The family member organising the sale from India should not substitute their own PAN for the actual seller’s details simply because they are handling the paperwork.
A useful agreement sets out the payment schedule and responsibility for tax calculation, deposit, filing and delivery of the certificate. These are practical matters for the parties and their advisers to resolve. They should be addressed before an advance is credited or paid, not left as a final-day conversation with the registrar.
Which seller details does Schedule E require?
Schedule E requires more than the seller’s name and PAN. It asks for status, overseas address, email and contact number, with additional tax-residence and identification information where applicable. The notification makes foreign contact and address details mandatory regardless of whether the seller has a PAN.
Where PAN is unavailable, the form notes refer to the prescribed tax residence certificate and overseas tax identification information under rule 217. That does not mean a missing PAN can simply be ignored. The parties need to establish whether the conditions for the relevant treatment are met and which documents support it.
Collect these details while the seller can check them against original records. A misspelt name or the wrong PAN can interfere with the tax credit the seller expects to claim. The person who receives the sale price, the person whose interest is transferred and the person named as deductee need to be reconciled where the transaction has several owners or representatives.
The schedule also provides for more than one seller. A joint sale should therefore be planned as a transaction involving each owner’s share and tax position, rather than as one undifferentiated family receipt. The existence of a common property address does not make all owners’ tax circumstances identical.
What changes at the first payment?
The eligible buyer uses PAN-based Form 141 reporting, but must still determine the amount liable for deduction and the applicable rate. Schedule E separately records the payment or credit date, amount, rate and tax deducted. It allows for applicable surcharge and cess and for a lower-deduction certificate.
This separation is useful: the agreed price is not automatically the seller’s capital gain, and the headline tax rate is not necessarily the complete withholding amount. Acquisition cost, improvement costs, transfer expenses, holding period and any available relief can affect the seller’s calculation. These must be supported by records rather than an informal estimate made to increase the seller’s immediate proceeds.
Official guidance distinguishes long-term and short-term property gains. For property held for more than 24 months, the department’s guidance identifies the 12.5 per cent long-term rate for transfers after 23 July 2024, before applicable additions. A shorter holding period brings different treatment. That headline figure should not be copied into an agreement as a universal rate for every seller and every payment.
Where the proposed deduction differs from the ordinary treatment, establish the lawful basis before paying. Schedule E has fields for the lower-deduction arrangements under section 395. A certificate’s coverage, validity and conditions matter. An application for a certificate and an issued certificate are different stages; a pending request should not be treated as approval.
How does one sale proceed from agreement to completion?
Consider a resident individual purchasing a jointly owned apartment from two non-resident sellers. This is an illustration of the paperwork sequence, not a reported transaction or a calculation of their tax.
Before the advance, the buyer verifies residence and obtains the sellers’ ownership and tax details. The parties identify whether a lower-deduction certificate is relevant and arrange a supported calculation. The agreement specifies the instalments and the amounts attributable to each seller.
At payment, the buyer records when money is credited or paid and the deduction made. Schedule E distinguishes a lump-sum payment from instalments and identifies whether an instalment is the first, a subsequent one or the last. Later instalments can be connected to the previous acknowledgement; the final instalment has fields for earlier and cumulative amounts.
At completion, the buyer reconciles the agreement, payment records and any registration details that are then available. The seller retains the statement acknowledgement, payment evidence and TDS certificate alongside the title and acquisition records. This creates a record of the withholding, separate from the documentation proving that ownership changed.
| Stage | What the change simplifies | What still needs checking |
|---|---|---|
| Before payment | Eligible resident individuals and HUFs can use PAN-based reporting | Buyer eligibility, seller residence and property classification |
| Payment or credit | Schedule E provides the non-resident property reporting route | Amount liable for deduction, rate, additions and certificate conditions |
| Instalments | The form records payment stages and previous acknowledgements | Each payment’s timing and attribution to sellers |
| After filing | The amended Form 132 records the seller’s TDS certificate | Correct identity, deposited tax and credit reconciliation |
| Seller’s return | No new exemption from capital gains tax | Final liability, available relief and any refund claim |
What does the seller still need to do after completion?
The NRI seller still needs to reconcile the tax withheld with the tax due on the sale. TDS is a credit towards liability, rather than a promise that the deducted amount is the final answer. A refund may depend on the return and the calculation supported by the seller’s records.
This distinction is particularly relevant when sale proceeds are intended for another purchase, repayment or transfer overseas. The amount arriving in the seller’s account can be lower than the agreed consideration because of withholding. A possible later refund should not be treated as money available on completion day.
The 1 October change also does not decide whether a particular reinvestment qualifies for capital gains relief or whether sale proceeds can be remitted abroad. Those questions have their own conditions and documents. The seller should keep the tax work and banking work connected, while asking the appropriate adviser or bank to check each set of requirements.
What should buyers and sellers ask before the next instalment?
Ask whether the buyer qualifies for the PAN route, whether every owner’s residence and share have been checked, and whether the calculation matches the payment being made. Then ask who will provide the filing acknowledgement and certificate to each seller.
The department’s Form 141 guidance explains the general statement and payment process. Read it alongside the September notification adding Schedule E: older descriptions listing only the resident-property schedule are incomplete for the new non-resident route. In particular, do not import the resident-property threshold into a non-resident sale merely because both use Form 141.
Readers dealing with wider financial arrangements can follow related business coverage and policy reporting. For the sale itself, the next useful step is to assemble one checked transaction file before the next credit or payment, then confirm the applicable filing instructions with the Income Tax Department or the tax professional handling the sale.
