Buying Property from an NRI? Here’s How the New  TDS Rules

Buying Property from an NRI? Here’s How the New TDS Rules Make Your Life Much Easier

                                                                     By CMA A Jaiswal, Sumanvi Consultancy Services

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If you’ve ever bought a house, you know the paperwork alone is enough to give you a headache. But if you’re buying from an NRI seller, things used to get even more complicated because of complicated Compliances of Tax Deducted at Source (TDS).

In the past, regular buyers like you and me had to apply for a specialized tax number called TAN and file quarterly tax returns just to pay TDS on an NRI property deal. It felt like running a small company just to buy a home!

Fortunately, as of October 1, 2026, the tax authorities have simplified this process for regular buyers. Here is what changed, what you need to do, and how to avoid costly mistakes.

What’s Changed?

• No more TAN needed: If you are buying property as a resident individual (or an HUF), you no longer need a TAN. You can complete the process using just your PAN.

• One simple form: Instead of juggling payments and separate tax returns, everything is now done through Form 141 (Schedule E). It acts as both your payment challan and your report to the tax department. Consequently, a separate quarterly TDS statement is not required for the transaction covered by this route.

• Who gets this benefit? This simplified process is specifically for regular individuals and HUFs buying from non-resident sellers. If buyer is a company, partnership firm, LLP, or trust, or non-resident individual, they still have to follow the old TAN-based process.

Payment & Filing Deadlines

You get 30 days from the end of the month in which you deducted the tax to pay it and file Form 141.

• Example: If you pay the seller and deduct TDS anytime in October 2026, your deadline to deposit the tax and submit Form 141 is November 30, 2026.

Note: Before you pay the seller, gather all their details—including their overseas address and foreign tax ID—because Schedule E will ask for them. If you’re buying jointly with a spouse or relative, each co-buyer needs to file separately for their respective share.

Giving the Seller Their Tax Certificate

Once you pay the tax, the seller will ask for a TDS certificate so they can claim credit for it.

1. The Form: You will give them Form 132.

2. How to get it: After you file Form 141, the tax portal processes it. Once processed, download Form 132 from the TRACES website, sign it digitally, and send it to the seller.

3. The Deadline: You must hand over Form 132 within 15 days from the due date of Form 141. For an October deduction, Form 141 is due November 30, which means Form 132 is due by December 15. (If the portal processes it faster, you can give it to them sooner.)

Penalties for Missing Deadlines

Missing these dates gets expensive quickly:

• Late Filing Fee: ₹200 per day for every day you are late submitting the form (capped at the total tax amount due).

• Late Payment Interest: 1.5% per month (calculated from the date you deducted the tax until you actually pay it).

• Late Deduction Interest: 1% per month if you fail to deduct the tax on time in the first place.

• Extra Penalties: Incorrect information or severe delays can trigger additional fines ranging from ₹10,000 to ₹1,00,000. However, if you file within one month of missing the deadline and pay all late fees/interest, you are usually safe from this extra penalty.

The Bottom Line

While the paperwork is much simpler now, the tax rates themselves haven't changed, and buying from an NRI still requires extra care.

Before you hand over any money to the seller:

1. Confirm their official tax residency status.

2. Figure out the exact tax rate to deduct.

3. Collect all their foreign contact and tax details.

4. Mark the payment, filing, and certificate deadlines directly on your calendar.

Getting these steps lined up early saves both you and the seller from last-minute stress at the registry office!

This article provides general information. The applicable deduction and compliance should be checked against the facts of each transaction and buyer should contact their legal/financial adviser before executing any such transaction.

Warm Regards

CMA A Jaiswal, founder Sumanvi Consultancy Services, Bengaluru.

Email: sales@sumanvi.com