Major Relief for Buyers Purchasing Property from NRIs: TAN Requirement Removed from 1 October 2026

As per the erstwhile provisions of section 203 (A), every person who is required to deduct tax  (TDS) or collect tax (TCS) under the TDS chapter is mandatorily required to obtain a TAN  (Tax Deduction and Collection Account Number) from the Assessing Officer. TAN deduction number is required to be quoted in the following documents furnished under TDS provisions: 

Exclusion from acquiring TAN was applicable only under section 194IA (payments for the  purchase of immovable property from resident individuals) as well as section 194IB  (payment of rent exceeding Rs. 50,000 by a non-tax audit individual). Under sections 194IA  and 194IB, TDS challan paid on the Income-tax portal is treated as a TDS return as well.  

As per erstwhile provisions of Income Tax Act, 1961, TAN is mandatorily required to be  obtained by a resident buyer while purchasing a property from a non-resident seller for  deducting TDS under section 195 as well as filing of TDS return/statement post deduction and  payment of any challan u/s 195. Acquiring a TAN is a cumbersome process, even if it was  required for a single transaction.  

To obtain a Tax Deduction and Collection Account Number (TAN), the deductor must:  

1. Apply in Form 49B under Section 203A of the Income-tax Act, 1961.  
2. Submit the application online through the official Protean (earlier NSDL) TAN services  portal or through a TIN Facilitation Centre.  
3. Provide details such as name, address, and contact details. 
4. Pay the prescribed processing fee.  
5. After verification, the Income Tax Department allots a 10-character alphanumeric  TAN. 

     With effect from 1st October 2026, in the Finance Act, 2026, an amendment is introduced to  section 397/erstwhile section 203A. Under this amendment, the provisions relating to the  requirement of obtaining TAN and quote the same while deducting or collecting TDS or TCS  have been made non-applicable to specified entries in section 393(1), 393(2), and 393(4).  Section 397 (1) (c) is reproduced as below:  

(i) a person in respect of a transaction where he is required to deduct tax under section  393(1) [Table: Sl. No. 2(i), 3(i) or 6(ii)]; or  

(ii) A person referred to in section 393(4) [Table: Sl. No. 12.C (a)] in respect of a  transaction where he is required to deduct tax on consideration for transfer of a  virtual digital asset under section 393(1) [Table: Sl. No. 8(vi)]; or  

(iii) a resident individual or Hindu undivided family in respect of a transaction  where he is required to deduct tax on any consideration for the transfer of any  immovable property under section 393(2) [Table: Sl. No. 17]; or  

(iv) A person notified in this regard by the Central Government.] 

Section 393(2) deals with tax deduction on payments made to non-residents that are chargeable  to tax in India. While this section covers various categories of payments to non-residents, the  present relaxation specifically applies to consideration paid for the transfer of immovable  property by a non-resident.  

Therefore, a resident individual or Hindu Undivided Family, in respect of a transaction where  he is required to deduct tax on any consideration for the transfer of any immovable property  under section 393(2), is not required to acquire a TAN. Accordingly, if a resident individual or  HUF purchases an immovable property from a non-resident seller and makes any payment on  or after 1st October 2026, the challan can be paid by quoting only the PAN. The challan 

generated thereunder will be treated as the TDS statement and separate filing of TDS return  will not be required.  

However, if any payment, including token advance, booking amount, or earnest money, is  made before 1 October 2026, the old provisions will continue to apply in respect of that  payment. Accordingly, obtaining TAN and complying with the existing TDS return filing  requirements will remain mandatory for such payments. 

The removal of the mandatory TAN requirement for resident individuals and HUFs purchasing property from NRIs is a welcome move that simplifies tax compliance. Effective from 1 October 2026, eligible buyers can complete TDS compliance by quoting only their PAN, eliminating the need to obtain a TAN or file a separate TDS return for qualifying transactions.

However, buyers should remember that this relief does not eliminate the obligation to deduct and deposit TDS correctly. It only streamlines the compliance process. Moreover, if any payment—including a token amount, booking advance, or earnest money—is made before 1 October 2026, the earlier TAN and TDS return requirements will continue to apply to that payment.

Given the complexities involved in NRI property transactions, obtaining professional tax guidance can help ensure complete compliance while avoiding costly errors or penalties.