Buying Property from an NRI? Form 141 Schedule E Ends the TAN Hassle from 1 October 2026

What changed on 1 October 2026

Buying property from an NRI has always carried a heavier compliance load than buying from a resident. Until 30 September 2026, a resident individual or HUF purchasing from a non-resident seller had to obtain a TAN (a tax deduction account number — an extra registration most home-buyers never otherwise need), deduct TDS, and file the statement in Form 144 through the TRACES portal.

Following the provisions introduced through the Finance Bill, 2026, that changes from 1 October 2026: no TAN is required for these transactions any more. The buyer reports and pays the TDS through Schedule E of Form 141 on the Income Tax e-filing portal, using the buyer’s PAN. What stays the same is the substance — the TDS rate, the fact that it applies on the full consideration, and the buyer’s liability as the deductor.

Which transactions does Schedule E cover?

Schedule E facilitates reporting of TDS on the transfer of immovable property by a non-resident to a resident individual or HUF, under Section 393(2), Table Serial No. 17, of the Income-tax Act, 2025 (the successor to Section 195 of the 1961 Act, in force from 1 April 2026).

Two boundaries to note:

• Buyer side: the no-TAN route is for resident individual or HUF buyers. Other buyer categories continue on their existing compliance track.
• Seller side: Schedule E is for non-resident deductees. If a deal has both resident and non-resident co-sellers, separate forms are needed — Schedule B for the resident seller, Schedule E for the non-resident one.

The TDS rates: what the buyer actually deducts

This is where buyers most often go wrong — usually by applying the familiar 1% resident rule. When the seller is a non-resident, TDS is deducted on the entire sale consideration (not the capital gain), at the rates below. There is no ₹50 lakh threshold like the resident 1% rule under Section 194-IA.

Worked example: an NRI sells a flat for ₹1 crore after holding it 5 years. The buyer deducts TDS at 12.5% plus cess (and surcharge per slab) on the full ₹1 crore — roughly ₹13 lakh at the minimum — even though the seller’s actual tax is only on the gain. The excess is recoverable by the seller through the Indian ITR as a refund, but that takes months. Which is why the lower-deduction certificate below matters.

Step by step: filing Schedule E on the e-filing portal

The Income Tax Department’s outlined process:

1. Log in to the Income Tax e-filing portal with your user ID and password.
2. Go to e-File → e-Pay Tax → New Payment, and click Proceed on the Form 141 payment option.
3. Select the deductee type: Corporate Deductee or Non-Corporate Deductee.
4. Enter deductor particulars: tax year, month of deduction, nature of transaction.
5. Enter the property details: type, complete address, stamp duty value, sale consideration, payment method (lump sum or instalments).
6. Enter all buyers and sellers: PANs, names, the seller’s status, contact details, overseas residential address and each party’s proportionate share.
7. Enter the transaction details: amount liable for TDS, deduction rate, amount deducted, relevant dates. Fields for Tax Residency Certificate and Tax Identification Number details are provided.
8. Select the payment mode, review, and click Pay Now — the TDS is deposited through the bank’s payment page in the same flow.
9. Download the challan receipt; payment details also sit under Payment History on the e-Pay Tax page.

Multiple buyers or sellers

• The buyers’ share percentages must total 100%.
• Where multiple deductees are included in one form, they must belong to the same deductee category and have the same month of deduction — corporate and non-corporate deductees cannot be combined in one form.
• Resident and non-resident co-sellers need separate forms (Schedule B and Schedule E respectively).

Seller’s PAN invalid or unavailable

If the seller’s PAN is invalid or unavailable, tax must be deducted at the higher rate prescribed under Section 397(2) — unless the buyer furnishes, in place of the PAN, the seller’s address in their country of residence, Tax Residency Certificate and Tax Identification Number. Get these documents from the seller before the payment schedule is agreed.

The smart move: get a lower-deduction certificate

Because TDS applies on the full sale consideration, the default deduction usually far exceeds the seller’s actual tax. The NRI seller can apply to the assessing officer for a lower or nil deduction certificate (the Form 13 process) before the deal closes; the officer computes the actual capital gain — purchase price, improvements, reinvestment plans — and certifies the lower rate the buyer may apply. Processing typically takes a few weeks, so this should start when the sale is decided, not when the buyer is found. It is the single most valuable planning step in an NRI property deal.

Buyer mistakes that get expensive

• Applying 1% / Section 194-IA: that section is for resident sellers only. Courts have held buyers liable for the full Section 195/393(2) shortfall plus interest even where the mistake was bona fide (see the ITAT Indore joint-buyer case — ₹5.15 lakh penalty per buyer was deleted on reasonable-cause grounds, but the tax shortfall and interest stood).
• Assuming an Indian address or PAN proves residence: residence depends on days of stay in India under Section 6, year by year. Get the seller’s residential status in writing.
• Deducting on the gain instead of the full consideration: without a lower-deduction certificate, TDS is on the entire price.
• Missing the deposit: a buyer who fails to deduct and deposit is treated as an assessee in default — the department can recover the TDS from the buyer with interest, and penalties follow.

Keep the whole TDS calendar on track with our TDS Hub and the Income Tax Hub; quarterly TDS statements have their own deadlines — see our Q2 TDS return guide for the 31 October filing.

Frequently Asked Questions

Do I still need a TAN to buy property from an NRI?
No — from 1 October 2026, a resident individual or HUF buyer does not need a TAN. The transaction is reported through Schedule E of Form 141 on the e-filing portal using the buyer’s PAN.

What is the TDS rate when buying property from an NRI?
12.5% (+ surcharge + 4% cess) for property held over 24 months — effective roughly 13% to 14.95% — and 30% (+ surcharge + cess, roughly 31.2%+) for property held 24 months or less. It applies on the full sale consideration, with no ₹50 lakh threshold.

What if the NRI seller does not have a PAN?
Deduct at the higher rate under Section 397(2), unless you furnish the seller’s overseas address, Tax Residency Certificate and Tax Identification Number in place of the PAN.

Can I deduct TDS only on the capital gain, not the full price?
Only with a lower or nil deduction certificate (Form 13 process) obtained by the seller from the assessing officer before the transaction. Without it, TDS applies on the entire sale consideration.

The deal has one resident and one NRI co-seller. One form?
No — file separate forms: Schedule B for the resident seller and Schedule E for the non-resident seller.