Jalandhar, September 30, 2026 (Yes Punjab News)
In a significant move towards simplifying tax compliance and easing procedural hardships for individual taxpayers, the Central Board of Direct Taxes (CBDT) has introduced a new mechanism for deduction and reporting of tax at source (TDS) on the purchase of immovable property from Non-Resident Indians (NRIs). The changes have been notified through the Income-tax (Fifth Amendment) Rules, 2026, vide Notification No. 121/2026 dated September 22, 2026, and shall come into effect from October 1, 2026.
Under the earlier framework of Section 195 of the Income-tax Act, 1961, a resident individual or Hindu Undivided Family (HUF) purchasing immovable property from a non-resident was required to undertake TDS compliance through a separate procedural mechanism. The requirement of obtaining a Tax Deduction and Collection Account Number (TAN), depositing the deducted tax and filing the prescribed TDS statement often created considerable inconvenience, particularly for individual buyers who were not otherwise engaged in regular TDS compliance.
Recognising these practical difficulties, the new Income-tax Act, 2025, read with the amended Income-tax Rules, 2026, introduces a simplified PAN-based compliance mechanism for eligible transactions covered under Section 393(2), Table Serial No. 17. Consequently, resident individual and HUF buyers will no longer be required to obtain TAN merely for complying with the prescribed TDS requirements in such transactions. This marks an important shift from a TAN-based system towards a more convenient PAN-based reporting framework.
A major highlight of the amendment is the introduction of Schedule E in Form No. 141, specifically designed for reporting TDS on the purchase of immovable property from a non-resident. The schedule provides for comprehensive disclosure of transaction-related particulars, including details of the property, buyer and seller, their respective PANs, residential status of the seller, overseas address, sale consideration, instalment-wise payments, applicable TDS rate and tax deposited. Wherever relevant, details of the Tax Residency Certificate, Tax Identification Number and lower or nil deduction certificate are also required to be considered.
Corresponding amendments have also been made to Form No. 132 to accommodate the revised reporting requirements and ensure consistency in the issuance of TDS certificates.
It is, however, important to appreciate that the amendment represents a simplification of compliance procedures and not a relaxation of the substantive TDS obligation. The applicable rate of deduction must still be determined in accordance with the provisions governing payments to non-residents. The rate applicable to purchases from resident sellers, generally one per cent in specified circumstances, cannot automatically be extended to transactions involving NRIs. The seller’s residential status, nature of the capital asset, applicable tax provisions and availability of a lower or nil deduction certificate must be carefully examined before determining the amount of tax deductible.
Special attention will also be required in cases involving multiple buyers or sellers, joint ownership and payment of consideration in instalments. Proper identification of the respective shares and accurate reporting of each payment will remain essential to ensure compliance and avoid future disputes.
The new mechanism is undoubtedly a noteworthy step towards making tax compliance simpler, more accessible and taxpayer-friendly. By removing the need for TAN in eligible cases and introducing a dedicated reporting schedule, the Government has sought to address a long-standing procedural difficulty faced by individual property buyers dealing with non-resident sellers.
The fundamental principle remains unchanged: simplification of compliance does not mean exemption from tax deduction. Buyers must continue to ensure correct deduction, timely deposit and proper reporting of TDS. For tax professionals, the new provisions present an important area requiring careful attention from October 1, 2026 onwards.
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