The Central Board of Direct Taxes (CBDT) has further simplified Tax Deduction at Source (TDS) compliance for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers. Pursuant to the relief introduced through the Finance Act, 2026, such buyers will not be required to obtain a Tax Deduction and Collection Account Number (TAN) for deducting tax on the purchase consideration with effect from October 1, 2026. The TDS can instead be reported and deposited through the prescribed PAN-based challan-cum-statement mechanism.
To operationalise the new mechanism, the CBDT has issued Notification No. 121/2026 [G.S.R. 830(E)] dated September 22, 2026, notifying the Income-tax (Fifth Amendment) Rules, 2026. The notification amends the Income-tax Rules, 2026 and will come into force from October 1, 2026.
TAN exemption gives effect to Budget 2026 announcement
The measure gives effect to the Union Budget 2026-27 announcement aimed at reducing the compliance burden on resident individuals and HUFs purchasing property from non-residents. Earlier, while a buyer purchasing property from a resident seller could comply without obtaining TAN, a resident buyer purchasing property from a non-resident seller was required to obtain TAN even where the property purchase was an isolated transaction.
The Finance Act, 2026 amended section 397(1)(c) of the Income-tax Act, 2025 so that a resident individual or HUF deducting tax on consideration for transfer of immovable property under section 393(2) [Table Sl. No. 17] is exempt from the requirement to obtain TAN, effective October 1, 2026.
PAN-based Form No. 141 to become the compliance route
CBDT has accordingly amended Rules 215, 218 and 219 to bring deductions under section 393(2) within the prescribed challan-cum-statement framework. Rule 218 has been expanded to cover consideration for transfer of immovable property paid or credited by a resident individual or HUF, while Rule 219 has been amended to include such transactions within Form No. 141 compliance.
Form No. 141 is the unified PAN-based challan-cum-statement prescribed under the Income-tax Rules, 2026 for reporting and depositing specified TDS payments. The Income Tax Department has officially described Form No. 141 as a PAN-based challan-cum-statement.
Consequently, from October 1, 2026, an eligible resident individual or HUF purchasing property from a non-resident will be able to undertake the prescribed TDS payment and reporting without first obtaining a separate TAN.
New Schedule E introduced in Form No. 141
A major change under Notification No. 121/2026 is the insertion of a dedicated Schedule E in Form No. 141, titled:
“TDS on any consideration on transfer of any immovable property covered under section 393(2) [Table: Sl. No. 17].”
The heading of Form No. 141 has also been expanded to expressly cover deductions under section 393(2).
The new Schedule E creates a specific reporting mechanism for a resident individual or HUF purchasing immovable property from a non-resident, thereby moving the transaction from the earlier TAN-oriented compliance structure to a transaction-specific PAN-based reporting framework.
Extensive property and buyer details required
Schedule E requires details relating to the address of the property, type of immovable property — land other than agricultural land, building or part thereof, or both — as well as details of all buyers, including their PAN, names and respective proportion of the total sale consideration.
The buyer will also be required to report the date of agreement, date of registration wherever available, total stamp duty value and total sale consideration of the property.
Lump-sum as well as instalment payments covered
The new form specifically requires the buyer to state whether the consideration is being paid in lump sum or instalments.
Where payment is made in instalments, the buyer must identify whether the payment represents the first, subsequent or last instalment. For subsequent or final instalments, the previous acknowledgement number may also have to be furnished, along with specified information regarding consideration already paid or credited.
Detailed disclosures for non-resident seller
The compliance framework requires detailed information regarding the non-resident seller or deductee. This includes the seller’s PAN, if available, name, status, contact number, email ID and overseas address.
The notification specifically provides that the non-resident deductee’s contact number, email ID and address in the country or specified territory outside India must be furnished irrespective of whether the non-resident has a PAN.
Where the non-resident does not have PAN, prescribed particulars relating to the Tax Residency Certificate (TRC) and Tax Identification Number (TIN) are required to be furnished in accordance with Rule 217 for ensuring that tax is not deducted at the higher rate merely on account of non-availability of PAN, subject to fulfilment of the prescribed conditions.
Seller can be an individual as well as other non-resident entities
Significantly, the notification is not confined only to an “NRI individual”. Schedule E provides status codes for different categories of non-resident sellers, including a company other than a domestic company, individual, HUF, association of persons, co-operative society, firm, body of individuals, artificial juridical person and others.
Accordingly, it is more appropriate to describe the new mechanism as applying to specified purchases of immovable property from a “non-resident seller”, rather than limiting the description only to an NRI seller.
Capital gains and TDS computation particulars to be reported
Schedule E also requires transaction-level TDS information, including the seller’s PAN and name, nature of capital gains, proportionate stamp duty value, amounts paid in earlier instalments, amount paid or credited in the current transaction, date of payment or credit, amount on which tax is deductible, applicable TDS rate, amount of TDS and date of deduction.
Details of certificates for lower or nil deduction obtained under section 395, wherever applicable, are also required to be reported.
TDS amount to include surcharge and cess
The notification expressly clarifies that the amount of tax deducted at source will include surcharge, wherever applicable, and cess. Further, where there is more than one deductor/buyer, each deductor is required to file a separate form. Certain information in Form No. 141 will be pre-filled to the extent possible.
Form No. 132 also amended
CBDT has also amended Form No. 132 to specifically recognise the transfer of immovable property by a non-resident to a resident individual or HUF. Corresponding changes have been made in the relevant notes and references in the form.
Form No. 141 to be furnished within prescribed 30-day timeline
Since the transaction has now been brought within Rule 219(5), the challan-cum-statement in Form No. 141 is required to be furnished within 30 days from the end of the month in which the deduction is made, in accordance with the prescribed framework under Rule 219.
Simpler procedure, but TDS responsibility of buyer continues
The amendment primarily simplifies the procedural mechanism for payment and reporting of TDS by removing the need for a separate TAN and allowing compliance through the PAN-based challan-cum-statement.
It does not remove the buyer’s obligation to correctly determine and deduct the applicable tax. The resident buyer remains responsible for ensuring proper deduction, including applicable surcharge and cess, and for furnishing the prescribed particulars in Form No. 141.
Given the extensive disclosures required under Schedule E, buyers would also need to obtain relevant information from the non-resident seller, including overseas contact and address particulars and, where applicable, tax residency and foreign tax identification details, before completing the TDS compliance.
Effective Date
The Income-tax (Fifth Amendment) Rules, 2026 will come into force from October 1, 2026.
The Notification can be accessed at: https://www.incometaxindia.gov.in/documents/d/guest/notification-no-121-2026-pdf
