If you own a property in India and your residential status is non-resident, then there are some income tax considerations you should be aware of when selling that property. For NRIs, the TDS rules state that there is no minimum limit for TDS deduction, while resident Indians have a threshold of Rs 50 lakh before TDS needs to be deducted. Also the TDS rate for NRIs depends on three factors.
First off, whether property sale results in long term capital gain (LTCG) or short-term capital gain (STCG) determines the TDS deduction rate. The buyer must deduct TDS at a specified rate for LTCG and at the slab rate for STCG. For property transactions, if it is sold two years after acquiring, it is LTCG.
Secondly, the buyer must apply for and get a TAN number.
Finally, you need to show the TDS challan to the property registrar for the officials to register the property.
In Budget 2026, the TAN requirement was removed, but this applies from October 1, 2026. So if the property is being sold before October 1, 2026, the previous process requiring the buyer to get a TAN applies.
Here’s what you can expect from these property transactions.
TDS rate for NRI sellers
Chartered Accountant Suresh Surana says when a NRI seller sells his/her India property, the TDS rate is governed by Section 393(2), Table Sl. No. 17 of the Income-tax Act, 2025 and in such cases, the buyer must deduct TDS at applicable rates of 12.5% (plus surcharge and cess) for long-term capital gains and at slab rates of the NRI (plus surcharge and cess) for short-term capital gains.
Without a TDS certificate or TDS challan, the property registrar may not register the property?
Neeraj Agarwala, Senior Partner, Nangia & Co LLP, told ET Wealth Online that unlike resident sellers (where TDS is only 1% under Section 194-IA), TDS on sale of property by NRI is much higher.
Agarwala says: “Accordingly, many states’ sub-registrar offices insist on proof of payment of TDS either in the form of TDS Certificate, in case of lower deduction or no deduction, or TDS challan or both. The idea is to ensure that the requisite TDS has been discharged by the buyer.”
How to get TDS challan
According to Surana, TDS is paid through a challan, and the online challan facility is available from April 1, 2026 as part of the standard TDS compliance system. There is no requirement to obtain a challan in advance. The challan is generated automatically at the time of making the payment on the income-tax portal.
Form 27Q is now being replaced with Form 144 under new Income Tax Rules, 2026, which will be available for filing before July 31, 2026, which is the due date for filing the form.
According to Surana, the process is as follows:
- The property buyer should log in to the Income-tax portal using their TAN credentials.
- Under the “e-Pay Tax” module, the buyer must enter the details of TDS deducted and proceed to make the payment online.
- While filing the challan, the buyer is required to specify whether the seller is a company or a non-company deductee, along with the seller’s residential status. Further, the deductee must select the appropriate deduction description and other TDS details.
- The tax must be deposited within 7 days from the end of the month in which the TDS is deducted, and the challan is generated automatically during this process.
Tax compliances for the buyer if seller if NRI
According to Surana, if a NRI seller is selling their property and this transaction is done before October 1, 2026, then the buyer (person responsible for deducting or collecting tax) is required to obtain a Tax Deduction and Collection Account Number (TAN) and comply with filing requirements under Form 144 of the Income-tax Rules, 2026 [corresponding to Form 27Q of the Income-tax Rules, 1962 (IT Rules 1962)].
Though Budget 2026 has introduced an amendment which removed the TAN requirement, it is still applicable from October 1, 2026.
This amendment was introduced under Section 397(1)(c) of Income Tax Act, 2025 as amended by the Finance Act, 2026, which provides that a resident individual or HUF deducts tax on consideration for transfer of immovable property under Section 393(2) [Table: Sl. No. 17] may deposit TDS using PAN without obtaining a TAN. This relaxation will come into effect from October 1, 2026.
According to Agarwala, here’s how resident property buyers can apply for TAN using the online process:
Step 1: First the resident buyer must apply for a TAN online – https://tin.tin.proteantech.in/tan/index.html. After filling the application form, the acknowledgment duly signed, along with a copy of specified documents like proof of address, identity and date of birth, shall be sent to Protean.
Step 2: Do not forget to superscribe the envelope with ‘APPLICATION FOR TAN – Acknowledgment Number’. Application will be processed after receipt of duly signed acknowledgment and realisation of fee payment.
Further, joint buyers must obtain two separate TANs to deposit their portion of applicable TDS. However, after October 1, 2026, individuals will be able to deposit TDS with their PAN without needing a separate TAN.
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