Property
It is now going to be easier for people living in India to buy property from NRIs. Making an important change, the government has decided that from October 1, 2026, it will not be necessary to obtain Tax Deduction and Collection Account Number (TAN) in such transactions. This will make the process of buying property simpler and faster than before.
What was the rule till now?
Under the current rules, if a person buys property from another person resident in India, he does not require TAN. But if the same property is purchased from an NRI, then it was mandatory for the buyer to obtain TAN to deduct TDS. This process was considered time consuming and complex.
Why was TAN so important?
TAN is a 10 digit alphanumeric number, which is necessary for deducting and depositing tax. To get it, a separate application had to be made, due to which people had to go through additional formalities even in a one-time transaction.
What will change with the new rule?
Under the new rule, now individual buyers and Hindu Undivided Families (HUF) have been exempted from taking TAN. Now buyers will be able to deposit tax through PAN only, as is done in normal property purchase. This will make the entire process easier and user-friendly.
Will TDS still be applicable?
This change does not mean that TDS has ended. When purchasing a property, the buyer will still have to deduct and deposit the tax on time. Tax rates will also remain applicable as before. Long term capital gains will have to be taxed at around 12.5% and short term gains will have to be taxed as per the slab.
Transparency of transactions will be maintained
The government has made it clear that this change will not affect the transparency of transactions. Records will be maintained through PAN of both buyer and seller and tax credit will be reflected in the relevant forms and AIS.
Challenge continues for NRI sellers
However, a problem still remains for NRI sellers. TDS is deducted on the entire transaction amount and not just the profits. Due to this, a lot of their money may get stuck for some time, until the tax refund is processed.
What is its effect?
Overall, this change is being considered positive for the real estate sector. This could speed up NRI property deals and make the process less complicated for buyers.
