Kamal Ghorui
The Union Budget 2026 has proposed simplifying tax compliance for property transactions involving non-resident sellers by allowing resident buyers to deduct and deposit TDS using their PAN-based challan instead of obtaining a Tax Deduction and Collection Account Number (TAN).At present, resident individuals or Hindu Undivided Families (HUFs) purchasing immovable property from a non-resident seller are required to obtain a TAN to deduct tax at source. The Budget has proposed removing this requirement, a move aimed at reducing compliance burden for one-time transactions.
Chartered Accountant Jigar Suba told ET: “In the current system, TAN is required to be obtain by a Resident Individual/ HUF whereby he purchases immovable property from a Non-resident. This requirement of obtaining has been removed. This is a welcoming change, since the TAN has no alternative use, except for this single transaction. Now, the buyers will deduct and deposit tax using PAN.” It is to be noted that these provisions are applicable from 1st October, 2026. This will reduce the overall cycle time for completion of sale deal and registering the sale deed, providing a relief to Non- Resident Sellers.” head added. The proposal is part of broader efforts to simplify property-related tax compliance and ease procedural requirements for resident buyers transacting with non-resident sellers.Currently, Section 397(1)(a) of the Income Tax Act requires every person deducting or collecting tax to apply to the assessing officer for allotment of TAN. Clause (c) of the same sub-section provides cases where a person is not required to obtain TAN.Under existing rules, buyers purchasing property from resident sellers are not required to obtain TAN for TDS deduction. However, when the seller is a non-resident, buyers must obtain TAN even if it is required for only a single transaction, creating additional compliance burden.To address this, Budget 2026 has proposed to amend Section 397(1)(c) to provide that resident individuals or HUFs will not be required to obtain TAN to deduct tax at source on consideration paid for transfer of immovable property involving non-resident sellers under Section 393(2).The amendment is proposed to come into effect from October 1, 2026.Experts said the move is expected to reduce documentation hurdles, speed up transaction timelines and make property deals involving non-resident sellers smoother, while maintaining tax compliance through PAN-linked reporting and payment systems.
