Buying property from an NRI is easier, but don’t make this 12.5% TDS mistake

Summary

While an administrative step has been removed, it does not dilute the buyer's responsibility for TDS, which is higher when the seller is an NRI.

Buying a house from a non-resident Indian (NRI) involves more tax compliance than buying one from a resident. One part of that process gets simpler from today.

A resident individual or Hindu undivided family (HUF) buying immovable property from an NRI will no longer need a TAN or tax account number just to deduct tax at source on the transaction. Now, the buyer can use PAN and deposit the tax deducted at source (TDS) through Form 141. The form will have a new Schedule E for such transactions.

“Form 141 is not a new form introduced by this notification. It is a consolidated challan-cum-statement that was introduced under the new Income-Tax Act, 2025, for specific TDS transactions. It is already used for depositing TDS on payments by individuals and HUFs to residents, including TDS on purchase of immovable property from a resident. The recent notification has expanded its scope to also cover TDS under Section 393 (2), where a resident individual or HUF purchases immovable property from a non-resident, with a new Schedule E specifically prescribed for such transactions,” said Neeraj Agarwala, senior partner at Nangia & Co LLP.

While this removes an administrative step, it does not dilute the buyer's responsibility for TDS, which is higher when the seller is an NRI.

What changes from 1 October

Until now, an individual or HUF buying a property from an NRI had to mandatorily get a TAN, which could add a few days to the process. A TAN application can be made online, but allotment typically takes about 2 to 10 days, according to Agarwala.