Budget 2026 Bombshell: TAN for NRI Property Sale No Longer Required : Buyer Now Deducts TDS via PAN

Last Updated on September 3, 2026 by Shitiz Srivastava

Franky I didn’t know that there was a requirement of TAN for NRI property sale.

A friend of mine lives in Dubai. He’s been trying to sell a flat he owns back in India for a while now, and every time he gets close, the same thing happens. The buyer hears the word “TDS,” asks a follow-up question, and then goes quiet for a week. Turns out most of these buyers had never heard of a TAN before, and once they found out they’d need to apply for one just to buy his flat, more than one of them simply lost interest and walked.

In case you don’t know, what is the difference between the two, TDS is the tax obligation, TAN is the ID you use to report it to the government.

But that’s not a one-off story. It’s been the reality for pretty much every NRI trying to sell property in India, and it’s the exact problem Budget 2026 has gone after. So let’s find out whether we are getting away with TAN for NRI property sale.

Why buyers kept running away

Here’s the thing that made no sense for years but kept going on.

If a resident Indian buys property from another resident, deducting TDS is trivial like 1%, using their own PAN, done in an afternoon.

But the moment the seller is an NRI, the entire process changes. The buyer suddenly needs a TAN, a Tax Deduction and Collection Account Number, which is really meant for businesses that deduct tax on a recurring basis. Not for someone buying a house once in their life.

So a first-time buyer would find themselves applying for a TAN for NRI property sale, waiting for it to come through, and then filing a quarterly return (Form 27Q) instead of the simple challan everyone else uses.

None of this had anything to do with the property. It was pure paperwork friction, and it fell entirely on the buyer’s shoulders for a transaction they’d probably never repeat.

Unsurprisingly, a lot of buyers just avoided NRI-owned properties altogether.

Not because the property was a bad deal but because the compliance felt like a hassle not worth taking on. And that reluctance was quietly costing NRI sellers a smaller buyer pool, longer holding periods, and weaker negotiating position.

Also Read : Property Sale Registration in Dubai: What It Is and Why It Is Legally Mandatory

What actually changed and is there still TAN for NRI property sale

In the Union Budget 2026–27, Finance Minister Nirmala Sitharaman did away with the TAN requirement for resident individual and HUF buyers purchasing property from an NRI.

From 1 October 2026, the buyer deducts TDS exactly as before, but deposits it using their own PAN through a challan-cum-statement; the same kind of process already used in resident-to-resident deals via Form 26QB. No TAN application. No Form 27Q.

That’s it. That’s the whole reform, and it’s a good one precisely because it’s this narrow.

What this doesn’t change, and why that matters

There’s been a fair bit of overexcited social media commentary treating this like a tax cut for NRIs. It isn’t. The buyer still has to deduct TDS; this just changes how it gets deposited, not whether it happens.

TDS rates haven’t moved if anyone is under misconceived notion. Long-term capital gains on NRI property sales are still taxed at 12.5% without indexation under Section 112, and the effective rate with surcharge and cess can still run close to 15%, deducted on the full sale value unless you’ve obtained a lower or nil deduction certificate.

That certificate process is untouched, if your actual gains are much lower than your sale price, you still need to apply for it before the deal closes, same as always.

The relief is also narrower than headlines suggest. It only applies where the buyer is a resident individual or HUF. If a company, LLP, or firm is buying the property, say, in a developer buyback, they still need a TAN for NRI property sale, still file Form 27Q, nothing changes for them. For most ordinary resales, though, that’s not who’s on the other side of the table, so the relief covers the situation you’re actually likely to be in.

And repatriation rules haven’t budged either. The USD 1 million per year cap on moving money out of an NRO account is exactly where it was before this budget.

Also Read : How Do I Transfer Dubai Property Sale Proceeds Overseas?

Why it’s still worth caring about

None of the above should undersell what this actually fixes. The tax bill for an NRI selling property in India is unchanged. But the thing that was killing deals wasn’t the tax, it was the buyer’s reaction to the compliance burden. Remove that, and you remove the single biggest reason resident buyers hesitated on NRI-owned property in the first place.

Practically, that should mean deals close faster, since nobody’s waiting on a TAN application before registration can go ahead. It should mean more buyers are willing to consider your property at all, since the process now looks almost identical to any other resale.

And it should mean fewer errors on the buyer’s end holding up your Form 16A or 16B, since a PAN-based challan is something most Indian buyers already understand.

Also Read : Dubai Myths vs Reality 2026: Tax-Free Truth, Property Hype & Legal Risks

What you should still do

Selling from Dubai doesn’t get any less deliberate just because the paperwork got shorter for your buyer. A few things are still on you:

Apply for a Lower or Nil TDS Certificate if your capital gains are meaningfully below your sale price otherwise the deduction happens on the full amount, and you’ll be chasing a refund later.

Make sure your buyer actually understands their obligation still exists; TAN for NRI property sale is gone, but the deduction and deposit obligation is not, and if they get it wrong, it’s your TDS credit that gets delayed.

Keep your PAN active and your NRI documentation current, since the whole new mechanism runs through PAN rather than TAN for NRI property sale. And if your sale has any flexibility on timing, keep 1 October 2026 in mind anything closing before that date still goes through the old TAN-based route.

My friend, for what it’s worth, is holding off listing his flat again until October. After the year he’s had trying to explain what a TAN is to three different buyers, he’s not in a rush to test it under the old rules one more time.

This article reflects the position announced in Union Budget 2026–27 and is meant as general information, not a substitute for advice on your specific transaction.