Budget 2026: NRI Property Sales to Implement New PAN-Based Chalan System for TDS Starting October 1
The Union Budget 2026 has introduced significant changes aimed at simplifying tax compliance for property transactions involving non-resident sellers. The proposal allows resident buyers to deduct and deposit Tax Deducted at Source (TDS) using their Permanent Account Number (PAN) instead of requiring a Tax Deduction and Collection Account Number (TAN). This change is expected to ease the compliance burden for one-time transactions, making the process more efficient for buyers and sellers alike.
Changes to Tax Compliance Requirements
Currently, resident individuals or Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers must obtain a TAN to deduct TDS. The Union Budget 2026 proposes to eliminate this requirement, allowing buyers to use their PAN for tax deductions. Chartered Accountant Jigar Suba noted that the removal of the TAN requirement is a positive development, as TAN serves no purpose beyond this specific transaction. By enabling buyers to deduct and deposit taxes using their PAN, the government aims to streamline the process and reduce the overall compliance burden.
This change is particularly beneficial for non-resident sellers, as it is expected to shorten the time required to complete property transactions and register sale deeds. The new provisions will come into effect on October 1, 2026, marking a significant shift in how property transactions are handled in India.
Current Compliance Landscape
Under the existing regulations outlined in Section 397(1)(a) of the Income Tax Act, individuals who deduct or collect tax must apply to the assessing officer for a TAN. However, there are exceptions under Clause (c) of the same section, which states that TAN is not required in certain cases. Presently, buyers purchasing property from resident sellers do not need to obtain a TAN for TDS deductions. In contrast, the requirement to obtain a TAN for transactions involving non-resident sellers has created unnecessary complications for buyers, who often need it for just a single transaction.
The proposed amendment to Section 397(1)(c) will allow resident individuals and HUFs to bypass the TAN requirement when deducting TDS on payments made for the transfer of immovable property from non-resident sellers. This change is anticipated to alleviate the documentation burden that buyers currently face.
Impact on Property Transactions
Experts believe that the proposed changes will significantly enhance the efficiency of property transactions involving non-resident sellers. By simplifying the tax compliance process, the government aims to reduce documentation hurdles and expedite transaction timelines. The use of PAN-linked reporting and payment systems will ensure that tax compliance is maintained, even as the process becomes more user-friendly for buyers.
This initiative is part of broader efforts by the government to streamline property-related tax compliance and ease procedural requirements for residents engaging in transactions with non-residents. The anticipated outcome is a smoother experience for both buyers and sellers, fostering a more dynamic property market.
Looking Ahead
As the implementation date of October 1, 2026, approaches, stakeholders in the real estate sector are encouraged to prepare for these changes. The removal of the TAN requirement is expected to not only simplify the buying process but also attract more non-resident sellers to the Indian property market. This shift reflects the government’s commitment to making property transactions more accessible and efficient, ultimately benefiting the economy as a whole.
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