- Does removing the TAN requirement actually speed up property deals, or are there still bigger delays in NRI property transactions?
- With PAN-based TDS reporting replacing TAN, what new compliance risks or common errors should resident buyers watch out for?
- Could this simplification result in more automated checks or closer scrutiny of NRI property transactions by the tax department?
- Does this change affect how NRIs plan capital gains tax, repatriation, or reinvestment when selling property in India?
- Is this likely a first step toward wider NRI-friendly real estate reforms, such as lower TDS rates or faster tax refunds?
The Union Budget 2026–27 has brought some major announcements for Non-Resident Indians (NRIs), especially those who still have property, investments, or small business interests in India. The focus this year is clearly on reducing paperwork, simplifying tax rules, and giving NRIs an easier way to meet their tax responsibilities in India.
One of the biggest changes is related to the sale of property by NRIs. Earlier, if an NRI sold a house or land in India, the resident buyer had to get a Tax Deduction and Collection Account Number (TAN) to deduct and deposit TDS. This was a complicated step, particularly because the TAN was needed only for a single property transaction.
As a result, many deals were delayed, and some buyers were even hesitant to go ahead. Under the new proposal, this requirement has been removed. The Budget also includes other measures that make property transactions and tax compliance simpler for NRIs.
Speaking to Financial Express (India), CA Ajay R. Vaswani, founder of Aras and Company and an expert in NRI taxation with over 13 years of experience, explains how these changes are set to impact the NRI community:
Does removing the TAN requirement actually speed up property deals, or are there still bigger delays in NRI property transactions?
The removal of the TAN (Tax Deduction and Collection Account Number) requirement is expected to speed up transactions from a compliance standpoint.
Under the earlier framework, a resident buyer purchasing property from an NRI had to:
Apply for TAN
Wait approximately 7–8 days for allotment
Deposit TDS
File quarterly TDS returns in Form 27Q
This multi-step process often created hesitation among buyers and caused procedural delays, especially where buyers were unfamiliar with NRI tax compliance.
With PAN-based TDS reporting, the process becomes structurally similar to TDS deduction in resident transactions, eliminating the TAN application stage. This reduces paperwork and shortens the compliance timeline.
However, it is important to note that major delays in NRI property transactions often arise from other factors, such as:
Obtaining lower or nil TDS certificates (Form 13)
Documentation and title verification
Capital gains planning and repatriation procedures
Therefore, while the change improves efficiency, it does not remove all transaction bottlenecks.
With PAN-based TDS reporting replacing TAN, what new compliance risks or common errors should resident buyers watch out for?
The simplification of the process does not reduce the buyer’s responsibility. Key compliance risks include:
Incorrect TDS Rate
TDS on purchase from an NRI is generally 12.5% plus applicable surcharge and cess on the sale consideration, not 1% as in resident transactions. Applying the resident rate is a serious default.
PAN Errors
Any mismatch in the seller’s PAN may lead to denial of credit to the seller and subsequent notices.
Wrong Tax Base
TDS must be deducted on the entire sale consideration, not merely on the capital gain component.
Multiple Sellers
Where there are multiple NRI co-owners, TDS must be deducted proportionately for each PAN.
Non-adherence to Lower TDS Certificates
If the seller has obtained a certificate under Section 197 (Form 13), the buyer must strictly follow the specified rate.
Thus, while the mechanism is simpler, errors in rate or reporting can still attract interest, penalties, and notices.
Could this simplification result in more automated checks or closer scrutiny of NRI property transactions by the tax department?
Yes, the move toward a PAN-based system is likely to enhance system-driven monitoring and automated matching.
Previously, compliance flowed through the TDS return (Form 27Q) system, which operated somewhat separately. Greater integration with the PAN-based income tax ecosystem enables faster cross-verification of:
Sale consideration reported
PAN details of buyer and seller
TDS deposited
Capital gains declared in the seller’s return
This does not necessarily imply harsher scrutiny, but it does mean that short deduction, non-payment, or reporting errors may be detected more quickly through automated processes.
Does this change affect how NRIs plan capital gains tax, repatriation, or reinvestment when selling property in India?
No. The reform is procedural and does not alter substantive tax provisions.
There is no change in:
Capital gains computation
Exemptions under Sections 54, 54F, or other reinvestment provisions
Repatriation rules
TDS rate structure
The change only modifies how TDS is deposited and reported, making compliance easier for the buyer. NRI tax planning strategies for capital gains and reinvestment remain unchanged.
Is this likely a first step toward wider NRI-friendly real estate reforms, such as lower TDS rates or faster tax refunds?
This measure can be viewed as a procedural facilitation, as it removes a significant compliance hurdle that discouraged buyers from transacting with NRIs.
However, it does not currently involve:
Reduction in TDS rates
Changes in capital gains tax rates
Faster refund mechanisms
Relaxation of reinvestment conditions
It is therefore an administrative reform aimed at improving ease of compliance, rather than a fiscal concession.
