Purchasing a property from a non-resident India would be a nightmare for resident Indians. But a Union Budget 2026 proposal has altered the scene for Indian buyers with a single regulatory tweak.
Finance Minister Nirmala Sitharaman has proposed that resident buyers acquiring property from NRIs can deduct and deposit tax deducted at source (TDS), a mandatory upfront 1% tax, through their own resident PAN-based challan.
Prior to the announcement, one would have to specially acquire a Tax Deduction and Collection Account Number (TAN) to pay this TDS, which is levied on all immovable property transactions and deposited by the buyer of the property.
“One had to acquire a TAN, which is usually issued only to corporates. Additionally, after acquiring the TAN, the resident individual had to deposit the tax through this and even file a TDS return. It is difficult to file this in their own capacity and hence they would have to engage the services of tax professionals,” says Karan Batra, managing partner at KN Global Consultants.
TDS on the sale of immovable property by a non-resident is levied at the rate of 1% if the permanent account number (PAN) is available, and increases to 20% in the absence of PAN.
Procedure simplified
“Too far into the deal, one would realise that tax deduction at source, which is mandatory for all immovable property sales, required too many steps and professional help. The procedure has now been simplified and Indians would be easily able to acquire properties owned by NRIs in India,” says Batra.
Resident Indians can now simply deposit the TDS, like they do for rental income etc, using their own PAN and account for them in their own tax returns, instead of filing another TDS return.
Additionally, another move has protected Indian residents who owned foreign non-immovable property up to ₹20 lakh and failed to disclose the same in their tax returns from prosecution. This immunity from prosecution would be applicable from 1 October 2024.
“Here, resident individuals who were working for foreign companies and had employee stock options from foreign firms, US stocks or foreign bank assets would have to pay tax on the assets, but the reporting requirement has been done away with,” says Batra.
Harsh punishments such as imprisonment would not be offered for not disclosing such income from foreign assets like ESOPs, bank accounts and stocks up to a limited ₹20 lakh. They currently do not have to pay any penalty for non-disclosure anyway.
