Income Tax Department eases TDS compliance on property bought from non-residents from October 1, removes…

According to fresh market updates, The Central Board of Direct Taxes (CBDT) has amended the Income-tax Rules, 2026 to change the way resident individuals and Hindu Undivided Families (HUFs) report tax deducted at source (TDS) when buying an immovable property from a non-resident. The new rules will come into effect from October 1, 2026.

The changes have been notified through the Income-tax (Fifth Amendment) Rules, 2026, dated September 22. The amendments specifically bring transactions covered under Section 393(2) of the Income-tax Act, 2025 into the relevant TDS reporting mechanism.

Under the amended rules, Form 141, which is used as a challan-cum-statement for specified TDS payments, has been expanded to cover deductions under Section 393(2). A new Schedule E has additionally been further noted to the form for TDS on consideration paid for the transfer of immovable property covered under the provision.

What changes for buyers purchasing property from an NRI?

The new framework applies where a resident individual or HUF purchases immovable property from a non-resident. The notification amends Rules 215, 218 and 219 to specifically include such transactions in the prescribed TDS payment and reporting mechanism.

Form 132 has additionally been amended to include the transfer of immovable property by a non-resident to a resident individual or HUF.

For the buyer, the key change is the introduction of Schedule E in Form 141. It will require the buyer to provide details of the property, all buyers and sellers, the sale consideration and TDS deducted.

The form seeks the property address, type of property, PAN and names of buyers, and the proportion of sale consideration payable by each buyer. It additionally asks for details of the seller, including PAN where available, status, contact number, email ID and overseas address.

NRI seller's foreign tax details to be noted

For a non-resident seller, the reporting requirements are more detailed. The buyer will have to provide the seller's overseas address, Tax Residency Certificate (TRC) number and Tax Identification Number (TIN), where applicable.

The notification says the non-resident's contact number, email ID and address in the country or specified territory of residence have to be provided even if the seller has a PAN. If the non-resident does not have a PAN, specified tax identification details have to be furnished under Rule 217 to ensure that tax is not deducted at a elevated rate.

The form additionally requires the agreement date, registration date, stamp duty value and total sale consideration. Buyers have to specify whether the payment is being made as a lump sum or in instalments. Where payments are made in instalments, the form captures whether it is the first, subsequent or final instalment and, in certain cases, the previous acknowledgement number.

TDS calculation will additionally have to be noted

Schedule E requires transaction-level information such as the seller's PAN and name, the applicable capital upside category, the proportionate stamp duty value, amounts paid in previous instalments, the amount paid in the current transaction, the date of payment, the amount on which TDS is payable, the TDS rate, tax deducted and date of deduction.

The notification additionally clarifies that the TDS amount noted should include surcharge and cess, wherever applicable. Where there is more than one deductor, each deductor has to file a separate form.

Tax compliance becomes simpler, but buyer's responsibility stays

Aarjav Jain, Executive Director and NRI Tax Expert, Dinesh Aarjav and Associates Chartered Accountants, stated the change addresses a compliance offering that could be easy for individual property buyers.

“From 1 October 2026, a resident individual or HUF can deposit and report this TDS through a single PAN-based challan-cum-statement,” Jain stated.

That stated, the change is in the reporting and payment mechanism, not in the underlying tax obligation. The buyer still needs to deduct the applicable TDS and ensure that the amount, including surcharge and cess where applicable, is correctly noted.

Jain additionally pointed out that the new form requires information that may primarily be available with the seller, including the overseas address, contact details, tax residency information and foreign tax identification number. Buyers should as a result collect these details before completing the transaction.