Buying From NRIs: TAN-Free

For a time people in India who wanted to buy a premium property from a Non-Resident Indian or NRI for short had to deal with a lot of administrative hassle. When Indians bought properties from Indians they just had to deduct a small amount of tax based on their Permanent Account Number or PAN.. When they bought from an NRI things got really complicated.

As of April 1 2026 the Income Tax Act of 2025 changed things for the better. Now people who buy properties from NRIs do not need to get a Tax Deduction and Collection Account Number or TAN. This is a relief for homebuyers.

The government is trying to make taxation more citizen-friendly. They want to make sure that people who occasionally buy properties do not have to deal with tax rules.

1. The Old Problem: Why TAN Was a Headache

Before, when people bought properties from NRIs they had to follow a lot of rules. They had to get a TAN, which was a registration process that required a digital signature. They also had to file tax returns every quarter, which was a lot of work. If they did not do this they would get notices from the tax department. All of this cost money around 15,000 to 30,000 rupees.. When the deal was done, giving up the TAN was a big hassle.

2. The New Rule: Section 402 of the Income Tax Act 2025

The new law makes things simpler for people who buy properties from NRIs. Now they can just use their PAN or Aadhaar number to deduct and pay tax. There is a form, Form 170 that covers all property-related tax. This form is used for all property transactions whether the seller is an Indian or an NRI.

3. Understanding Tax Rates

It is essential for buyers to know that while the process is simpler the tax rates are still different for NRIs. If the seller is an Indian the buyer deducts 1% of the property value.. If the seller is an NRI the buyer has to deduct tax based on the capital gains rules. This can be 20% plus charges.

4. The New Process: How to Buy from an NRI in 2026

The tax department has made a Property Cell" to help with these transactions. Here is what buyers need to do:

First they need to check the sellers residency status. Then they need to get a Lower Deduction Certificate if the seller provides one. Next they fill out Form 170 on the tax portal enter the sellers PAN and pay the tax. They get a receipt instantly which they can use to register the property.

5. What This Means for Sub-Registrars

The law tells Sub-Registrars not to ask for TAN-based documents for NRI transactions. The registration software is linked to the tax portal so once the buyer pays the tax the system automatically clears the registration.

6. Being Careful: Avoiding Tax Problems

Buyers need to be careful not to deduct little tax. If they do they will be responsible for the shortfall. It is an idea to get a Taxation Liability Report from the seller to avoid problems.

7. Benefits, for NRI Sellers

This new law helps NRI sellers too. They get their tax credit faster. They can claim refunds more easily. They also get notifications when the buyer pays the tax, which makes things more transparent.

8. A Big Step Forward

The government has made a change that will help people buy properties from NRIs. It is now easier and less complicated. The real estate sector will benefit from this. It will be easier for Indians living abroad to sell their properties. People who are planning to buy a property should make sure the sellers PAN is active and updated.