Buying Property from NRI in India: TDS & Tax Guide

If you are planning to buy property from a Non-Resident Indian (NRI) in India, you need to be aware of some distinct tax regulations. Unlike transactions with resident sellers, there is no minimum limit for Tax Deducted at Source (TDS) when the seller is an NRI.

This means that even for smaller property transactions, you, as the buyer, are responsible for deducting TDS. Resident sellers typically only have TDS applied if the property value exceeds ₹50 lakh.

What Buyers Need to Know

When you’re the buyer in an NRI property sale, there are three crucial aspects to keep in mind. Understanding these will help you navigate the process smoothly.

• You must correctly classify the capital gains as either long-term or short-term.
• You might need to obtain a Tax Deduction and Collection Account Number (TAN).
• You must provide proper proof of TDS payment for the property registration to proceed.

Understanding Capital Gains

The type of capital gain affects the TDS rate you need to deduct. This classification depends on how long the NRI seller owned the property before the sale.

• If the property is sold after two years of ownership, it’s considered a long-term capital gain. The TDS for this is 12.5%, plus any applicable surcharge and cess, as per Section 393(2) of the Income-tax Act, 2025.
• If the property is sold within two years, it results in short-term capital gains. These gains are taxed at the NRI seller’s income-tax slab rate, also with relevant surcharge and cess.

Key Numbers for NRI Property Sales

• No minimum limit for TDS on NRI property sales.
• ₹50 lakh: The threshold for TDS on property sales by resident sellers.
• 12.5%: TDS rate for long-term capital gains from NRI property sales.

Upcoming Changes for Your TAN

There’s an important change coming regarding the Tax Deduction and Collection Account Number (TAN) requirement for buyers. This update was part of Budget 2026 and will simplify the process for many.

Effective October 1, 2026, resident individuals and Hindu Undivided Families (HUFs) buying property from NRIs will no longer need a separate TAN for TDS deposits. Instead, you can use your existing Permanent Account Number (PAN) for transactions on or after this date.

However, if your property sale happens prior to October 1, 2026, you will still need to obtain a TAN. In such cases, you must also file Form 144 or Form 27Q to ensure compliance.

Knowing these dates and requirements helps you handle the tax aspects correctly. Always double-check the current rules based on your transaction date to avoid any surprises.