Union Budget 2026-27: Big Compliance Relief for Buyers Purchasing Property from Non-Residents

The Union Budget 2026–27 has proposed a significant compliance simplification for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers. This move is expected to ease procedural hurdles and reduce the compliance burden associated with such transactions.

What Has Changed?

While presenting the Union Budget 2026–27, The Finance Minister Smt. Nirmala Sitharaman announced that resident buyers will no longer be required to obtain a Tax Deduction Account Number (TAN) for deducting Tax Deducted at Source (TDS) on the purchase of property from non-residents.

Instead, TDS can now be deducted and deposited by quoting the Permanent Account Number (PAN) of the resident buyer, aligning the process with property transactions involving resident sellers.

This proposed change will come into effect from 1 October 2026.

Existing Challenge

Under the current framework, when a resident individual or HUF purchases property from a non-resident:

• Obtaining a TAN is mandatory, even for a one-time transaction
• Buyers must deposit TDS using TAN
• Quarterly TDS returns are required to be filed

This process has long been viewed as cumbersome, especially since TAN is generally intended for regular or ongoing tax deduction activities rather than isolated property transactions.

In contrast, when property is purchased from a resident seller, the buyer is permitted to deduct and deposit TDS using PAN alone, without the need for TAN—creating an inconsistency based solely on the residential status of the seller.

What the Budget Proposes

To address this disparity, the Government has proposed an amendment to Section 397(1)(c) of the Income-tax Act. Once implemented:

• Resident individuals and HUFs purchasing property from non-residents will not be required to obtain TAN
• TDS will be deducted and deposited using a PAN-based challan
• The reporting mechanism will be aligned with transactions involving resident sellers

Why This Matters

This proposal is a welcome step towards:

• Reducing compliance burden for genuine homebuyers
• Simplifying tax procedures for one-time property transactions
• Creating parity in TDS compliance regardless of the seller’s residential status

It also reflects the Government’s broader objective of improving ease of compliance and rationalising tax procedures.

Conclusion

If enacted as proposed, this change will bring much-needed relief to resident buyers dealing with non-resident property sellers. Buyers and professionals should, however, take note of the effective date (1 October 2026) and ensure continued compliance under the existing framework until the amendment becomes applicable.

Source : Economic Times

Disclaimer: This article has been prepared solely for general information and investor education purposes based on the Union Budget 2026–27 announcements, the Budget Speech and publicly available sources. The content is intended to provide an overview of the proposed compliance-related changes applicable to property transactions involving non-residents and does not constitute tax advice, legal advice, investment advice or a recommendation or solicitation of any kind.