Union Budget 2026: Govt eases compliance burden for individuals buying immovable properties from non-residents

New Delhi: To ease compliance burden, the government on Sunday proposed that an individual purchasing immovable properties from non-residents will not be required to furnish TAN details for tax deduction.

Under the new framework proposed in the Union Budget 2026-27, resident individuals or Hindu Undivided family (HUF) can report the Tax Deducted at Source (TDS) by quoting PAN numbers, as it is done when the transactions are between two residents.

The revised norm will be effective from October 1. Tax Deduction and Collection Account Number (TAN) are issued to corporate entities, while Permanent Account Number (PAN) are for individuals.

In her budget speech, Finance Minister Nirmala Sitharaman said, "TDS on the sale of immovable property by a non-resident is proposed to be deducted and deposited through the resident buyer's PAN-based challan instead of requiring TAN".

A resident individual or HUF would not be required to obtain a TAN to deduct tax at source in respect of any consideration on transfer of any immovable property by a non-resident under section 393(2), as per the annexure in the budget speech.

Instead, the deduction should be reported by quoting the PAN in the same manner as a transaction of a similar nature between two residents.

According to the Budget memorandum, Section 397 (1)(a) of the Income Tax Act, every person, deducting or collecting tax, should apply to the Assessing Officer for the allotment of a TAN. Clause (c) of the sub-section provides for cases where a person is not required to obtain a TAN.

"Presently, if a person buys an immovable property from a resident seller, the person is not required to obtain a TAN to deduct tax at source. However, where the seller of the immovable property is a non-resident, the buyer is required to obtain a TAN to deduct tax at source. This creates unnecessary compliance burden for the buyer, as he would need TAN for a single transaction," the memorandum said.

To reduce compliance burden, the government has proposed to amend section 397(1)(c) of the Act to provide that a resident individual or HUF is not required to obtain a TAN to deduct tax at source in respect of any consideration on transfer of any immovable property under section 393.

"Currently, TDS compliance for the purchase of house property from NRI is a huge task as the buyer has to apply and get TAN, deposit taxes and also file quarterly TDS return.

"By eliminating the need for TAN while buying property from NRIs, the Budget has addressed a long-standing compliance burden faced by individual home buyers. This is a welcome step towards simplifying TDS procedures and improving ease of compliance," Divya Baweja, Partner, Deloitte India, said.

The amendment will take effect from October 1, 2026.