The TAN (Tax Deduction and Collection Account Number) requirement for buyers purchasing property from an NRI, OCI, or foreign citizen seller is removed from 1 October 2026, under the Finance Act 2026 (Act No. 4 of 2026), which amends Section 397(1)(c) of the Income-tax Act, 2025.
No transitional provision specific to straddling transactions has been separately notified at the time of writing. Parties completing around that date should treat the timing points in this guide as good practice, not confirmed procedure, and verify treatment with a Chartered Accountant and their legal advisor before payment is made.
TDS and your obligations as a seller are unchanged either side of the deadline. Only the buyer’s administrative process is affected.
Why Timing Matters More Than the Headline Change
Most coverage of this reform explains what is changing. Fewer address when it takes effect for a transaction already in progress. If you are an NRI or OCI seller currently mid-negotiation, or a resident buyer partway through arranging a TAN, the relevant question is not “has the rule changed” — it is which process is likely to apply around your specific payment date.
Indian withholding tax obligations generally arise at the point tax is deducted, which is usually tied to payment or credit. On that general principle — and in the absence of a published transitional clarification for this specific amendment — it would be reasonable to expect that a deduction made before 1 October 2026 falls under the existing TAN-based process, and a deduction made on or after that date falls under the PAN-based route. This is a sensible working assumption for planning purposes, not a confirmed rule, and for a transaction spanning the cut-off — deposit paid in September, balance paid in October, for example — it is worth having your CA confirm treatment for each tranche before it is paid, rather than assuming a position after the fact.
Good Practice Points If Your Sale Is Progressing Now
These are practical planning considerations, not confirmed procedural rules — always have your CA and Indian legal team verify the position for your specific transaction and payment schedule.
If completion is expected before late September 2026: Continuing on the existing TAN-based footing is sensible. There is no confirmed tax advantage to delaying a ready transaction purely to “wait for the new rules” — the underlying TDS rate and your net position are unaffected either way, and a delay only extends the time your proceeds sit in India.
If completion is expected in October 2026 or later: It is worth confirming with your buyer’s advisers that they are aware a TAN is not expected to be required from 1 October, since buyers unfamiliar with the change may otherwise begin a TAN application unnecessarily, adding a 15–30 day delay for no clear benefit.
If the timing is genuinely uncertain: Building in a short buffer either side of 1 October, and confirming the applicable process with your Indian legal advisor-CA before the deduction is made rather than after, is good practice while the transitional detail remains unclarified.
The Operational Gap Worth Knowing About
As of mid-2026, the specific PAN-based challan-cum-statement form for the no-TAN NRI-seller scenario had not been separately notified by the CBDT. The Finance Act and the CBDT’s Finance Bill 2026 FAQ confirm the mechanism in principle — deduction and reporting via the buyer’s own PAN, quoting the seller’s PAN — but the exact form reference had not yet appeared alongside the renumbered Income-tax Act, 2025 forms. This is a detail to confirm with your Chartered Accountant closer to completion, particularly for transactions closing in the early weeks of October 2026, rather than something to assume is fully operational the moment the date passes.
What Stays the Same Regardless of Timing
- TDS is still calculated on the gross sale consideration.
- The current effective LTCG TDS position is unaffected.
- Repatriation via your NRO account remains governed by FEMA, capped at USD 1 million per financial year, regardless of which TDS process applied.
- Company and firm buyers still require a TAN — the exemption applies to resident individual and HUF buyers only.
For the full breakdown of what changed and why, see our earlier guide: Does a Resident Buyer Need a TAN to Buy Property from an NRI in 2026? The above is subject to change by the official authorities, and information may be updated at any time.
Frequently Asked Questions
Does the TAN removal apply retroactively to deductions made before 1 October 2026? No. The exemption text applies from 1 October 2026, and no transitional provision extending it earlier has been published. Deductions made before that date would be expected to follow the existing TAN-based process under Section 195, though this has not been separately confirmed for straddling transactions.
If my Agreement of Sale is signed in September but payment completes in October, which rule applies? This has not been explicitly clarified for this amendment. As good practice, treat the date TDS is actually deducted (rather than the agreement date) as the likely reference point, and confirm the expected payment schedule and applicable process with your buyer’s adviser and your advisors before each tranche is paid.
Should I delay my sale to benefit from the new rules? Not for tax reasons — the underlying TDS rate and your net position are unchanged either side of the deadline. Delaying only affects how long proceeds remain in India before repatriation.
Who should I confirm the form/process detail with closer to completion? Your Indian Chartered Accountant should confirm the operative form and process shortly before your transaction completes, particularly for sales expected in the early weeks of October 2026, given the transitional detail is not yet fully settled.
How Whytecroft Ford Can Help
If you have an Indian property sale upcoming and require planning advice, speak with our team. Call us on 0208 757 5751 or use our free assessment form.
Disclaimer: This page reflects the regulatory position as understood at the date of publication and does not constitute legal, tax, or financial advice. Indian tax law and FEMA regulations are subject to individual circumstances and change. Always consult a qualified Indian law adviser and a registered Chartered Accountant regarding your specific transaction. Whytecroft Ford does not provide CA services.
Official References
- Finance Act, 2026 (Act No. 4 of 2026) — amendment to Section 397(1)(c), Income-tax Act, 2025
- Finance Bill 2026 — India Budget (indiabudget.gov.in/doc/Finance_Bill.pdf)
- Amended Section 397 text — incometaxindia.gov.in
