Buying property from a non-resident: TDS rates, Form 141 and deadlines from October 2026

From 1 October 2026, a resident individual or Hindu undivided family (HUF) buying a flat, house or plot from a non-resident no longer needs a tax deduction and collection account number (TAN) to deduct tax at source. The buyer now pays the tax and reports the deal in one step, through a new Schedule E in Form No. 141, using their own PAN. The change comes from the Finance Act, 2026, which amended section 397(1) of the Income-tax Act, 2025, and from CBDT Notification No. 121/2026 dated 22 September 2026, which amended the Income-tax Rules, 2026. We covered the notification in a short update.

What has not changed is the amount. When the seller is resident, the buyer deducts 1% of the price or stamp duty value, whichever is higher, and only if the price or stamp duty value is ₹50 lakh or more. When the seller is non-resident, section 393(2) applies instead. There is no threshold, and the rate comes from Part II of the First Schedule to the Finance Act, 2026: for an individual seller, 12.5% on a long-term gain or 30% on a short-term gain, plus surcharge and 4% cess. On a ₹1.2 crore flat, that is ₹17,94,000 instead of ₹1,20,000.

The bottom line: the paperwork is lighter, but the deduction is still large and still the buyer’s responsibility. Settle the seller’s residential status, PAN and any certificate before the first payment, and diarise the 30-day deadline.

What changed

The notification adds deduction under section 393(2) [Table: Sl. No. 17], where a resident individual or HUF buys immovable property from a non-resident, to rules 215, 218 and 219. These rules already routed TDS on property bought from residents, rent paid by individuals and a few other payments through Form No. 141. Separately, section 87 of the Finance Act, 2026 substituted section 397(1)(c) from 1 October 2026, so that the TAN requirement does not apply to these buyers.

Schedule E asks for each buyer’s PAN and share and, for each seller, the PAN if available, contact details, overseas address, tax residency certificate number, tax identification number and share. It also asks for the stamp duty value, the total consideration, any instalments, the type of capital gain, whether the seller has opted out of the section 202 tax regime, any certificate numbers and the Form No. 145 acknowledgement. Note 10 says the tax deducted includes surcharge, if applicable, and cess. The notification does not change the rate of deduction.

Resident seller or non-resident seller: how the TDS differs

The rates come from Part II of the First Schedule to the Finance Act, 2026, which section 3(7) applies to deduction under section 393(2) [Table: Sl. No. 17]. Section 3(16) adds the 4% Health and Education Cess; section 3(17) removes it where the payee is a domestic company or other resident. On long-term capital gains, which section 197 taxes at 12.5%, surcharge cannot exceed 15%. Short-term gains on property fall under the 30% rate for “the whole of the other income”; the 20% rate is only for section 196 gains on equity shares and units sold with securities transaction tax. Part II has no marginal relief.

Under section 2(101) of the Income-tax Act, 2025, land or a building held for not more than 24 months immediately before transfer is short-term; anything held longer is long-term. The option in section 197(3) to compare with 20% after indexation, for land or buildings acquired before 23 July 2024, is limited to resident individuals and HUFs. In practice, on a long-term gain of a non-resident individual, the TDS works out to 13% of the payment where the price is up to ₹50 lakh, 14.3% up to ₹1 crore and 14.95% above ₹1 crore. Section 2(90)(c) also allows a tax treaty rate where applicable.

Who is affected

The new route is for resident individuals and HUFs buying land (other than agricultural land), a building or part of a building, or both, from a non-resident. Sellers can be NRIs, other non-resident individuals or foreign companies.

The obligation to deduct under section 393(2) applies to any payer. But the Income Tax Department’s Form 141 FAQs say Schedule E can be filed only by a resident individual or resident HUF, and other buyers must use the TAN-based statements. So a company, firm or LLP buying office space from a non-resident landlord, or a non-resident buying from another non-resident, still needs a TAN, deposits by the seventh of the next month and files Form No. 144 every quarter. Purchases from resident sellers continue under the 1% rule in Schedule B.

What the buyer must do

Deduct at the time of credit or payment, whichever is earlier (section 393(2)(b)). That covers every instalment, including a token advance. Collect the seller’s PAN before paying. If the seller has no PAN, rule 217 avoids the higher rate only if the seller gives their name, email, contact number, overseas address, tax residency certificate and tax identification number. Otherwise section 397(2) requires deduction at the higher of the rate in force and 20%.

Before the money is remitted, rule 220 requires information in Form No. 145. Part A applies if the payment, or the total of such payments in the tax year, is ₹5,00,000 or less. Above that, Part B applies where the buyer holds a certificate under section 395(1) or 395(2), and otherwise Part C, with a certificate in Form No. 146 from an accountant.

Within 30 days from the end of the month of deduction, pay the tax with Form No. 141 from the PAN login (e-File, then e-Pay Tax, Income Tax Act 2025, New Payment, Form 141). One form covers one month of deduction and one type of seller; companies and other sellers go on separate forms. Each joint buyer files their own form for their share (Note 11). Within 15 days after that due date, download Form No. 132 from TRACES and give it to the seller.

Lower or nil deduction certificates

There are two routes, and Schedule E records both.

The seller’s certificate, section 395(1). The seller applies in Form No. 128 (rule 213). The Assessing Officer looks at the tax on the estimated income for the year, the tax on the last four years’ income, existing liabilities and tax already paid or deducted. The certificate is issued in the buyer’s name and is valid only for the named payment and amount, for the period it states (rule 213(7) and (8)). No certificate is granted without a valid PAN (section 397(2)(f)(ii)). The Finance Act, 2026 added section 395(6), under which the application may also go to a prescribed income-tax authority that issues or rejects it after electronic verification. Form No. 141 now refers to both.

The buyer’s application, section 395(2). Where the buyer considers that the whole sum is not chargeable, they can apply in Form No. 129 for the Assessing Officer to fix the chargeable proportion (rule 214). The officer examines chargeability under the Act and any tax treaty. Tax is then deducted only on that proportion.

In practice, the certificate must be in hand before the payment it covers, and any amount beyond it is taxed at the normal rates.

Worked example

Asha, a resident individual in Delhi, buys a flat in Gurugram from Rohan, an NRI living in Dubai. The price is ₹1,20,00,000 and the stamp duty value is ₹1,10,00,000. Rohan bought the flat in 2015, so his gain is long-term. He has a PAN and no certificate. Asha pays the full price on 10 November 2026.

Asha deducted in November 2026, so she must file Form No. 141 with Schedule E and pay by 30 December 2026, and give Rohan Form No. 132 by 14 January 2027. She does not need a TAN. Had Rohan been resident, she would have deducted 1% of ₹1,20,00,000, or ₹1,20,000.

Now suppose Asha had paid a ₹10,00,000 advance on 25 September 2026. The surcharge is still 15%, because Part II looks at the amount “paid or likely to be paid”, which is ₹1.2 crore. The TDS on the advance is ₹1,49,500. That payment falls before 1 October, so she needs a TAN, must deposit by 7 October 2026, file Form No. 144 by 31 October 2026 and issue Form No. 131 by 15 November 2026. The balance of ₹1,10,00,000 in November carries TDS of ₹16,44,500 through Schedule E. The Schedule E user manual asks for the RRR number of the earlier Form No. 144 in that case.

Calculate the TDS on your purchase

Enter who the seller is, the price payable to them, the stamp duty value, whether the gain is long-term or short-term, the seller’s PAN position, any certificate and the payment date. It shows the TDS with surcharge and cess, the resident-seller comparison, the forms, due dates and whether you need a TAN.

What goes wrong in practice

• Deducting 1% as if the seller were resident. The 1% rule applies only to payments to a resident. A buyer who deducts too little is treated as an assessee in default (section 398(1)) and pays interest at 1% a month from when tax was deductible to when it is deducted, and 1.5% a month from deduction to payment (section 398(3)).
• Leaving out surcharge and cess. On a price above ₹1 crore they add almost 2.5 percentage points.
• Assuming a ₹50 lakh threshold. The table in section 393(2) has none.
• Paying a seller without a PAN or the rule 217 details. The higher rate under section 397(2) then applies.
• Relying on a certificate that does not fit. It must name the buyer, and cover the payment, amount and dates.
• Filing late. Form No. 141 is prescribed in rule 219, which deals with statements under section 397(3)(b). Section 427 charges ₹200 a day for such a statement filed late, up to the tax deductible.
• Using the wrong schedule. Resident and non-resident co-sellers need Schedule B and Schedule E on separate forms, and the manual allows Schedule E dates only from 1 October 2026.

What to do now

1. List every payment to the non-resident seller and its date. Payments before 1 October 2026 stay on the TAN and Form No. 144 route.
2. Get the seller’s PAN, or the full rule 217 details, and confirm their residential status before the first payment.
3. Ask whether the seller has applied for a certificate in Form No. 128, or consider applying in Form No. 129 yourself, well before the payment date.
4. Work out the TDS with surcharge and cess, and build it into the payment schedule and the sale agreement.
5. File Form No. 145, with Form No. 146 where needed, before the money is remitted.
6. Pay and file Form No. 141 Schedule E within 30 days from the end of the month of deduction.
7. Download Form No. 132 from TRACES and give it to the seller within 15 days of that due date.

Key dates

What the rules don’t say yet

• Whether surcharge and cess are added on top of the 20% higher rate in section 397(2). The calculator shows both figures.
• How Form No. 145 applies where the price is paid into the seller’s account in India; rule 220 speaks of giving it to the authorised dealer before remitting.
• How the surcharge thresholds apply where several buyers each pay part of the price.
• Form No. 129, the buyer’s application under section 395(2), still asks for a TAN; the notification did not amend it.
• The conditions for applications under section 395(6) are to be prescribed. The Rules as notified on 20 March 2026 do not set them out.

Frequently asked questions

Do I need a TAN to buy property from an NRI?

Not if you are a resident individual or HUF and the payment is on or after 1 October 2026. You file Form No. 141 with Schedule E from your PAN login. Companies, firms, other buyers and payments made before that date still need a TAN.

Is there a ₹50 lakh threshold when the seller is non-resident?

No. The ₹50 lakh threshold belongs to the 1% rule for resident sellers. Section 393(2) has no threshold, so even a smaller purchase from a non-resident needs TDS.

What rate applies if the seller has owned the property for more than two years?

The gain is long-term, so the rate is 12.5%, plus surcharge depending on the price and 4% cess. For an individual seller with a PAN and no certificate, that comes to between 13% and 14.95% of the payment.

Can the TDS be reduced?

Yes, through a certificate. The seller can apply in Form No. 128 under section 395(1), or the buyer in Form No. 129 under section 395(2). Deduct at the lower rate only for the payment and amount the certificate covers.

I paid an advance in September 2026. Which form do I use?

The advance goes through the earlier route: TAN, challan, Form No. 144 and Form No. 131. Later payments from 1 October can go through Schedule E, quoting the earlier receipt number. Confirm the details with your adviser.

What happens if I deducted only 1%?

The shortfall remains your liability as buyer, with interest under section 398(3). Speak to your adviser about paying the difference and correcting the filing; Form No. 141 is corrected on TRACES.