Quick answer If you buy property from an NRI, you must deduct TDS from every payment: 12.5% for a long-term sale (owned over 24 months) or 30% for a short-term sale, plus surcharge and 4% cess, on the full amount unless the seller gives you a lower TDS certificate. From 1 October 2026 you can deposit it with your PAN; no TAN is needed.
Many good resale flats and plots in Mohali, Zirakpur and Panchkula are owned by families living abroad. Buying from an NRI is perfectly normal, but the tax rules put real responsibility on the buyer. Get them wrong and the tax department can come after you, not the seller. Here is what changes from October 2026 and what you need to do.
Resident seller vs NRI seller at a glance
| Resident seller | NRI seller | |
|---|---|---|
| When TDS applies | Price or collector value ₹50 lakh or more | Every payment, any amount |
| TDS rate | 1% (20% if no valid PAN) | 12.5% long-term or 30% short-term, plus surcharge and cess |
| Worked out on | Higher of price and collector value | Amount paid (or as per the seller’s lower TDS certificate) |
| Buyer needs TAN? | No — PAN based | No, from 1 October 2026, for resident individual and HUF buyers |
| Deposit by | 30 days from end of the month | 7 days from end of the month |
What exactly changed on 1 October 2026?
Until 30 September 2026, a resident buyer purchasing from an NRI had to first obtain a TAN (Tax Deduction Account Number), a hassle for a one-time purchase, and joint buyers often needed two. Budget 2026 removed this: for payments from 1 October 2026, resident individuals and HUFs can deduct and deposit the TDS using their PAN through the e-Pay Tax service, much like the 1% TDS on a purchase from a resident.
The tax rates themselves did not change. The seller still pays tax on the gain, still needs to file an Indian tax return, and can still apply for a lower TDS certificate.
How much TDS? An example
The deal You agree to buy a Mohali flat for ₹90 lakh from an NRI who bought it in 2015 for ₹50 lakh. It is a long-term sale, and the payment is between ₹50 lakh and ₹1 crore, so the TDS rate is 12.5% + 10% surcharge + 4% cess = 14.3%.
| Without certificate | Seller’s estimated actual tax | |
|---|---|---|
| Amount | ₹12,87,000 (14.3% of ₹90 lakh) | about ₹5,20,000 (on a ₹40 lakh gain) |
| Seller receives now | ₹77,13,000 | — |
Without a certificate, more than ₹7 lakh of extra tax sits with the government until the seller files a return and gets a refund. That is why sensible NRI sellers apply for a lower TDS certificate before signing. As the buyer, ask for it early, because it changes how much you pay the seller directly.
The buyer’s checklist
- Confirm the seller’s status. Ask in writing whether each seller is a resident or an NRI, and take copies of their PAN and passport.
- Ask for a lower TDS certificate. If the seller has one, deduct only at the rate shown on it, and keep a copy.
- Deduct on every payment. That includes the token money, the agreement amount and the final payment at registration.
- Deposit on time. Pay the TDS online within 7 days from the end of the month in which you deducted it. From 1 October 2026 you can use your PAN.
- File and hand over the certificate. File the TDS statement and give the seller the TDS certificate so they can claim credit.
- Keep everything with the sale deed. Challans, certificate and the lower TDS certificate, if any. Banks and the sub-registrar may ask for them.
Do not skip TDS to “keep it simple”. If you do not deduct, you can be held liable for the tax, plus interest and penalty, even though the gain was the seller’s.
Work it out for your deal
Our free NRI TDS calculator gives the exact TDS, what the seller receives, and how much a lower TDS certificate could save. If you are the NRI seller, our capital gains tax calculator and guide to capital gains tax on a property sale show your actual tax. Before paying any token amount on a resale property, also go through the documents to demand before booking.
