CBDT Amends TDS Rules for Non-Resident Property Transfers
Notification No. 121/2026 introduces a PAN-based Form 141 filing route and new Schedule E when a resident individual or HUF buys immovable property from a non-resident seller.
No separate TAN step for the covered individual or HUF buyer
From 1 October 2026, the resident individual or HUF buyer can report and deposit TDS through PAN-based Form 141 Schedule E. The new form captures the property, all parties, sale value, capital-gain category, applicable rate and certificate details.
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What are the new TDS rules for buying property from an NRI?
CBDT Notification No. 121/2026, dated 22 September 2026, amends the Income-tax Rules, 2026 from 1 October 2026. A resident individual or Hindu undivided family buying immovable property from a non-resident can use PAN-based Form 141 Schedule E to deposit and report TDS under Section 393(2), Table serial number 17.
The change removes the separate TAN-registration step for this covered buyer category and brings the payment and reporting into one challan-cum-statement. It does not turn the transaction into a 1% resident-property case. The buyer must still determine the correct non-resident withholding rate, including surcharge and cess where applicable, or use a valid certificate under Section 395.
The identity of the buyer should be settled before the agreement is signed. The simplified route applies to a resident individual or HUF, not automatically to a company, LLP or firm. Where property is being acquired for a new venture, establish the intended owner first through CompanyJi's company registration service and then apply the TDS route that matches that legal buyer.
The compliance form is simpler; the tax-rate analysis is not. Confirm the seller's tax residence and withholding position before releasing an advance or instalment.
What exactly did CBDT amend?
The Income-tax (Fifth Amendment) Rules, 2026 modify Rules 215, 218 and 219 and update Forms 132 and 141 in Appendix III. The amendments operationalise the special property-transfer route created for a resident individual or HUF paying a non-resident seller.
Rule 215
Form 132 now covers transfer of immovable property by a non-resident to a resident individual or HUF.
Seller receives the TDS certificate.Rule 218
The covered Section 393(2) payment joins the thirty-day challan-cum-statement route.
Tax is deposited with Form 141.Rule 219
The covered buyer must furnish Form 141 within thirty days from the end of the deduction month.
One PAN-based statement per deductor.Schedule E
The new schedule records the property, buyers, sellers, consideration, rate, certificates and tax deducted.
Detailed transaction-level reporting.Do not apply the new procedure mechanically to an earlier deduction event. The date of payment or credit, the transition rule and the law governing that event must be checked.
Who can use the new Form 141 Schedule E route?
Resident individual or HUF
The buyer must be a resident individual or Hindu undivided family covered by the special Section 393(2) property transaction route.
Non-resident transferor
The seller is non-resident for income-tax purposes and transfers land, a building, part of a building or both.
Residential status is a tax-law test
NRI, foreign citizen, overseas address and non-resident are often used casually, but the TDS route turns on the seller's residential status under income-tax law for the relevant period. Citizenship, passport or an NRE bank account does not by itself complete that analysis.
Before and after 1 October 2026
| Compliance point | Earlier position for covered NRI property purchase | Position from 1 October 2026 |
|---|---|---|
| Buyer category | Resident individual or HUF purchasing from a non-resident | Same covered buyer and seller combination |
| Identifier used by buyer | TAN-based compliance was generally required | PAN-based challan-cum-statement route |
| TDS statement | Regular non-resident reporting route was used | Form 141 with new Schedule E |
| Payment and reporting | Separate regular-deductor process | Combined challan-cum-statement mechanism |
| Deadline | Applicable earlier deposit and statement dates | Thirty days from end of month of deduction |
| TDS certificate | Certificate under the earlier framework | Form 132 under Section 395(4) |
| Rate analysis | Non-resident rates, surcharge, cess and certificate position | Still requires the same substantive withholding review |
The buyer remains responsible for correct deduction and deposit. A simpler statement does not replace the sale agreement review, capital-gain classification or lower-deduction certificate planning.
What information does Form 141 require for NRI property TDS?
Schedule E is designed for the transaction itself, not just a single tax amount. Prepare the complete party, property and payment record before opening the statement.
Address and whether the asset is land, a building, part of a building or both.
Identify the assetPAN, name and each buyer's proportion of the total sale consideration.
Total must reconcilePAN if available, name, status, contact details, email and overseas address.
Residential status recordTax residency certificate number and foreign tax identification number or permitted unique number.
Required where applicableSale consideration, stamp duty value, earlier instalments, current payment and deduction base.
Track every paymentCapital-gain type, TDS rate, certificate numbers, tax deducted, deduction date and Form 145 acknowledgement where applicable.
Apply the legal basisMultiple buyers need separate filings
Schedule E captures all buyers and their proportions, but the notification expressly states that where there is more than one deductor, each deductor must file a separate form. The agreement, payment trail and forms should use the same ownership proportions.
TDS rate on purchase of property from an NRI
The 1% rule applies to specified immovable-property purchases from resident sellers. A non-resident seller falls under Section 393(2), Table serial number 17, where the rate must be determined from the rates in force and the transaction facts.
The analysis normally considers whether the seller's gain is long-term or short-term, the applicable domestic rate, surcharge, health and education cess, treaty position where relevant and any certificate obtained under Section 395. Schedule E specifically asks for the capital-gain category and the rate used.
| Question | Why it matters | Document to review |
|---|---|---|
| Is the seller non-resident? | Selects the non-resident withholding framework | Residential-status working and travel facts |
| How long was the property held? | Affects long-term or short-term capital-gain treatment | Purchase deed and sale agreement |
| Is a certificate available? | May authorise lower, nil or proportionate deduction | Section 395 certificate and validity conditions |
| Does PAN or foreign tax identity exist? | Affects identification and possible higher-rate rules | PAN, TRC and foreign TIN |
| Are surcharge and cess applicable? | They can increase the effective withholding amount | Seller status and consideration calculations |
For current section mapping and rate references, see CompanyJi's TDS rates chart for FY 2026-27.
Should the NRI seller obtain a lower TDS certificate?
Deducting on the gross sale consideration can materially exceed the seller's eventual tax on capital gain. Section 395 provides certificate routes that can determine the appropriate proportion or rate in eligible cases. The notification builds these certificates directly into Schedule E.
Buyer applies the legally determined withholding rate
The buyer bears risk if tax is short-deducted and should not reduce the amount merely because the seller expects a refund.
Conservative transaction reviewUse the authorised rate or amount
Check the certificate number, seller, buyer, property, validity, payment amount and conditions before applying it.
Match every conditionA lower-deduction application should be planned before the payment that triggers withholding. A later application does not automatically rewrite a deduction already required.
Form 141 due date and Form 132 timeline
For a covered deduction, Rule 218 requires the tax to be paid with Form 141 within thirty days from the end of the month in which deduction is made. Rule 219 applies the same thirty-day period to furnishing the challan-cum-statement.
Count thirty days from 31 October 2026.
Form 141 due: 30 November 2026Count thirty days from 30 November 2026.
Form 141 due: 30 December 2026Issue the prescribed TDS certificate within the Rule 215 timeline after the statement is due.
Preserve proof of deliveryDo not wait for registration of the sale deed if tax became deductible when an advance or instalment was paid or credited. Map every payment date to the deduction and Form 141 deadline.
How to complete TDS compliance for property bought from a non-resident
Prepare the income-tax residential-status working; do not rely only on nationality or an overseas mailing address.
Identify every buyer, legal status, PAN and ownership proportion before finalising the agreement.
Review capital-gain type, rates in force, surcharge, cess, PAN and any Section 395 certificate.
Collect property address, stamp duty value, consideration, prior instalments, seller details, TRC and foreign TIN.
Apply the correct rate at the legally relevant event and retain the calculation approved for that instalment.
Use the PAN-based Schedule E route within thirty days from the end of the deduction month.
Provide the seller with the TDS certificate and verify that the transaction, challan and tax credit match.
Documents required for NRI property TDS compliance
What happens if the buyer uses the wrong TDS route?
Property registration does not close the income-tax obligation. Non-deduction, short deduction, delayed deposit or an incorrect statement can expose the buyer to interest, fee, penalty, recovery proceedings and transaction-level mismatches. The seller may also struggle to claim tax credit if PAN, payment or property details are wrong.
CompanyJi's TDS return filing service supports statement review and correction, while the income-tax notice reply service can assist if a default or mismatch notice is received.
Add a TDS clause to the sale agreement that records the seller's tax residence, the rate basis, certificate responsibility, each buyer's filing obligation and how any later demand or refund will be handled.
Conclusion
Notification 121/2026 removes a major procedural barrier for a resident individual or HUF buying property from a non-resident. From 1 October 2026, Form 141 Schedule E becomes the practical filing route, but accurate residence, rate, certificate and instalment analysis remains essential.
Sources reviewed for this update
This guide was checked against CBDT and Income Tax Department material available on 24 September 2026.
CBDT NRI property TDS FAQs
What did CBDT Notification 121/2026 change?
It amended Rules 215, 218 and 219 and Forms 132 and 141 so a resident individual or HUF buying immovable property from a non-resident can use PAN-based Form 141 Schedule E.
When do the new NRI property TDS rules apply?
The Income-tax (Fifth Amendment) Rules, 2026 come into force on 1 October 2026.
Is TAN required after 1 October 2026?
A covered resident individual or HUF can use the PAN-based Form 141 route without obtaining TAN solely for that transaction. Other buyer categories must review their regular TAN obligations.
Which form applies when buying property from an NRI?
Form 141 with new Schedule E applies to the covered Section 393(2), Table serial number 17 transaction.
What is the Form 141 due date?
Deposit the TDS and furnish Form 141 within thirty days from the end of the month in which the deduction is made.
Is TDS on NRI property purchase always 1%?
No. The 1% rule concerns specified resident-seller transactions. Apply the non-resident rates in force and any valid Section 395 certificate.
Can the NRI seller obtain a lower TDS certificate?
Yes, the applicable Section 395 route may be considered. Obtain and apply the certificate before the relevant deduction and follow every condition.
What details are required in Schedule E?
Property details, all buyers and sellers, overseas identity information, consideration, stamp value, instalments, capital-gain type, rate, certificates and tax deducted.
What if there are multiple buyers?
Record all buyers and their proportions in Schedule E. Where there is more than one deductor, each deductor must file a separate form.
What is Form 132?
Form 132 is the prescribed TDS certificate under Section 395(4), issued after tax is deducted and deposited so the seller can support the TDS credit claim.
Review the rate before the property payment
Share the sale agreement, party details, seller's tax residence, acquisition papers, payment schedule and any lower-deduction certificate. CompanyJi Private Limited can help organise the TDS calculation and filing workflow.
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