Budget 2026 Win: The Removal of TAN Requirements for NRI Property Sales

Introduction

Budget 2026 eliminated the requirement for resident buyers of NRI properties to obtain a Tax Deduction and Collection Account Number (TAN). This administrative change removes a major friction point, instantly expanding the secondary market for your NRI property.

For years, the biggest hurdle for an NRI trying to sell property in India wasn't finding a buyer—it was the buyer's fear of the dreaded NRI TDS paperwork. Thankfully, Union Budget 2026 delivered a massive win: the removal of the requirement for resident buyers to obtain a Tax Deduction and Collection Account Number (TAN) when purchasing from an NRI.

This simple administrative change drastically alters the liquidity of an NRI's Indian real estate portfolio.

The Old Friction Point

Previously, under Section 195 of the Income Tax Act, a resident Indian buying property from an NRI had to deduct TDS at the prevailing capital gains rate (which currently stands at 12.5% for LTCG post-July 2024, plus surcharge and cess).

However, to legally deduct and deposit this TDS, the buyer had to apply for a TAN.

For a retail buyer—who isn't a corporation and has never interacted with a TAN—this process was intimidating, tedious, and often required hiring a Chartered Accountant just to buy a house. Many buyers simply walked away from NRI-owned properties, preferring to buy from resident Indians where only a simple PAN was needed for the 1% TDS.

This left NRIs with highly illiquid assets, forcing them to sell at a discount simply to compensate the buyer for the administrative headache.

The "Frictionless Exit"

With the Union Budget 2026 update, the government has streamlined this process. Removing the TAN requirement means that buyers can now process the TDS on NRI property purchases with much less friction.

What does this mean for your portfolio? It means the secondary market for your Indian real estate has suddenly expanded. Buyers who previously filtered out NRI-sellers will now treat your property exactly like any other listing. You no longer have to negotiate from a position of administrative weakness.

What Hasn't Changed: The 12.5% Tax Hit

While the process of deduction is easier for the buyer, the financial impact of the tax remains significant for the NRI. The flat 12.5% Long-Term Capital Gains tax (without indexation) is still the law of the land for properties sold after July 23, 2024 ([[related: nri-property-tax-12-5-capital-gains-2026]]).

Furthermore, unless you take proactive steps, the buyer is still legally required to deduct TDS on the entire sale value, not just your capital gains.

To truly capitalize on this new frictionless exit, you must still apply for a Lower Deduction/Nil Deduction Certificate (Form 13) from the Income Tax Assessing Officer ([[related: tds-property-purchase-guide-2026]]). This ensures that the buyer only deducts TDS on your actual profit, leaving you with more immediate capital to repatriate or reinvest.

Strategic Takeaway

The elimination of the TAN requirement removes the biggest psychological and administrative barrier for your buyers. If you have been holding onto an underperforming legacy apartment in India because it felt "too hard to sell," 2026 is the year to liquidate it.

The exit door is now wide open. Pair this simplified process with a Lower Deduction Certificate, and you can finally free up trapped capital to deploy into higher-yielding, institutional-grade corridors or repatriate it to fund your global lifestyle.

Frequently Asked Questions

Do Indian buyers still need to deduct TDS when buying from an NRI?

Yes, buyers are still legally required to deduct Tax Deducted at Source (TDS) under Section 195. However, Budget 2026 removed the requirement for the buyer to obtain a TAN to do so, significantly easing the administrative burden.

What is the new LTCG tax rate for NRIs selling property in 2026?

The Long-Term Capital Gains (LTCG) tax rate for properties sold after July 23, 2024, is a flat 12.5% plus applicable surcharge and cess, without the benefit of indexation.

How can NRIs lower the TDS on their property sale?

NRIs can apply for a Lower/Nil Deduction Certificate (Form 13) from the Income Tax Department. This allows the buyer to deduct TDS only on the actual capital gains rather than the total sale value.