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No TAN Requirement for Deducting TDS Where Seller is Non-Resident.
The Finance Bill 2026 proposes an important amendment to simplify TDS compliance for property transactions. The following FAQs explain the existing provisions and the proposed changes regarding the requirement of TAN.
Who are required to obtain TAN under the Income-tax Act?
As per Section 397(1) of the Income-tax Act, 2025, every person who is responsible for deducting or collecting tax at source is generally required to obtain a Tax Deduction and Collection Account Number (TAN).
TAN is a mandatory identification number used for:
- Depositing TDS with the government
- Filing TDS/TCS statements
- Issuing TDS certificates
- Tracking tax compliance
However, the law also provides certain exceptions where obtaining TAN is not required. These exceptions mainly apply to resident individuals or Hindu Undivided Families (HUFs) who are not regularly engaged in tax deduction activities but are required to deduct tax in specific transactions such as the purchase of immovable property.
Whether a resident individual or HUF is required to obtain TAN when deducting TDS on purchase of property from a resident seller?
No. When a resident individual or HUF purchases immovable property from a resident seller, they are not required to obtain TAN for the purpose of deducting TDS.
In such cases:
- The buyer can deduct tax using their PAN.
- The buyer is required to report the transaction by filing a challan-cum-statement with the Income Tax Department.
- The seller’s PAN must be quoted in the statement.
This provision was introduced to reduce compliance burden and make the process easier for individual taxpayers involved in one-time property transactions.
What is the present provision where the buyer is a resident and the seller is a non-resident?
Under the current provisions, when a resident individual or HUF purchases immovable property from a non-resident seller, the buyer is required to:
- Obtain a TAN
- Deduct TDS at the applicable rate
- Deposit the tax using TAN
- Comply with the applicable TDS reporting requirements
This creates additional compliance responsibilities for individual buyers who may not be familiar with the TDS system, leading to procedural difficulties and increased dependence on tax professionals.
What change has been proposed regarding obtaining TAN in the Finance Bill 2026?
The Finance Bill 2026 proposes that a resident individual or HUF will not be required to obtain TAN, even when TDS is required to be deducted on the purchase of immovable property from a non-resident seller.
After the amendment:
- The buyer will deduct TDS using their PAN.
- The deduction will be reported through a PAN-based challan-cum-statement.
- The seller’s PAN will be quoted.
- The process of deduction and reporting will become uniform, regardless of whether the seller is resident or non-resident.
This amendment aims to simplify procedures and remove unnecessary compliance hurdles.
How will this amendment benefit taxpayers?
The proposed amendment will significantly benefit resident individuals and HUFs by:
- Reducing compliance burden – No need to apply for TAN.
- Saving time – Eliminates the additional step of TAN registration.
- Lowering professional costs – Simplified process may not require extensive expert assistance.
- Ensuring ease of compliance – A single, uniform procedure for all property transactions.
- Reducing risk of errors and penalties – due to procedural complexities.
Overall, the amendment promotes ease of doing transactions in the real estate sector.
What will be the process of TDS deduction at source in the absence of TAN?
In cases where TAN is not required, the taxpayer will be able to deduct tax at source by:
- Using their PAN instead of TAN.
- Quoting the seller’s PAN.
- Filing the prescribed PAN-based challan-cum-statement.
- Depositing the TDS amount within the prescribed time.
The process of tax deduction and reporting will now be similar in all cases, irrespective of whether the seller is a resident or non-resident.
From which date will the above amendment be effective?
The proposed amendment is scheduled to come into effect from 1st October 2026.
Accordingly, all eligible property transactions executed on or after this date will be able to follow the simplified PAN-based TDS procedure without the requirement of obtaining TAN.
Conclusion
The removal of the TAN requirement for resident individuals and HUFs in property transactions involving non-resident sellers is a welcome move. By simplifying the compliance framework and introducing a uniform PAN-based reporting system, the Finance Bill 2026 aims to reduce administrative burden and make property transactions smoother and more taxpayer-friendly And Its effective from 1 Oct 2026.
