How to make NRI TDS Payment on sale of property after 1st april 2026
Under the new Income-tax Act, 2025 (effective from April 1, 2026), the process for deducting and depositing TDS on the sale of property by a Non-Resident Indian (NRI) is different from the process for resident sellers.
The simplified PAN-based Challan-cum-Statement (Form No. 141, Schedule B) used for purchasing property exceeding ₹50 lakhs is explicitly restricted to “resident transferors”. Therefore, a buyer purchasing property from an NRI cannot use Form 141.
Instead, the TDS obligations for purchasing property from an NRI fall under the general provisions for payments to non-residents. Here is the complete step-by-step process for the buyer (deductor) to make the NRI TDS payment:
1. Obtain a TAN (Tax Deduction and Collection Account Number)
Since the PAN-based Form 141 cannot be used, the buyer must mandatorily hold a TAN to deduct and deposit the tax. If the buyer does not have a TAN, they must apply for one using the new Form No. 135 (which replaces the old Form 49B for non-government entities).
From Which date TAN is not required for tds deposit of NRI
- Before 1 October 2026: You must still obtain a TAN and use Form 27Q (if TDS deducted on or before 31st March 2026) or the new equivalent Form 144 if the transition has occurred after 1st April 2026 ) to report the transaction.
- On or after 1 October 2026: Resident individuals and HUFs can deposit TDS using their PAN via a simplified PAN-based challan
2. Determine the Applicable TDS Rate and Chargeable Proportion
Payments to an NRI for the purchase of property fall under Section 393(2) [Table: Sl. No. 17] (“Any other income”), and tax must be deducted at the “rates in force”.
what is the meaning of rate in force in income tax act 2025
1. Rates Specified in the Annual Finance Act
2. Rates in the Double Taxation Avoidance Agreement (DTAA)
- Advantage: If the DTAA rate is used, you generally do not need to add surcharge or education cess.
- Requirement: To use this, the NRI must provide a Tax Residency Certificate (TRC). [
3. Penalty Rates (Section 206AA)
How to Apply It
- Base Rate: (from the Act or DTAA).
- Surcharge: Based on the total transaction value (e.g., 10%, 15%, or more).
- Cess: A mandatory 4% Health and Education Cess.
- Lower Deduction/Proportionate Tax: Because deducting tax on the entire sale consideration can lead to excessive TDS, the buyer can make an application to the Assessing Officer to determine the appropriate proportion of the sum actually chargeable to tax (i.e., the capital gains portion). Tax will then be deducted only on that chargeable proportion.
- Alternatively, the NRI seller can proactively apply to the Assessing Officer for a lower or nil withholding certificate using the new Form No. 128 (which replaces the old Form 13).
3. Submit Foreign Remittance Forms (If Applicable)
If the sale proceeds are being remitted outside India on or after April 1, 2026, the buyer must furnish remittance information using Form No. 145 (which replaces the old Form 15CA). If the remittance exceeds the prescribed threshold, it must be accompanied by a Chartered Accountant’s certificate in Form No. 146 (which replaces the old Form 15CB).
4. Rules for Deduction and Deposit of TDS of NRI Property
Rules for Deduction of TDS on NRI Property
The buyer must deduct the tax at the time of crediting the income to the NRI’s account or at the time of payment, whichever is earlier.
Under the Income-tax Act, 2025, the due dates for depositing Tax Deducted at Source (TDS) on payments to Non-Resident Indians (NRIs) follow the general TDS deposit timelines prescribed under Rule 218 of the Income-tax Rules, 2026.
For non-government deductors, the last date to deposit the TDS is as follows:
- For the months of April to February: On or before the 7th of the month following the month in which the deduction is made.
- For the month of March: On or before the 30th of April.
For Government deductors paying without an income-tax challan, the TDS must be deposited on the same day. If a Government deductor deposits TDS with an income-tax challan, the due date is the 7th of the following month, and specifically for the month of March, it is the 7th of April.
Rules for Deposit of NRI Property
Deposit the TDS Online:
- Log in to the Income Tax e-Filing portal and navigate to ‘e-File’ > ‘e-Pay Tax’.
- Before 1st October 2026: Use Challan 281 (requires TAN).
- From 1st October 2026: Use the new PAN-based challan (similar to Form 141 which eliminates the TAN requirement for resident buyers.
- The payment must be deposited within 7 days from the end of the month in which the deduction was made.
5. File the Quarterly TDS Return
The buyer must report the transaction by filing the Non-Resident Quarterly TDS Return using the new Form No. 144 (which replaces the old Form 27Q).
6. Issue the TDS Certificate
After filing the TDS return, the buyer must download and issue a TDS certificate to the NRI seller. For non-salary payments under the new Act, this certificate is issued in Form No. 131 (which replaces the old Form 16A).
Summary
| Action | Old Form (Pre-April 2026) | New Form (Post-April 2026) |
|---|---|---|
| Quarterly Return (NRI) | Form 27Q | Form 144 |
| TDS Certificate | Form 16A | Form 131 |
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