Introduction
The Finance Bill, 2026 proposes a pragmatic relief by removing the requirement to obtain TAN for resident individuals and HUFs purchasing immovable property from non-resident sellers, thereby addressing a long-standing compliance anomaly.

Background / Legal Framework
Under the existing provisions of the Income-tax Act, buyers are required to deduct tax at source (TDS) on property transactions:

• Section 194-IA: Applicable for resident sellers (no TAN required)
• Section 195: Applicable for non-resident sellers (TAN mandatory)

This created a disparity where even small taxpayers had to obtain TAN for one-time transactions involving non-residents.

What is the Change / Update
Clause 75 of the Finance Bill, 2026 amends section 397(1)(c) to:

• Exempt resident individuals and HUFs from obtaining TAN
• Where TDS is deducted under section 393(2) on property purchase from non-residents

Effective Date: 1st October 2026

Key Features / Highlights

• Removes mandatory TAN requirement for individuals/HUFs 
• Reduces procedural burden for one-time buyers
• Continues TDS obligation, but simplifies registration requirements

Practical Impact

• First-time property buyers dealing with NRIs will no longer face TAN-related delays
• Compliance cost and professional dependency for TAN application will reduce
• Facilitates smoother execution of property transactions involving non-residents

Risks / Caution / Alternative Interpretation

• The exemption applies only to TAN requirement, not to TDS compliance
• Buyers must still ensure:
  • Correct TDS rate (often higher under section 195)
  • Proper determination of capital gains component
• Absence of TAN may create practical challenges in TDS return filing unless corresponding procedural utilities (like Form 26QB equivalent) are introduced
• There is ambiguity on whether existing filing mechanisms will be modified—this needs administrative clarity

Action Plan (What Should Taxpayers Do Now)

• For transactions before 1st October 2026: Continue obtaining TAN where applicable
• For transactions after the effective date:
  1. Verify eligibility (resident individual/HUF)
  2. Deduct TDS as per applicable provisions on non-resident payments
  3. Track updates on new TDS reporting mechanism (likely simplified form)
  4. Maintain documentation for valuation and tax computation
  5. Seek professional advice in cases involving capital gains computation or DTAA implications

Conclusion
This amendment removes an unnecessary compliance layer and brings parity in tax procedures for property buyers. However, execution clarity and procedural updates will be critical for its effectiveness.

For expert guidance on this topic, contact your tax professional today.