Where a resident buyer purchases immovable property from a Non-Resident Indian (NRI), tax is required to be deducted at source before making payment to the seller. Under the new Income-tax Act, 2025, the provisions relating to such transactions are covered under Section 393(2) [Table: Sl. No. 17] and, for the purpose of payment and return filing, the relevant code is 1057. These provisions are applicable from 1st April, 2026.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(2)
- Table Reference: Sl. No. 17
- Nature of Payment: Purchase of immovable property from NRI
- Code (for payment / return filing): 1057
- Return Form: Form 144
TAN-based payment up to 30th September 2026
In case of purchase of property from an NRI, TDS payment is to be made through TAN-based payment up to 30th September, 2026.
Accordingly, the buyer should first obtain TAN and use the TAN-based login on the Income-tax portal for depositing such TDS and filing quarterly returns.
The change to PAN-based payment for such transactions is expected to become applicable from 1st October, 2026.
When is TDS required to be deducted?
TDS is required to be deducted by the resident buyer at the time of credit or payment to the NRI seller, whichever is earlier.
Rate of TDS
In case of purchase of property from an NRI, the rate of TDS depends upon the nature of income chargeable in the hands of the seller, such as:
- Long-term capital gains, or
- Short-term capital gains
Since the seller is a non-resident, the TDS implications are different from purchase of property from a resident seller. The provision of 1% TDS applicable in resident property purchase cases does not apply here.
Depending on the facts of the case, surcharge and health / education cess may also become applicable.
Return Filing
After depositing the TDS, the relevant TDS return is required to be filed in the prescribed form. For this purpose, the applicable return form under the new framework is Form 144.
While preparing the TDS return for such transactions, apart from selecting the correct TDS code 1057, the relevant remittance code also needs to be selected under the deductee details, based on the nature of income / capital gain applicable in the hands of the NRI seller.
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