Vide Notification No. 121/2026, F. No. 370142/29/2026-TPL, dated 22 September 2026, the CBDT has notified the Income-tax (Fifth Amendment) Rules, 2026, effective 1 October 2026, bringing TDS on the purchase of immovable property from a non-resident seller by a resident individual or HUF within the ambit of Form 141 — the same PAN-based challan-cum-statement already used for resident-to-resident property TDS under Section 393(1). A new Schedule E is inserted in Part B of Form 141 to capture these transactions under Section 393(2), Table Sl. No. 17, and the corresponding TDS certificate continues on Form 132. The practical effect: a resident individual or HUF buying property from an NRI no longer needs to obtain a TAN to deduct, deposit and report this TDS — it can now be done entirely through the buyer's PAN. This note sets out every change the notification makes to Rules 215, 218 and 219 and to Forms 132 and 141, clause by clause, along with the compliance workflow going forward. The official gazette notification is attached at the end for reference.
1. TDS Rate on Property Purchased from a Non-Resident (NRI) Seller
Before getting into the Form 141 Schedule E mechanics, it helps to be clear on the rate itself. When purchasing property from a Non-Resident Indian (NRI), the buyer must deduct TDS under Section 393(2), Table Sl. No. 17 (the successor to the erstwhile Section 195) on the total sale consideration — not just the capital gains portion — inclusive of applicable surcharge and 4% health and education cess.
| Property Value / Consideration | Long-Term Capital Gains (LTCG — held > 24 months) | Short-Term Capital Gains (STCG — held ≤ 24 months) |
|---|---|---|
| Up to ₹50 Lakhs | 13.00% (no surcharge) | 31.20% (no surcharge) |
| ₹50 Lakhs to ₹1 Crore | 14.30% (10% surcharge) | 34.32% (10% surcharge) |
| ₹1 Crore to ₹2 Crores | 14.95% (15% surcharge) | 35.88% (15% surcharge) |
| ₹2 Crores to ₹5 Crores | 14.95% (surcharge capped at 15%) | 39.00% (25% surcharge) |
| Above ₹5 Crores | 14.95% (surcharge capped at 15%) | 42.74% (37% surcharge — old regime) 39.00% (25% surcharge — new regime) |
For a non-resident, the enhanced surcharge rates of 25% and 37% do not apply to income chargeable under the long-term capital gains provisions (and the other specified special-rate incomes). The maximum surcharge on tax payable on such income is 15%, as stated by the Income Tax Department on its e-filing portal's guidance for Non-Resident Individuals. This is why the LTCG column stays at 14.95% (12.5% × 1.15 × 1.04) for every consideration above ₹1 Crore — and why a higher figure for the ₹2 Crore+ slabs, which is sometimes seen in published tables, overstates the TDS.
The cap does not extend to short-term gains on immovable property, which are taxed at slab rates — so for STCG the surcharge continues to step up to 25% (new regime) or 37% (old regime) on the highest slab. The STCG column above is computed on a 30% base rate plus the applicable surcharge and 4% cess, and is indicative.
For LTCG on immovable property, resident sellers were given the option to compute tax at the lower of 12.5% without indexation or 20% with indexation, for property acquired before 23 July 2024. This optionality is not available to a non-resident seller — an NRI's LTCG on the sale of immovable property is taxable only at the flat rate (12.5%, without the indexation benefit or the comparison option), and TDS under Section 393(2) must be deducted on that basis. Applying the resident comparison logic to an NRI seller's transaction, or deducting at a lower effective rate on that assumption, is a common and avoidable error.
Because TDS is computed on the gross sale consideration rather than on the actual capital gain, the amount deducted can significantly exceed the seller's real tax liability — particularly where the property was held for a long period or acquired at a substantial cost. For this reason, an NRI seller is entitled to apply for a Lower or Nil Deduction Certificate under Section 395, so that TDS is deducted only on the estimated taxable gain rather than the entire consideration. We have covered the certificate process, documentation and timelines for this in detail in Part 2 of our NRI Property Tax series.
2. Background — Why This Amendment Was Needed
Under the Income Tax Act, 2025, a resident individual or HUF purchasing immovable property from a resident seller has always been able to discharge the Section 393(1) TDS obligation through Form 141 — a simple, PAN-based challan-cum-statement, with no TAN requirement, directly comparable to the erstwhile Form 26QB under Section 194-IA of the 1961 Act.
Where the seller was a non-resident, however, the position was materially harder. TDS on such a purchase falls under Section 393(2), Table Sl. No. 17 — the successor to the erstwhile Section 195 obligation on payments to non-residents — and until this amendment, discharging that obligation required the buyer to obtain a TAN and file through the regular TAN-based TDS statement route (Form 140 / the erstwhile Form 27Q), along with the fuller non-resident-specific disclosures that route demands. For an individual or HUF buying a single property as a one-off transaction, obtaining a TAN purely for this purpose has long been a disproportionate compliance burden relative to a resident-to-resident purchase of the same property.
The Income-tax (Fifth Amendment) Rules, 2026 close this gap. They extend the Form 141 PAN-based route to cover the non-resident-seller scenario as well, while preserving the additional disclosures a non-resident transaction genuinely requires — residency details, overseas identification, and capital-gains character — inside a dedicated new schedule.
3. The Notification at a Glance
| Particular | Detail |
|---|---|
| Notification | G.S.R. 830(E), No. 121/2026, F. No. 370142/29/2026-TPL |
| Date of notification | 22 September 2026 |
| Short title | Income-tax (Fifth Amendment) Rules, 2026 |
| Effective date | 1 October 2026 |
| Rules amended | Rule 215(1), Rule 218(3), Rule 219(5) and (8), Appendix III — Form No. 132 and Form No. 141 |
| Enabling provisions | Sections 395(4)(a), 397(3)(a) & (b), and 533 of the Income-tax Act, 2025 |
| Signed by | Utkarsh Gupta, Under Secretary, Ministry of Finance (Department of Revenue), CBDT |
4. What Has Actually Changed
| Point | Before 1 October 2026 | From 1 October 2026 |
|---|---|---|
| Form used | Form 141 covered only Section 393(1) resident-to-resident property TDS; a non-resident-seller purchase required the TAN-based route | Form 141 also covers Section 393(2), Table Sl. No. 17 — property bought by a resident individual/HUF from a non-resident seller |
| TAN requirement | Buyer needed a TAN to deduct and deposit TDS on payment to a non-resident seller | No TAN needed — Form 141 is filed through the buyer's PAN login |
| Reporting schedule | Reported in the regular TAN-based TDS statement (no dedicated schedule in Form 141) | New Schedule E inserted in Part B of Form 141, after Schedule D |
| TDS certificate | Issued under the TAN route | Form 132, now with an added checkbox for "transfer of immovable property by a non-resident to a resident individual or HUF" |
| Rate 215(1) Table Sl. No. 3 | Covered only Section 393(1) deductions [Sl. Nos. 2(i), 3(i), 6(ii), 8(vi)] | Also covers Section 393(2) [Table Sl. No. 17] deductions by a resident individual/HUF |
The TDS rate itself, and the underlying obligation to deduct at the time of payment or credit, are unchanged. What the amendment changes is purely the mechanism of deposit and reporting — PAN-based and schedule-driven, instead of TAN-based.
5. Who Can Use Form 141 Schedule E
- The buyer is a resident individual or a Hindu Undivided Family (HUF) — the relief does not extend to companies, firms, LLPs, or any other category of buyer
- The seller is a non-resident
- The asset is immovable property — land other than agricultural land, a building or part of a building, or both
- TDS is deductible under Section 393(2), Table Sl. No. 17 of the Income-tax Act, 2025, on the sale consideration
This amendment does not disturb the existing Form 141 route for resident-to-resident property transactions. Where the seller is a resident, the TDS continues to be reported under the existing schedule for Section 393(1) [Table Sl. No. 3(i)] deductions. Schedule E is additive — it applies specifically, and only, to the non-resident-seller scenario described above.
6. Rule-by-Rule Breakdown of the Amendment
6.1 Rule 215(1) — Table, Serial Number 3
Rule 215(1) prescribes the categories of deduction for which a TDS certificate is to be issued. Against serial number 3, Column B is substituted to now read as covering two limbs:
(i) Deduction under Section 393(1) — (a) [Sl. No. 2(i)]; (b) [Sl. No. 3(i)]; (c) [Sl. No. 6(ii)]; and (d) [Sl. No. 8(vi)].
(ii) Deduction under Section 393(2) [Sl. No. 17], in respect of a transaction where a resident individual or Hindu Undivided Family is required to deduct tax at source on any consideration for the transfer of any immovable property.
6.2 Rule 218(3) — Certificate and Challan-Cum-Statement Provisions
- In the opening portion, the words "and (2)" are inserted after "section 393(1)" — extending the rule's application to Section 393(2) transactions as well
- In clause (d), the word "or" is inserted after the existing Section 393(1) [Table Sl. No. (8)(vi)] reference
- A new clause (e) is inserted: covering "any consideration for transfer of any immovable property (being a sum of the nature specified in section 393(2) [Table Sl. No. 17]) and where such consideration is paid or credited by a resident individual or Hindu undivided family"
6.3 Rule 219 — Time and Mode of Payment, and Filing of Statement
- Sub-rule (5): the word "and" is omitted from clause (c); clause (d) is amended to end with "; and"; and a new clause (e) is inserted covering "section 393(2) [Table Sl. No. 17], where a resident individual or Hindu Undivided Family is required to deduct tax at source on any consideration on transfer of any immovable property"
- Sub-rule (8): the reference to "sub-section (1)" is substituted with "sub-section (7)" — a cross-reference correction consequential to the other changes in Rule 219
7. Changes to Form No. 132 (TDS Certificate)
Form 132 is the TDS certificate issued to the deductee — the successor to the erstwhile Form 16B. The notification makes four changes to this form:
| Location in Form 132 | Change |
|---|---|
| Form heading | Reference to "[See rule 215(1) [Table: Sl. No. 2]]" is replaced with "[See rule 215(1) [Table: Sl. No. 3]]" |
| Part A, Sl. No. 7, Column 3 | A new checkbox is inserted after "Transfer of virtual digital asset": "Transfer of immovable property by a non-resident to a resident individual or Hindu Undivided Family" |
| Part A, Sl. No. 10, Column 3 | The words "(refer Note 3)" are inserted |
| Part B, sub-heading | The figure "132" is substituted with "141" — correcting a cross-reference to the challan-cum-statement form |
| Notes 3 & 4 | Replaced with new Notes 3, 4 and 5 (see below) |
3. This field is mandatory, if the deductee is a resident.
4. Some of the information in the Form would be pre-filled to the extent possible.
5. Amounts to be filled in ₹ unless otherwise provided.
8. Changes to Form No. 141 (Challan-Cum-Statement) — The Core of the Amendment
Form 141 is where the substance of this amendment sits. Five changes are made:
8.1 Heading Expanded
The form's heading — previously reading "challan-cum-statement of deduction of tax under section 393(1) [Table Sl. Nos. 2(i), 3(i), 6(ii) and 8(vi)]" — is expanded to add: "and section 393(2) [Table Sl. No. 17]", so the form now explicitly covers both the resident and non-resident seller scenarios.
8.2 Part A, Sl. No. 6 — New Checkbox
After the existing "Transfer of virtual digital asset" option, a new option is inserted: "Transfer of any immovable property by a non-resident to a resident individual or Hindu undivided family." This is the box the buyer selects to invoke the Schedule E workflow.
8.3 Part B — New Schedule E Inserted After Schedule D
This is the substantive addition. Schedule E captures TDS under Section 393(2) [Table Sl. No. 17] on consideration for the transfer of immovable property, in the following parts:
- Property details: address of the property transferred/to be transferred; type of property — land (other than agricultural land), building or part of a building, or both
- All buyers: PAN, name, and proportion of total sale consideration to be paid/credited by each buyer (must total 100%)
- All deductees (sellers): PAN if available, name, status, contact number, email ID, address in the country/territory outside India of residence, Tax Residency Certificate number, Tax Identification Number, and proportion of total sale consideration to be received/credited by each seller (must total 100%)
- Deal particulars: date of agreement; date of registration (if available); total stamp duty value of the property; total sale consideration
- Payment structure: whether payment is lump sum or in instalments; for instalments — first, subsequent, or last; previous acknowledgement number for subsequent/last instalments; and, for the last instalment, total consideration paid/credited including that instalment
- Transaction details (per seller): PAN and name of the deductee; whether the deductee is opting out of the Section 202(1) taxation regime (if applicable); type of capital gain — long-term as per Section 197(1), or short-term excluding Section 196
- TDS computation table (per deductee row): proportionate stamp duty value; amount paid/credited in previous instalments; amount paid/credited in the present transaction; date of credit/payment; amount on which tax is liable to be deducted; rate of TDS; certificate number under Section 395(1) (deductee-obtained) or Section 395(2) (deductor-obtained), if any; amount of TDS; date of deduction; and, if applicable, the unique acknowledgement number of the corresponding Form No. 145
8.4 Note 3(c) — Lower/Nil Deduction Certificate Reference Widened
In the existing Note 3, clause (c), the words "or under section 395(6) issued by the prescribed income-tax authority, as the case may be" are inserted after "Assessing Officer" — meaning a lower/nil deduction certificate issued under Section 395(6) by the prescribed income-tax authority is now also a valid basis for applying a reduced TDS rate, alongside one issued by the Assessing Officer.
8.5 Notes 6, 7 and 8 — Substituted
| Note | Content |
|---|---|
| Note 6(a) | Contact number, email ID and overseas address of the country/territory of residence must be provided mandatorily, whether or not the non-resident seller has a PAN |
| Note 6(b) | Where the non-resident seller has no PAN, the details in Schedule E columns (H) and (I) of Sl. No. 1(iv) must be furnished as per Rule 217, to ensure tax is not deducted at the higher rate |
| Note 7 | Status-code table for Schedule E column 1(iv)(D) — codes 01 to 10, covering company (other than domestic), individual, HUF, AOP (two variants), co-operative society, firm, body of individuals, artificial juridical person, and others |
| Note 8 | Defines a Tax Residency Certificate as a certificate of residence issued by the government of the relevant country/territory, where that jurisdiction's law provides for such a certificate |
Notes 9 through 13 — covering the seller's foreign Tax Identification Number, inclusion of surcharge/cess within the TDS amount, the requirement for each deductor to file a separate form where there is more than one buyer, pre-filling of information, and the rupee-denomination default — carry forward without substantive change from the existing Form 141.
9. Schedule B vs Schedule E — Where the Line Is Drawn
| Particular | Existing Schedule (Resident Seller) | New Schedule E (Non-Resident Seller) |
|---|---|---|
| Governing provision | Section 393(1) [Table Sl. No. 3(i)] | Section 393(2) [Table Sl. No. 17] |
| Seller | Resident | Non-resident |
| Buyer category | Any buyer covered under the existing provision | Resident individual or HUF only |
| Seller overseas details | Not applicable | Overseas address, TRC number, Tax Identification Number mandatory |
| Capital-gains character | Not separately captured | Long-term (Sec. 197(1)) or short-term (excl. Sec. 196) captured explicitly |
| TDS certificate | Form 132 | Form 132, with the added non-resident-transfer checkbox |
The determining factor for which schedule applies is the residential status of the seller — not the type of property, the consideration amount, or the mode of payment.
10. Step-by-Step Compliance Process
- Step 1 — Confirm the seller's residential status. Schedule E applies only where the seller is genuinely a non-resident for tax purposes
- Step 2 — Collect seller information upfront. PAN (if available), name, status code, contact number, email ID, overseas residential address, TRC number, and foreign Tax Identification Number — ideally before the payment or credit event, not after
- Step 3 — Compute TDS. Determine the amount liable to deduction and the applicable rate, including surcharge and cess, under Section 393(2) [Table Sl. No. 17], noting whether a lower/nil deduction certificate under Section 395(1), 395(2) or 395(6) has been obtained
- Step 4 — Deduct and deposit through Form 141. Log in to the e-filing portal using PAN, select e-File > e-Pay Tax > Income Tax Act, 2025 > New Payment > Form 141, choose the non-resident property option, and complete Schedule E
- Step 5 — Deposit within the prescribed window from the end of the month in which the amount was deducted, consistent with the deposit timeline applicable to other PAN-based challan-cum-statement forms (Form 141 for resident sellers, and the erstwhile Form 26QB/26QC/26QD/26QE)
- Step 6 — Issue Form 132 to the seller after generating and downloading it from the TRACES portal, within the prescribed period from the due date for furnishing Form 141
- Step 7 — Retain records — the agreement, registration details, payment proof, seller documentation, TDS workings and the Form 141 acknowledgement — for future reference and assessment
Where a property is purchased jointly by more than one buyer, each buyer (deductor) must file a separate Form 141, reporting their own proportionate share of the consideration and the corresponding TDS — the schedule does not permit a single consolidated filing across co-buyers.
11. Practical Points Worth Flagging to Clients
| Point | Why It Matters |
|---|---|
| No PAN for the seller | Overseas contact, email and address details become mandatory — and the Rule 217 details in Schedule E columns (H)/(I) must be furnished to avoid deduction at the higher rate that otherwise applies to a payee without PAN |
| Instalment payments | Each instalment must be tagged correctly as first, subsequent or last, with the previous acknowledgement number carried forward — getting this sequence wrong can misstate the cumulative consideration reported |
| Capital gains character | The seller's long-term/short-term classification feeds directly into the correct TDS rate — this should be confirmed with the seller's documentation, not assumed |
| Section 202(1) opt-out | Where the seller has opted out of the default tax regime for the relevant tax year, this affects the applicable rate and must be captured in the transaction details |
| Portal readiness | Since the rules take effect from 1 October 2026, buyers should confirm that the e-filing portal's Form 141 workflow actually displays the new non-resident property option and Schedule E before relying on it for a live transaction |
- CBDT Notification No. 121/2026, dated 22.09.2026, effective 1 October 2026, extends Form 141 to cover TDS on property bought from a non-resident seller by a resident individual/HUF, under Section 393(2), Table Sl. No. 17
- No TAN is required — the transaction is reported through the buyer's PAN, via the new Schedule E in Part B of Form 141
- Resident-to-resident property TDS continues unchanged under the existing schedule for Section 393(1) — Schedule E is additive, not a replacement
- Schedule E requires detailed overseas seller information — PAN (if any), status, TRC number, foreign TIN, contact and address details — mandatory even where the seller has a PAN
- Form 132 (TDS certificate) gets a new checkbox for this category of transfer, and its Part B cross-reference is corrected from "132" to "141"
- Lower/nil deduction certificates issued under the new Section 395(6) route, by the prescribed income-tax authority, are now expressly recognised alongside Assessing Officer certificates
- Where there is more than one buyer, each must file a separate Form 141
12. Final Practitioner Takeaway
This is a genuinely welcome simplification — it removes a disproportionate compliance step (obtaining a TAN) for what is, for most resident individuals and HUFs, a one-off property purchase. But the simplification is procedural, not substantive: the underlying TDS obligation under Section 393(2), the rate, and the need for complete, accurate seller documentation — particularly where the seller has no PAN — are unchanged and, if anything, more visible now that they sit inside a structured schedule rather than a general TAN-based statement.
The practical risk to watch for in the early weeks after 1 October 2026 is portal readiness — the rule is effective from that date, but the e-filing portal's actual Form 141 workflow needs to display the new non-resident property option and Schedule E before a buyer can rely on it for a live transaction. Confirming this before the payment date, rather than after, avoids an avoidable last-minute scramble.
The complete text of CBDT Notification No. 121/2026, F. No. 370142/29/2026-TPL, dated 22 September 2026 (Income-tax (Fifth Amendment) Rules, 2026), as published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), is attached below for reference.
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