NRI Selling Property in India 2026: The TDS and PAN Survival Guide
By Gagandeep SinghUpdated Editorial standards
Most NRI property sales we hear about start with a WhatsApp message that has nothing to do with tax: "We finally found a buyer for the Pune flat." The relief lasts about a week. Then the buyer's lawyer sends a one-line email — "Please share your PAN and a lower-TDS certificate if you have one" — and the seller, sitting in Leicester or Hounslow, realises they understand none of it. How much TDS? On the gain, or the whole sale? What is a TAN, and why does the buyer suddenly not need one? And the most awkward question of all: do I even have a working PAN?
This guide is the playbook we give UK-resident NRIs before they sign anything. We will walk through the 2026 TDS rules for an NRI selling Indian property, the genuinely helpful PAN-not-TAN change that lands on 1 October 2026, the long-term capital gains rate, the lower/nil-TDS certificate that stops the tax department holding a fortune of your money hostage, and — the part everyone skips until it is too late — why a valid PAN with the correct Non-Resident status is the very first brick in the wall.
If you have never sorted your Indian tax identity, start with our NRI PAN card 2026 guide. And if you are juggling this alongside your wider Indian paperwork, OCI vs Indian visa 2026 explains where your residency and OCI status fit.
Why TDS on an NRI sale feels so harsh
When a resident buys property from another resident, the buyer deducts a small 1 percent TDS on the sale value and moves on. When the seller is an NRI, the world changes.
The buyer is now deducting under the non-resident provisions, and two things make it sting:
- The rate is much higher. For a long-term sale the headline rate is 12.5 percent (plus surcharge and cess). With surcharge and the 4 percent health-and-education cess layered on, the effective rate on a large transaction can climb into the mid-teens — commonly quoted around 14.95 percent at the top, and higher still where the deduction is computed on the full sale value.
- It is deducted on the whole sale price, not just your gain. This is the cruel part. Unless you hold a certificate that says otherwise, the buyer must apply that percentage to the entire sale consideration, not to the profit you actually made. On a flat you bought decades ago that has barely doubled, the TDS can dwarf your real tax bill — and the surplus sits with the Income Tax Department until you file a return and claim it back, often many months later.
Read that twice. Without a lower or nil TDS certificate, the buyer deducts the non-resident rate on the gross sale price, not on your capital gain. On a property that appreciated modestly, the deduction can be several times your actual tax liability — money you will only see again after you file your Indian return and the refund clears.
Long-term vs short-term
If you held the property for more than 24 months, the gain is long-term and taxed at the 12.5 percent regime (without indexation) that applies to transfers on or after 23 July 2024. There is an indexation nuance for certain properties acquired before that date — a point worth confirming with a CA rather than guessing, because it can change your number materially. If you held it for 24 months or less, the gain is short-term and taxed at your slab rate, with TDS deducted accordingly. Either way, the deduction is on the full sale value unless you have a certificate.
The 1 October 2026 change: PAN instead of TAN
Here is the genuinely good news, and it is the headline reason this topic is in the air in 2026.
Historically, a buyer purchasing from an NRI had to obtain a TAN (Tax Deduction and Collection Account Number) before they could deposit your TDS, then file a Form 27Q return. For an ordinary family buying one flat, getting a TAN was a real, time-consuming hurdle — and a frequent reason deals with NRI sellers stalled or fell through.
Under the Finance Act 2026 changes, from 1 October 2026 an individual or HUF buyer making a one-off purchase from an NRI can deposit the TDS using their PAN and a challan-cum-statement, instead of obtaining a TAN. In other words, buying from an NRI starts to look more like the simple resident-to-resident process.
Two honest caveats, because the headlines tend to drop them:
- Until 30 September 2026, the old TAN route still applies. If your sale completes before October, your buyer is still in the TAN-and-Form-27Q world.
- Companies and non-individual buyers still need a TAN. The PAN simplification is aimed at ordinary individual and HUF buyers, not corporate purchasers.
And critically: the buyer's obligation to deduct does not disappear. Only the mechanism for depositing the TDS gets simpler. The rate, the base, and your need for a certificate are all unchanged.
| Until 30 Sep 2026 (or company buyer) | From 1 Oct 2026 (individual buyer) | |
|---|---|---|
| Buyer needs a TAN | Yes | No, PAN is enough |
| Return or challan | Form 27Q return | Challan-cum-statement on PAN |
| Setup burden on buyer | High | Low |
| TDS rate and base | Unchanged | Unchanged |
| Your need for a lower-TDS cert | Same | Same |
The PAN-not-TAN change helps the buyer. It does nothing about the fact that, absent a certificate, TDS still comes off your gross sale value. Sellers sometimes hear "PAN instead of TAN — it is simpler now" and assume the deduction itself got smaller. It did not. Your lever for reducing the deduction is still the lower-TDS certificate, covered below.
The lower/nil-TDS certificate (Form 13): your real lever
This is the single most valuable thing an NRI seller can do, and most learn about it a week too late.
You — the seller — can apply to your Jurisdictional Assessing Officer under Section 197, using Form 13, for a lower or nil TDS certificate. If granted, the certificate instructs the buyer to deduct TDS only on your actual computed capital gain, rather than on the gross sale value. On a long-held, modestly-appreciated property, that is the difference between, say, tax on a small gain versus a deduction on the entire sale price.
The mechanics that matter:
- It is applied for online through the income-tax portal, and processed by your Assessing Officer.
- It typically takes several weeks — commonly cited as around 30 to 45 days — so it must be started well before completion, not after.
- The certificate has to be in the buyer's hands before they remit substantial consideration, because once they deduct at the full rate, recovering the excess means waiting for your return and refund.
Sequence is everything. The lower-TDS certificate only helps if it exists before the buyer pays you. Decide early whether you want to go this route, gather your cost-of-acquisition documents, and file Form 13 as soon as the buyer is firm. A few weeks of lead time can keep a very large sum out of the tax department's hands.
Why PAN is the very first step
None of the above functions without a PAN. It is mandatory, and it is mandatory correctly:
- The buyer needs your PAN to deposit the TDS and to credit it against your account.
- You need that TDS credit to show up against your PAN so you can claim it (or your refund) when you file.
- A Form 13 lower-TDS application is filed on your PAN.
And it is not enough merely to have a PAN card from twenty years ago. It must reflect your Non-Resident status. NRIs and OCIs are generally exempt from PAN-Aadhaar linking, but the income-tax database can still carry stale Resident status — and a PAN flagged inoperative or wrongly showing Resident causes higher deductions, refund delays, and nervous emails from the buyer's bank.
Under PAN 2.0, the application forms changed: from 1 April 2026, foreign citizens, OCIs and PIOs apply on Form 95 (Indian citizens, including resident-Indian-citizen NRIs, use Form 93). If you have never held a PAN, or yours is dormant, getting a correctly-issued PAN showing Non-Resident status is the foundation of the whole sale — which is exactly why we treat the NRI PAN card service as step zero of any property-sale conversation.
If your PAN is inoperative, or still lists you as Resident, TDS can be deducted at a higher rate, your refund can stall, and your CA cannot cleanly file your return. Check your PAN's status and residential classification on the income-tax portal before you list the property. Updating status to Non-Resident — or obtaining a properly-issued PAN — is far cheaper done in advance than untangled mid-sale.
The order of operations for a UK NRI seller
Here is the sequence we walk sellers through, deliberately front-loaded with the boring tax-identity work that prevents the expensive surprises.
Selling your Indian property from the UK, in order
- Fix your PAN first — confirm you hold a valid PAN, that it is operative, and that it shows Non-Resident status. No PAN, no clean sale.
- Establish your numbers — gather proof of your original cost of acquisition and any improvement costs, so your true capital gain can be computed.
- Decide on a lower-TDS certificate — if the deduction on gross value would far exceed your real tax, file Form 13 early and budget several weeks.
- Brief the buyer on the deposit route — TAN-based until 30 Sep 2026 (and for company buyers); PAN-based challan from 1 Oct 2026 for individual buyers.
- Complete the sale and collect the TDS evidence — keep the deduction certificate and challan details for your return.
- File your Indian return — claim the TDS credit, settle the final liability, and recover any excess as a refund.
When DIY is fine, and when you should bring in help
We will be straight with you, because the honest answer here is split.
Where DIY genuinely works: if you already hold a valid PAN with correct Non-Resident status, your gain is modest and easy to compute, and you are comfortable coordinating with the buyer's CA, much of this can be handled without an agent. The 2026 PAN-not-TAN change has, for once, made part of the process simpler rather than harder.
Where it earns its fee: the lower-TDS certificate, the repatriation of sale proceeds out of India, and computing the gain across indexation nuances are CA territory — a good chartered accountant in India is worth far more than they charge on a transaction of this size, and we will tell you so rather than pretend otherwise. NriDirect's lane is the identity layer: making sure your PAN exists, is operative, and shows Non-Resident status before any of that begins. Get that wrong and even the best CA is blocked.
If your PAN is missing, dormant, or wrongly flagged, that is exactly the problem we fix every week. We sort the NRI PAN card end-to-end — fresh PAN on the correct PAN 2.0 form, status corrections to Non-Resident, and reactivation of an inoperative PAN — so your property sale can actually proceed.
Selling Indian property from the UK is very doable in 2026, and the rules just got a little kinder. But the deductions are unforgiving and the tax department holds your surplus until you claim it back. Start with the one thing that unblocks everything else — a clean, correctly-classified PAN — and the rest of the sale gets a great deal calmer. For the wider picture on Indian paperwork from the UK, our Indian PCC for Canada and Australia 2026 guide shows how the same identity documents recur across every NRI process.
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Apply for or update your PAN card as an NRI. Essential for property, tax, and banking in India. No VFS visit needed.
Turnaround: ePAN 7-12 days, physical card 20-25 days
This guide reflects the TDS, capital-gains, and PAN rules affecting NRIs selling Indian property as observed by NriDirect in 2026, including the PAN-instead-of-TAN change effective 1 October 2026, the 12.5 percent long-term rate, and the Form 13 lower-TDS route. Tax rates, surcharge, thresholds, and procedures change without notice and depend on your individual circumstances — verify current details with the Income Tax Department↗ and always consult a qualified chartered accountant or tax professional before transacting. NriDirect is an independent agent, assists only with PAN and consular paperwork, and is not affiliated with the Income Tax Department or any Indian government body.
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