The Central Board of Direct Taxes (CBDT) has announced significant changes to simplify Tax Deducted at Source (TDS) compliance for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-resident sellers. These new rules, part of the Income-tax (Fifth Amendment) Rules, 2026, are set to take effect from October 1, 2026.
Key Changes to TDS Reporting Framework
A central element of this simplification is the expansion of Form No. 141. This form will now specifically cover property transactions where a non-resident transfers immovable property to a resident individual or HUF. The notification, issued on September 22, brings these transactions under section 393(2), Table Serial No. 17, within the updated TDS reporting framework.
Introducing Schedule E: Detailed Transaction Information
To facilitate the new compliance, a new Schedule E has been inserted into Form 141. This schedule is specifically designed for TDS on consideration paid for the transfer of immovable property under section 393(2). It mandates comprehensive details, ensuring transparency and accuracy in reporting.
Information Required in Schedule E:
- Property Details: Address and type of property.
- Party Details: Information for all buyers and sellers, including PAN (if available), seller status, contact details, email ID, and overseas address.
- Seller Residency: Tax residency certificate and tax identification number for non-resident sellers.
- Transaction Specifics: Date of agreement, registration date, stamp duty value, and total sale consideration.
- Payment Structure: Whether payment is lump sum or in instalments. For instalments, buyers must indicate if it's the first, subsequent, or final payment, providing previous acknowledgement numbers where applicable.
TDS Calculation and PAN Requirements
For each non-resident seller, Schedule E will require specific financial details:
- Amount paid or credited.
- Date of payment.
- Amount on which TDS is liable to be deducted.
- Applicable TDS rate.
- Total tax deducted.
The form also includes provisions for reporting certificate numbers if any certificates under relevant provisions have been obtained. In cases where a non-resident seller does not possess a Permanent Account Number (PAN), additional contact information such as their contact number, email ID, and overseas address, along with tax residency and identification details, will be crucial for determining the correct TDS rate.
Guidance for Multiple Deductors
The CBDT has clarified that if there is more than one deductor involved in a transaction, each deductor must file a separate Form 141. The new framework aims to streamline the process, with some information in the form expected to be pre-filled to the extent possible, and amounts generally required to be reported in Indian Rupees.
These changes are expected to significantly simplify the TDS compliance burden for resident individuals and HUFs involved in property transactions with non-residents, ensuring a clearer and more structured reporting mechanism from October 1, 2026.