Finance Minister Nirmala Sitharaman on Sunday simplified Tax Deducted at Source (TDS) on property sales by non-residents. Resident buyers can now deduct and deposit TDS using a PAN-based challan, removing the need to apply for a Tax Deduction Account Number (TAN), she announced in the Union Budget 2026.
“TDS on sale of immobile property by a non-resident is proposed to be deducted and deposited through the resident buyer and his or her PAN-based challan. Instead of requiring a tan, which is a temporary accounting number,” the Finance Minister said, presenting her ninth consecutive Budget.
TDS is a system where tax is deducted at the time a payment is made and deposited with the Income Tax Department on behalf of the recipient. It applies to income such as salary, bank interest, rent, professional fees, commissions, dividends and property transactions. The tax deducted is reflected in Form 26AS and the Annual Information Statement, and is adjusted against the final tax liability at the time of filing returns.
Nirmala Sitharaman also announced a one-time six-month foreign asset disclosure scheme to address compliance issues faced by students, young professionals, expatriate employees and relocated NRIs.
“To address practical issues of small taxpayers, I propose to introduce a one-time six-month foreign asset disclosure scheme,” Sitharaman said.
Under the scheme, two categories of taxpayers will be covered. For Category A, involving undisclosed overseas income or assets of up to Rs 1 crore, taxpayers will have to pay 30% tax on the fair market value or undisclosed income, along with an additional 30% tax in lieu of penalty, and will receive immunity from prosecution.
For Category B, where overseas income was disclosed and tax paid but assets were not declared, assets up to Rs 5 crore will be eligible for immunity from both penalty and prosecution on payment of a Rs 1 lakh fee. The Budget also proposed a significant reduction in Tax Collected at Source (TCS). Sitharaman announced that TCS on overseas tour programme packages will be reduced to 2% without any threshold, and TCS for education and medical expenses under the Liberalised Remittance Scheme (LRS) will be cut from 5% to 2%. “I propose to reduce the TCS rate… from 5% and 20% to 2%,” she said.
