The Finance Bill, 2026 proposes a significant compliance relaxation under the Income-Tax Act, 2025 by exempting resident individuals and Hindu Undivided Families (HUFs) from the requirement to obtain a Tax Deduction and Collection Account Number (TAN) when purchasing immovable property from a non-resident seller. Under the existing framework, while buyers of property from resident sellers were already exempt from obtaining TAN, buyers dealing with non-resident sellers were required to obtain TAN even for a single transaction, leading to disproportionate compliance burden. To address this anomaly, Clause 75 amends section 397(1)(c) to extend the TAN exemption to resident individuals and HUFs deducting tax at source under section 393(2) on consideration paid for transfer of immovable property. The amendment aims to simplify compliance, reduce procedural hurdles, and align the treatment of resident buyers irrespective of the seller’s residential status. This change will come into effect from 1 October 2026.
Relaxation from requirement to obtain tax deduction and collection account number (TAN) by a resident individual or HUF, where the seller of the immovable property is a non -resident
Section 397(1)(a) of the Act provides that every person, deducting or collecting tax shall apply to the Assessing Officer for the allotment of a “tax deduction and collection account number” (TAN). Clause (c) of the said sub-section provides for cases where a person is not required to obtain TAN.
2. Presently, if a person buys an immovable property from a resident seller, the person is not required to obtain (TAN) to deduct tax at source. However, where seller of the immovable property is a non-resident, the buyer is required to obtain TAN to deduct tax at source. This creates unnecessary compliance burden for the buyer, as he would need TAN for a single transaction.
3. In order to reduce compliance burden for the resident individual and Hindu undivided family, it is proposed to amend section 397(1)(c) of the Act to provide that resident individual or Hindu undivided family, is not required to obtain TAN to deduct tax at source in respect of any consideration on transfer of any immovable property under section 393(2) [Table Sl. No. 17].
4. The amendment will take effect from the 1st day of October, 2026.
[Clause 75]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 75 of the Bill seeks to amend section 397 of the Income-tax Act, 2025 relating to compliance and reporting.
Clause (a) of sub-section (1) of the said section requires that every person, deducting or collecting tax shall apply to the Assessing Officer for the allotment of a “tax deduction and collection account number”.
Clause (c) of sub-section (1) of the said section provides that the provisions of clause (c) shall not apply in certain cases specified therein.
It is proposed to substitute clause (c) of the said sub-section so as to provide that the provisions of clause (a) shall not apply to––
i. a person in respect of transaction where he is required to deduct tax under section 393(1) [Table: Sl. Nos. 2(i), 3(i) or 6(ii)]; or
ii. a person referred to in section 393(4) [Table : Sl. No. 12.C(a)] in respect of transaction where he is required to deduct tax on consideration for transfer of a virtual digital asset under section 393(1) [Table : Sl. No. 8(vi)]; or
iii. a resident individual or Hindu undivided family in respect of transaction where he is required to deduct tax on any consideration for the transfer of any immovable property under the provisions of section 393(2) [Table : Sl. No. 11]; or
iv. a person notified in this regard by the Central Government.
This amendment will take effect from 1st October, 2026.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
75. Amendment of section 397.
In section 397 of the Income-tax Act, in sub-section (1), for clause (c), the following clause shall be substituted with effect from the 1st October, 2026, namely:––
“(c) the provisions of clause (a) shall not apply to––
(i) a person in respect of a transaction where he is required to deduct tax under section 393(1) [Table: Sl. No. 2(i), 3(i) or 6(ii)]; or
(ii) a person referred to in section 393(4) [Table: Sl. No. 12.C(a)] in respect of a transaction where he is required to deduct tax on consideration for transfer of a virtual digital asset under section 393(1) [Table: Sl.No.8(vi)]; or
(iii) a resident individual or Hindu undivided family in respect of a transaction where he is required to deduct tax on any consideration for the transfer of any immovable property under section 393(2) [Table: Sl. No. 17]; or
(iv) a person notified in this regard by the Central Government.”.
