Summary: CBDT Notification No. 121/2026 materially expands transaction-level TDS reporting for immovable property purchased from a non-resident. Effective 1 October 2026, Form 141 incorporates the covered section 393(2) transaction through a new Schedule E requiring detailed information on the property, buyers, non-resident sellers, consideration, stamp-duty value, instalments, applicable rate, certificates and tax deducted. The amendment also changes the TAN mechanics for specified resident individual/HUF buyers, but it does not remove the underlying obligation to deduct and report tax. This guide explains the operational impact and a practical closing checklist.
- What Notification No. 121/2026 Changes
- Who Needs to Pay Attention
- Schedule E: Information That Should Be Collected Before Filing
- Rate, Consideration and Timing: Why a Professional Computation Matters
- Forms 141 and 132 After 1 April 2026
- Practical Closing Checklist
- Useful TaxGuru References
- Frequently Asked Questions
- Key Takeaways
What Notification No. 121/2026 Changes
CBDT Notification No. 121/2026, dated 22 September 2026, took effect from 1 October 2026 and changes the reporting mechanics for tax deduction on transfer of immovable property where the seller is a non-resident. The change is important because property TDS involving a non-resident is not the same compliance exercise as the familiar resident-seller property mechanism. The buyer has to determine the correct provision, rate and reporting route by reference to the seller’s residential status and the transaction facts.
The amended framework brings section 393(2) transactions into Form No. 141 and introduces a detailed Schedule E. Schedule E captures the property, buyer and non-resident seller, sale consideration, stamp-duty value, instalments, capital-gain related particulars, applicable TDS rate, any certificate obtained for lower or appropriate deduction, and the amount actually deducted. The design therefore moves the filing closer to a transaction-level information statement rather than a short challan with limited data.
The notification also removes the earlier practical assumption that a resident individual or HUF buying property from a non-resident necessarily has to obtain TAN merely for this transaction. That relaxation does not remove the duty to deduct and report tax. It changes the identifier/compliance route, not the substantive obligation.
Who Needs to Pay Attention
The principal audience is a buyer of immovable property from a seller who is non-resident for Indian income-tax purposes. Residential status is a tax-law determination and should not be inferred only from citizenship, passport, overseas address or the fact that the seller describes himself as an NRI. The buyer should obtain and retain an appropriate declaration and supporting information.
The amendment is also relevant to tax advisers, property lawyers, brokers, chartered accountants and authorised representatives because a property closing can fail operationally if the parties discover the non-resident status only after consideration has been paid. The correct approach is to identify residency and the deduction mechanism before the first taxable payment or credit.
Where there are multiple buyers, the reporting responsibilities should be mapped buyer-wise. The notification specifically contemplates separate filing where there is more than one deductor. Parties should therefore avoid treating one buyer’s filing as automatically discharging every co-buyer’s reporting responsibility.
Schedule E: Information That Should Be Collected Before Filing
The new Schedule E requires substantially more structured information. Buyers should collect the complete identity and contact particulars of each party, property description, agreement value, stamp-duty value, payment schedule, amount already paid, date of payment or credit, and the tax computation basis. For the non-resident seller, overseas address and tax-residency information can become relevant.
Where PAN of the non-resident is unavailable, the notification points to additional information under Rule 217, including tax residency certificate and foreign tax identification information, for the higher-rate consequences to be evaluated correctly. This should not be read as a general licence to ignore PAN. It is a specific information framework that needs to be satisfied on its own terms.
If a certificate under section 395 has been obtained, the certificate particulars and rate should be captured accurately. Buyers should not independently substitute a lower rate merely because the seller expects a low capital gain. The deduction obligation is governed by law and any applicable certificate, not by an informal estimate communicated during negotiation.
Rate, Consideration and Timing: Why a Professional Computation Matters
The Income-tax Act, 2025 has applied from 1 April 2026. That transition matters because many familiar concepts continue but section numbers, prescribed forms and reporting architecture have changed. A compliance article for tax year 2026-27 therefore needs to identify the current provision and, where useful, explain the old-law equivalent instead of assuming that readers can translate references themselves. Taxpayers should also distinguish a statutory liability from the mechanics of portal filing: the portal enables compliance, but it does not enlarge or reduce the underlying legal obligation.
Record keeping remains central. A taxpayer or deductor should preserve the source document, computation, challan, acknowledgement, correspondence, working papers and evidence supporting the legal position adopted. Where a return, statement or form is corrected, both the original and corrected versions should be retained so that the audit trail remains intelligible. This is particularly important when the correction changes PAN, residency, consideration, tax rate, deduction amount, challan mapping or another field that can affect credit in the recipient’s tax account.
Non-resident property transactions can involve the rate in force, surcharge and cess, treaty questions, capital-gain character, lower-deduction certificates and instalment payments. The amount withheld is therefore not safely determined by copying the resident-property percentage used in ordinary transactions. A buyer should obtain a transaction-specific computation before releasing consideration.
The agreement should also address how withholding will be handled. If consideration is stated gross of tax, the buyer deducts from the amount payable. If commercial documentation uses a net-of-tax formulation, grossing-up issues may arise and should be examined before payment. The tax mechanics should not be left to the registration day.
Forms 141 and 132 After 1 April 2026
The Income-tax Rules, 2026 reorganised several familiar TDS forms. Form No. 141 is the challan-cum-statement framework for specified transaction-level deductions, while Form No. 132 is the relevant TDS certificate in this redesigned system. Notification No. 121/2026 refines that architecture for non-resident property transfers from 1 October 2026.
Practitioners should update checklists, engagement letters and property-closing templates. A checklist that still refers only to Form 26QB or Form 16B can produce avoidable errors after the statutory transition. Software teams should likewise ensure that validations distinguish resident and non-resident seller cases.
Practical Closing Checklist
Before signing or paying, confirm the seller’s tax residential status, PAN or alternative prescribed identification details, ownership share, property particulars, consideration and stamp-duty value. Before each payment, determine the deduction rate and whether a lower-deduction certificate applies. At filing stage, reconcile the challan, transaction amount, seller details and Schedule E. After filing, preserve the acknowledgement and issue/download the prescribed certificate within the applicable timeline.
A final reconciliation should compare the agreement, bank payment, TDS payment, Form 141 data and certificate. Any mismatch should be corrected promptly rather than waiting for the seller to discover missing credit while filing the return.
Useful TaxGuru References
CBDT amends TDS rules for non-resident immovable-property transfers
TDS on property transfers from 1 April 2026: Forms 141 and 132
Frequently Asked Questions
1. Does Notification 121/2026 apply from 1 October 2026?
Yes. The notification states that the Fifth Amendment Rules, 2026 come into force on 1 October 2026.
2. Is a non-resident seller transaction the same as buying from a resident?
No. The applicable deduction provision, rate analysis and reporting particulars differ materially.
3. Does the TAN relaxation mean no TDS is required?
No. It changes an identification/compliance requirement; it does not abolish the underlying deduction obligation.
4. What is Schedule E?
It is the detailed property-transfer schedule added to Form 141 for the covered non-resident immovable-property transaction.
5. What if the seller has no PAN?
The prescribed alternative information and Rule 217 conditions must be examined; the buyer should not assume that PAN consequences disappear.
6. Can the buyer use a lower rate estimated by the seller?
A lower rate should be supported by the applicable legal basis, including a valid certificate where required.
7. Should each co-buyer file separately?
The notification indicates that where there is more than one deductor, each deductor has to file a separate form.
8. Should old Form 26QB/16B checklists still be used?
They should be updated for the post-1 April 2026 form architecture and the 1 October 2026 amendment.
Key Takeaways
- Notification 121/2026 is effective from 1 October 2026.
- Form 141 now carries a detailed Schedule E for covered non-resident property transfers.
- Residency must be determined under tax law before applying the TDS route.
- TAN relaxation does not remove the duty to deduct, deposit and report tax.
- Co-buyers should map filing responsibility separately and preserve a complete audit trail.
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Disclaimer: This article is for general informational and educational purposes and summarises the law and reporting framework as understood on 6 October 2026. Property TDS involving a non-resident can depend on residential status, transaction structure, applicable rates, surcharge, cess, treaty position and certificates. Parties should verify the current statute, rules, portal utilities and professional advice before acting. TaxGuru, its owners, management, editors, authors, employees and associated persons accept no responsibility or liability for any loss, damage, consequence, decision or action arising from reliance on or use of this material.
