New reporting rules introduced on 1 October aim to enhance traceability in cross-border real estate deals by streamlining compliance while maintaining effective tax collection mechanisms.
The Income Tax Department has tightened reporting rules for property deals involving non-resident sellers, while also making the filing process easier for resident buyers who must deduct tax at source. The changes, which take effect on 1 October, are designed to improve traceability in cross-border real-estate transactions without adding a separate tax account number requirement for one-off purchasers.
According to tax advisers quoted by The Hindu BusinessLine, the revised framework keeps the buyer’s obligation to withhold and report tax intact, but reduces some of the procedural friction that previously applied when a resident individual or Hindu undivided family bought immovable property from a non-resident. Under the updated rules, buyers will be able to use their permanent account number, or PAN, instead of applying for a tax deduction and collection account number, commonly known as TAN, for this specific type of transaction.
The filing process will run through an amended Form 141, which now includes a new Schedule E for property purchases from non-residents. Moneycontrol and Mint both reported that the revised form is intended to capture more detailed information about the transaction, including the property, the buyer and the overseas seller, while also simplifying payment and reporting. Where there is more than one buyer, each buyer must file a separate Form 141.
Tax specialists said the changes should help the tax department follow instalment-based payments more closely. The Hindu BusinessLine reported that the new reporting format records the nature of each instalment and links later or final payments to the original acknowledgement, making it easier to track the full consideration and the related tax deducted at source. The revised rules also require buyers to gather more documentation at the outset, including the seller’s overseas address, contact details, registration dates, sale value and payment information.
Amit Maheshwari of AKM Global told The Hindu BusinessLine that the additional disclosure, including the seller’s tax residency certificate and foreign tax identification number where applicable, should improve information matching on cross-border property transfers. Zeel Jambuwala of Aurtus said the relief is mainly procedural, because tax must still be deducted at the rates that apply to the non-resident seller’s capital gains, plus surcharge and cess, rather than the 1% rate that applies to resident-seller purchases. Jambuwala also noted that the ₹50 lakh threshold does not apply when the seller is a non-resident.
Jayesh Sanghvi of EY India told The Hindu BusinessLine that the policy direction is to remove avoidable compliance barriers for genuine buyers while strengthening reporting and traceability. For sellers without a PAN, the new rules require a tax residency certificate and foreign tax identification number, and where those are not provided, tax will be deducted at a higher rate. The combination of lighter entry requirements for buyers and fuller disclosure obligations for the parties involved suggests the department is trying to make compliance simpler at the front end and stricter at the reporting end.
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