CBDT Notification No. 121/2026: How Form 141 and Schedule E Transform TDS Compliance for Non-Resident Property Transactions
Overview of the Regulatory Change
CBDT Notification No. 121/2026, dated 22 September 2026, introduces a significant structural shift in the way tax deduction at source is reported when immovable property is purchased from a non-resident seller. Operational from 1 October 2026, this notification amends the Income-tax Rules, 2026 — specifically through the Fifth Amendment Rules, 2026 — and brings Section 393(2) transactions within the ambit of Form No. 141, accompanied by a newly introduced Schedule E.
This is not a minor administrative update. The amendment repositions Form 141 from a relatively lean challan-cum-statement into a comprehensive, transaction-level information instrument. Every party involved in such a property closing — buyers, legal advisers, chartered accountants, brokers and authorised representatives — must recalibrate their compliance checklists accordingly.
Important: The compliance architecture for property purchases from a non-resident differs fundamentally from the familiar resident-seller mechanism. Conflating the two can lead to errors in rate application, reporting, and credit in the seller's tax account.
What Has Notification No. 121/2026 Actually Changed?
Inclusion of Section 393(2) Transactions in Form 141
Prior to this amendment, the reporting mechanism for TDS on non-resident property transfers operated under a framework that lacked transaction-level granularity now mandated by Schedule E. Notification No. 121/2026 specifically brings Section 393(2) transactions into Form No. 141 and mandates a structured Schedule E for such filings.
The earlier assumption that a resident individual or Hindu Undivided Family (HUF) purchasing property from a non-resident must invariably obtain a Tax Deduction Account Number (TAN) solely for this transaction has also been addressed. The notification modifies the TAN-related identification and compliance mechanics for such specified buyers — but this relaxation is limited in scope.
Critical Clarification: The TAN relaxation does not eliminate or dilute the underlying obligation to deduct, deposit, and report tax. It alters the identification route, not the substantive legal duty.
Introduction of Schedule E: A Detailed Transaction-Level Schedule
Schedule E is the centrepiece of Notification No. 121/2026. It converts what was previously a brief challan with limited data fields into a granular property-transfer record. The schedule captures:
- Property details — description, location, and nature of the asset
- Buyer particulars — complete identity and contact information for each buyer
- Non-resident seller particulars — identity, overseas address, and tax-residency information
- Consideration details — agreed sale price and stamp-duty value
- Payment schedule — instalment break-up and dates of payment or credit
- Capital gain–related particulars — where applicable
- Applicable TDS rate — including surcharge and cess
- Certificate details — if a lower or appropriate deduction certificate under
Section 395has been obtained - Amount actually deducted — tax withheld at source
This level of detail signals a clear regulatory intent: the government wants transaction-level visibility into non-resident property transfers, not merely aggregated or summary-level data.
Who Is Directly Affected by This Amendment?
Primary Audience: Property Buyers
The assessee who is acquiring immovable property from a seller who qualifies as a non-resident under Indian income-tax law is the principal party bearing the TDS obligation and the new reporting responsibility.
One of the most consequential practical points here is the determination of residential status. Residential status is a legal characterisation under the Income Tax Act, 2025 — it cannot be assumed from:
- The seller's citizenship or passport country
- An overseas postal address
- The seller's self-description as an NRI