The Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026. Tax rates did not change, but the references did: TDS on payments to NRIs now sits in Section 393(2), tenants file Form 144 instead of Form 27Q, and lower deduction certificates use Form 128 under Section 395.
What actually changed on 1 April 2026
The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961. The Income Tax Department's transition FAQs state that the new law does not impose any new tax. Its purpose is simpler language and structure. For NRI property owners, three things change in practice:
- Tax Year replaces "previous year" and "assessment year". Income earned from 1 April 2026 to 31 March 2027 is Tax Year 2026-27.
- Section numbers and form numbers changed. Your tenant, buyer and CA now use new references.
- Which Act applies depends on when the income arose. Income up to 31 March 2026 (FY 2025-26) is assessed under the 1961 Act. Income from 1 April 2026 falls under the 2025 Act.
Old versus new: the references NRI owners need
| What it covers | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| TDS on payments to non-residents (rent, sale price) | Section 195 | Section 393(2), Table Sl. No. 17 |
| Lower or nil deduction certificate | Section 197, Form 13 | Section 395, Form 128 |
| Quarterly TDS return for non-resident payees | Form 27Q, Section 200(3) | Form 144, Section 397(3)(b) |
| TDS certificate to the payee | Form 16A | Form 131 |
| Remittance information and CA certificate | Forms 15CA and 15CB | Forms 145 and 146 |
| TDS on purchase from a resident seller | Section 194IA, Form 26QB | Section 393(1), Form 141 |
| Higher TDS when payee has no PAN | Section 206AA | Section 397(2) |
The Form 144 reference, its section and its due dates are confirmed in the Income Tax Department's Form 144 FAQs. For any other section, confirm the mapping with the department's section mapping utility or your CA before quoting it in an agreement.
If you are an NRI landlord
Your tenant must still deduct TDS from every rent payment, with no minimum threshold, now under Section 393(2). The effective rate for most individual NRI landlords remains 31.2%: 30% plus 4% health and education cess, with surcharge only at higher income levels. Our detailed guide to TDS on NRI rental income walks through the numbers and the lower deduction certificate that can reduce them.
What changes for your tenant is the paperwork:
| Quarter | Period | Due date |
|---|---|---|
| Q1 | April to June | 31 July |
| Q2 | July to September | 31 October |
| Q3 | October to December | 31 January |
| Q4 | January to March | 31 May of the following year |
October action point: the Form 144 return for July to September 2026 is due on 31 October 2026. Ask your tenant to confirm it has been filed, then ask for the Form 131 certificate so the credit matches in your tax statement.
Tenants still need a TAN to deduct TDS on rent paid to you. The Budget 2026 TAN relief applies only to buyers purchasing property from a non-resident, not to tenants.
If you are selling Hyderabad property
The substance is unchanged. Long term capital gains on property held for more than 24 months are taxed at 12.5% without indexation, and short term gains at slab rates, plus surcharge and cess. The buyer deducts TDS on the full sale consideration under Section 393(2) unless you obtain a lower deduction certificate using Form 128.
One procedural change is significant: from 1 October 2026, a resident individual or HUF buying from an NRI can deposit that TDS using their PAN instead of first obtaining a TAN. That removes a real source of delay in NRI sales. We explain it with worked examples in Buying property from an NRI: TDS without a TAN. For moving the money abroad afterwards, see our repatriation guide; the forms are now Forms 145 and 146.
Which Act governs which tax return
Your return for income earned from April 2025 to March 2026 (FY 2025-26) follows the 1961 Act, because that income arose before the new law began. Your return for Tax Year 2026-27, filed in 2027, will follow the 2025 Act. TDS certificates for deductions made up to 31 March 2026 will carry old section references; those made from 1 April 2026 carry new ones. Keep both sets together so that nothing is missed when your CA reconciles your tax credit statement.
Treaty relief still works the same way
If you live in a country that has a Double Taxation Avoidance Agreement with India, you may be able to claim a lower treaty rate or credit abroad. The documentary basis is unchanged in principle: a Tax Residency Certificate from your country of residence plus the prescribed self declaration. For rent and property gains, most treaties allow India to tax the income because the property is here, so the practical benefit is usually a credit in your country of residence rather than a lower Indian TDS rate.
Your October 2026 checklist
- Confirm your tenant filed Form 144 for July to September by 31 October 2026.
- Collect Form 131 certificates for every quarter of Tax Year 2026-27 so far.
- If your TDS is far higher than your real tax, apply for a Form 128 certificate for the rest of the tax year.
- Update your rental agreement's TDS clause to cite Section 393(2) for new or renewed tenancies.
- If you plan to sell, apply for the lower deduction certificate before signing the sale agreement.
Frequently asked questions
Did tax rates for NRIs change under the Income-tax Act, 2025?
No. The Income Tax Department's transition FAQs state that the new Act does not impose any new tax. Rates and slabs continue as set by the Finance Act; the section numbers, form numbers and the Tax Year concept changed.
Is Section 195 still valid for NRI rent?
For deductions made up to 31 March 2026, yes. For deductions from 1 April 2026, the correct reference is Section 393(2) of the Income-tax Act, 2025, Table Sl. No. 17, which carries the same obligation forward.
What is Form 144?
Form 144 is the quarterly TDS return for payments other than salary made to non-residents. It replaced Form 27Q from Tax Year 2026-27. The July to September quarter is due by 31 October.
Do I need a new lower TDS certificate under the new Act?
Lower deduction certificates are issued for a specified period, so Tax Year 2026-27 needs its own certificate. Under the 2025 Act the application is made in Form 128 under Section 395.
Which Act applies to my FY 2025-26 income tax return?
The Income-tax Act, 1961, because the income arose before 1 April 2026. Income from 1 April 2026 onwards is assessed under the Income-tax Act, 2025 as Tax Year 2026-27.
Official sources checked
- Income Tax Department: FAQs on Interplay and Transition to the Income-tax Act, 2025
- Income Tax Department: Form No. 144 FAQs
- Income Tax Department: Form No. 144 reference note
- Income Tax e filing portal
- TRACES, TDS Reconciliation Analysis and Correction Enabling System
This guide is general information for property owners and is not legal, tax or financial advice. Rules change, and your facts matter. Confirm your specific situation with a Chartered Accountant or a Telangana advocate before acting.
Is your tenant's TDS paperwork on track?
We coordinate Form 144 filings, Form 131 certificates and lower deduction applications with your tenant and CA every quarter.