TDS on Property Purchase in India 2026 — Complete Guide (Section 194-IA)
TDS on Property Purchase Calculator
Know your exact TDS, filing form, and due date before you pay the seller.
Updated: 24 July 2026 | Fact-checked against Income Tax Department, Tax2win, ClearTax, Taxguru, CA Club India
Ramesh just bought a flat in Pune for ₹65 lakh. He paid the full amount to the seller, registered the property, and went home happy. Three months later, he got a notice from the Income Tax Department. The reason? He forgot to deduct TDS before paying the seller.
This happens more than you think. Thousands of property buyers in India every year land in trouble — not because they did anything dishonest, but because nobody told them about TDS on property purchase.
This guide will make sure that doesn’t happen to you.
What Exactly is TDS on Property?
TDS stands for Tax Deducted at Source. When you buy a property worth ₹50 lakh or more, the government does not want to wait until the seller files their income tax return to collect tax. So it puts the responsibility on you — the buyer — to deduct a small percentage of the payment before handing it over to the seller.
Think of yourself as a mini tax collector for just this one transaction.
This rule comes from Section 194-IA of the Income Tax Act, 1961 (and from April 1, 2026 onwards, the restructured equivalent under Section 393(1) of the Income Tax Act, 2025). The rate is simple: 1% of the sale consideration or stamp duty value, whichever is higher.
The seller gets the remaining 99%. They can later claim credit for this TDS amount when they file their ITR, and if tax is excess, they get a refund.
Who Has to Deduct This TDS?
The buyer — always. Not the seller. Not the builder. Not the broker.
If you are purchasing any immovable property (flat, plot, house, commercial space — anything except rural agricultural land) worth ₹50 lakh or more from a resident Indian seller, you must deduct 1% TDS before making any payment.
You don’t need a TAN (Tax Deduction Account Number) for this — for resident-seller purchases only. All you need is your PAN and the seller’s PAN. (NRI-seller purchases work differently — see the dedicated section further below.)
The ₹50 Lakh Threshold — One Critical Update Many People Miss
Here’s where most buyers make a mistake. They look only at the sale agreement value. But the law says TDS applies on the higher of two values:
- The sale consideration (what you actually pay the seller)
- The stamp duty value of the property (also called circle rate / ready reckoner value)
This change was introduced in Budget 2022 and is now firmly in place.
Example: You buy a flat and agree to pay ₹48 lakh to the seller. But the government’s circle rate for that area puts the property’s stamp duty value at ₹55 lakh. Even though you’re paying only ₹48 lakh, TDS still applies — and it applies on ₹55 lakh (the higher value).
So the TDS deductible = 1% of ₹55 lakh = ₹55,000.
This catches a lot of buyers off guard, especially in cities where circle rates have been revised upward recently.
The 1% TDS Calculation — Exactly How It Works
The formula is straightforward:
TDS = 1% × (Sale Consideration OR Stamp Duty Value, whichever is higher)
And here’s the most important thing to understand: TDS applies on the full sale value, not just the amount above ₹50 lakh.
Many buyers think: “My property is ₹60 lakh, so TDS is 1% of ₹10 lakh = ₹10,000.” That is completely wrong.
Correct calculation: TDS = 1% of ₹60,00,000 = ₹60,000
The seller receives: ₹60,00,000 − ₹60,000 = ₹59,40,000
Quick Reference Table — TDS on Property Values
| Property Value | TDS Applicable? | TDS Amount | Net Amount to Seller |
|---|---|---|---|
| ₹45,00,000 | ❌ No | ₹0 | ₹45,00,000 |
| ₹50,00,000 | ✅ Yes | ₹50,000 | ₹49,50,000 |
| ₹75,00,000 | ✅ Yes | ₹75,000 | ₹74,25,000 |
| ₹1,00,00,000 | ✅ Yes | ₹1,00,000 | ₹99,00,000 |
| ₹2,50,00,000 | ✅ Yes | ₹2,50,000 | ₹2,47,50,000 |
TDS rate: 1% (no surcharge or cess added on resident-seller transactions — confirmed by Income Tax Department)
What If the Seller Doesn’t Have PAN?
Then your TDS rate jumps from 1% to 20% under Section 206AA.
If you pay ₹60 lakh to a seller who hasn’t given you their PAN (or whose PAN is not Aadhaar-linked), you’d need to deduct ₹12 lakh instead of ₹60,000. That’s a massive difference. Always get the seller’s PAN before any payment is made. No exceptions.
The Form Change You Need to Know About in 2026
This is the most critical update that most articles — including older versions of this page — get wrong or miss entirely.
For property transactions where payment was made on or before March 31, 2026: Use the old Form 26QB and TDS certificate is Form 16B (downloaded from TRACES).
For property transactions where payment is made on or after April 1, 2026: The Income Tax Act, 2025 applies. Form 26QB has been replaced by Form 141 (Schedule B). The TDS certificate is now Form 132 (downloaded from TRACES), which replaces Form 16B.
The due date remains the same: 30 days from the end of the month in which payment was made.
How to Pay TDS on Property — Step by Step (2026)
Let’s say you paid ₹65 lakh to the seller on July 10, 2026. Here’s exactly what you need to do:
Step 1: Deduct before paying Pay the seller ₹64,35,000. Retain ₹65,000 (1% of ₹65 lakh) to be deposited as TDS.
Step 2: Go to the Income Tax e-filing portal Visit incometax.gov.in. Log in with your PAN.
Step 3: File Form 141 (Schedule B) Under the Income Tax Act, 2025 section, select Form 141 and choose Schedule B (Transfer of Immovable Property). Enter buyer PAN, seller PAN, property details, sale consideration, stamp duty value, and amount of TDS.
Step 4: Pay online Pay ₹65,000 through net banking or UPI. The payment and filing happen in one step — Form 141 is a challan-cum-statement.
Step 5: Due date Since payment was made on July 10, 2026, Form 141 must be filed and TDS deposited by July 31, 2026 (30 days from end of July).
Step 6: Download Form 132 After processing (usually 5–7 working days), download Form 132 from TRACES and give it to the seller. This is their proof of TDS credit, which they will use when filing their ITR.
Note: If you’re a buyer individual or HUF purchasing from a resident seller, you do not need a TAN. Your PAN is sufficient. This does not apply when buying from an NRI seller — see below.
Joint Buyers — One Thing That Trips People Up
If two people are buying a property together — say husband and wife — each buyer must file a separate Form 141. Each buyer files for their proportionate share of the sale value and TDS.
Example: Flat worth ₹80 lakh, two joint buyers in equal 50-50 share.
- Buyer 1 files Form 141 for ₹40 lakh value, TDS = ₹40,000
- Buyer 2 files Form 141 for ₹40 lakh value, TDS = ₹40,000
- Total TDS deposited: ₹80,000 (1% of ₹80 lakh — correct)
Under the old Form 26QB system, 2 buyers + 2 sellers meant 4 separate forms. Under Form 141, it’s now one form per buyer regardless of number of sellers — a genuine simplification.
What About Instalment Payments?
Under-construction properties are often paid in multiple instalments. TDS applies on each instalment separately — not just the final payment. Every time you pay an instalment that, when added to previous instalments, takes the total above ₹50 lakh, you start deducting TDS.
Most people handling under-construction flats just deduct 1% TDS from each instalment throughout the payment schedule to keep it clean.
Penalties for Not Paying TDS on Time
This is where Ramesh from the beginning of this article got hurt. Here’s what happens if you don’t comply:
Late Filing Fee — Section 234E
₹200 per day from the due date until the date you actually file Form 141. This fee is capped at the total TDS amount — so it can never exceed the TDS you owe. But on a ₹65,000 TDS amount, at ₹200/day, you can hit the cap in just 325 days.
Interest on Late Deduction — Section 201(1A)
If you delay deducting TDS from the seller: 1% per month (or part of a month) from the date TDS was deductible to the date you actually deducted it.
Interest on Late Deposit — Section 201(1A)
After deducting TDS, if you delay depositing it with the government: 1.5% per month from the date of deduction to the date of deposit.
Penalty — Section 271H
An additional penalty of ₹10,000 to ₹1,00,000 can be imposed by the Assessing Officer for non-filing or incorrect filing. However, this penalty is waived if you file within 30 days of the due date, pay the TDS, and deposit the late fee and interest.
Real-world consequence: On a ₹1 crore property, if TDS of ₹1 lakh is delayed by 6 months, interest alone adds up to ₹9,000 (1.5% × 6 months). Not a huge amount, but you’ll also be answering a tax notice, which is far more inconvenient.
What Happens to the Seller?
The seller gets their 99% amount after TDS deduction. The TDS you deposit shows up in the seller’s AIS (Annual Information Statement) and Form 26AS automatically. When the seller files their ITR, they claim this TDS as a credit against their total tax liability. If their actual tax is less than what was deducted, the difference is refunded.
So the seller is not “losing” money — they’re just prepaying tax they would have to pay anyway.
Critical for the seller: They can only claim TDS credit after you file Form 141 and download Form 132. If you never file, the seller’s TDS credit doesn’t appear, and they end up paying full tax from their pocket. This is exactly why many sellers now insist on proof of TDS filing before handing over property documents.
When Does Section 194-IA NOT Apply?
TDS under this section is not required in these situations:
- Property value below ₹50 lakh (both sale consideration and stamp duty value are below ₹50 lakh)
- Rural agricultural land — explicitly exempt
- Compulsory government acquisition — falls under Section 194LA instead
- NRI sellers — completely different rules apply under Section 195 (see below)
Buying Property from an NRI Seller — Different Rules Entirely
If the person selling you the property is an NRI (Non-Resident Indian), do not apply the 1% rule, and do not assume the “PAN is enough” guidance from earlier in this article applies here — it doesn’t. Section 194-IA does not apply to NRI sellers at all.
Instead, Section 195 of the Income Tax Act applies, with a completely different rate structure, deposit mechanism, and deadline:
| Gain Type | Holding Period | TDS Rate (FY 2025-26) |
|---|---|---|
| Long-Term Capital Gain | More than 24 months | 12.5% (no indexation) + surcharge + 4% cess |
| Short-Term Capital Gain | 24 months or less | As per income slab, up to 30% + surcharge + cess |
Surcharge is what catches people off guard. On a straightforward LTCG sale with no surcharge slab triggered, the effective rate lands around 14.95%. But once the NRI’s total income crosses ₹50 lakh, surcharge pushes the effective rate to roughly 20.8%, and above ₹1 crore it climbs to nearly 23.92%. On a ₹1.5 crore sale, that’s the difference between withholding ~₹22.4 lakh and ~₹35.9 lakh — plan the seller’s payout accordingly.
Three things that work completely differently from a resident-seller purchase:
- You need a TAN, not just a PAN. This is the single most common mistake buyers make when purchasing from an NRI. Apply for a TAN via Form 49B at NSDL/UTIITSL before the transaction — you cannot deposit this TDS on your PAN alone the way you can under Section 194-IA.
- Filing is different. Deposit TDS using Challan 281, and file your TDS return on Form 27Q quarterly — not Form 141/26QB, and not a single post-payment filing.
- The deadline is shorter. TDS must be deposited by the 7th of the month following deduction — not the 30-day window that applies to resident-seller property purchases.
There is also no ₹50 lakh threshold for NRI sellers — TDS applies from rupee one.
By default, TDS is deducted on the entire sale value, not just the profit — which is why many NRI sellers apply for a Lower Deduction Certificate (via Form 13, under Section 197) from the Income Tax Department to reduce TDS to their actual tax liability. If your NRI seller has one, apply the rate specified on that certificate instead of the standard rate.
If you’re buying from an NRI and try to apply 1% TDS using your PAN, you’re non-compliant on multiple fronts at once. Always verify the seller’s residential status — and get your TAN sorted — before signing the agreement.
5 Common Mistakes Buyers Make (And How to Avoid Them)
- Mistake 1: Paying the full amount and then trying to deduct TDS later TDS must be deducted before paying the seller. If you’ve already paid, you are in technical default. Contact a CA immediately.
- Mistake 2: Ignoring stamp duty value Always check the circle rate/stamp duty value of the property before calculating TDS. If stamp duty value is higher, your TDS base is higher.
- Mistake 3: Missing parking, club membership, PLC charges in TDS base These charges are part of the total consideration. They must be included in the TDS calculation base. Not including them is a common error flagged in AIS mismatches.
- Mistake 4: Filing Form 26QB for transactions after April 1, 2026 For payments made on or after April 1, 2026, use Form 141 (Schedule B). Using the old Form 26QB will cause processing errors.
- Mistake 5: Using PAN instead of TAN for an NRI-seller purchase The PAN-only rule applies only to resident-seller transactions. If your seller is an NRI, you need a TAN, must file Form 27Q, and deposit by the 7th of the following month — not the 30-day window that applies elsewhere in this guide.
Quick Summary — Everything in One Place
| What | Resident Seller (194-IA) | NRI Seller (Section 195) |
|---|---|---|
| Who deducts TDS? | Buyer | Buyer |
| TDS rate | 1% | 12.5%+ (LTCG) or slab rate (STCG), plus surcharge & cess |
| TDS base | Higher of sale value or stamp duty value | Entire sale value (unless Lower Deduction Certificate obtained) |
| Minimum threshold | ₹50 lakh | None — applies from ₹1 |
| TAN required? | No — PAN is enough | Yes |
| Form to file (from April 1, 2026) | Form 141 (Schedule B) | Form 27Q (quarterly) |
| Deposit challan | Built into Form 141 | Challan 281 |
| Due date | 30 days from end of month of payment | 7th of the following month |
| TDS certificate | Form 132 (from TRACES) | Form 16A |
| Late filing penalty | ₹200/day (Section 234E), capped at TDS amount | Same provision applies |
| No PAN of seller | TDS at 20% under Section 206AA | N/A — TAN-based filing |
Use the Free TDS on Property Calculator
Instead of doing this manually, use the MY Bharat TDS on Property Calculator above to instantly get:
- TDS amount based on your property value and stamp duty value
- Form 141 due date based on your payment date
- Late filing interest and penalty estimation if you’ve already missed the deadline
Enter your numbers at the top of this page and get your answer in seconds.
Frequently Asked Questions
This article is for general informational purposes and reflects rules applicable as of 24 July 2026. It has been fact-checked against the Income Tax Department (incometax.gov.in), Tax2win, ClearTax, Taxguru, and CA Club India. Tax laws change — consult a chartered accountant or registered tax advisor for your specific transaction.
For more guides you can visit our main page mybharatportal.com