TDS on Purchase of Property: Complete Guide to Section 194-IA

If you're buying a property worth ₹50 lakh or more in India, you can't hand over the full amount to the seller. The law requires you to hold back 1% of the price and deposit it with the government as TDS. This is Section 194-IA of the Income Tax Act — and from 1 April 2026, it has a new number too. Here's everything a buyer needs to get this right the first time. 

You may have landed here searching for TDS on property purchase, TDS on sale of property, TDS on immovable property, 194-IA TDS rate, or how to pay TDS on purchase of property — they're all the same rule, just phrased differently. This guide covers all of it in one place. 

What Is TDS on Purchase of Property? 

TDS on purchase of property means the buyer deducts a small percentage of the sale price and pays it directly to the Income Tax Department, instead of paying the full amount to the seller. The seller gets the balance, and later claims credit for the deducted amount when filing their income tax return. The same rule is what people mean by TDS on sale of immovable property buyer and seller sides of one transaction. 

This rule was introduced through Section 194-IA of the Income Tax Act, 1961, effective from 1 June 2013. Its purpose is simple: high-value property deals were slipping through the tax net, so the government made the buyer responsible for collecting tax at the source of the transaction. 

The rule applies the same way whether you're buying a flat, a plot of land, an independent house, or a shop. You'll see it called TDS on flat purchase, TDS on land purchase, TDS on land sale, TDS on house purchase, or TDS on residential property in different places — the name changes with the property type, but the 1% rate and ₹50 lakh limit stay identical. 

Important 2026 update: The Income Tax Act, 1961 has been replaced by the Income-tax Act, 2025, effective 1 April 2026. All TDS provisions, previously spread across separate sections (194A to 194T), are now consolidated under Section 393, with each payment type — including immovable property listed as its own line in the accompanying TDS rate table. TDS on property purchase falls under Section 393(1) of the new Act. 

The rule, rate, and threshold are unchanged — only the section number is new. Most buyers, sellers, and even bank staff still refer to it as "194-IA," "the TDS section on sale of property," or "TDS under section 194IA." This guide uses all these names, so you can match whichever term you came across. 

When Does TDS Apply? The ₹50 Lakh Rule 

TDS under this section applies when: 

• The property is immovable land, a flat, a house, or a shop (not agricultural land in rural areas) 

• The sale consideration is ₹50 lakh or more, OR the stamp duty value (circle rate/jantri value) is ₹50 lakh or more whichever of the two is higher 

• The seller is a resident of India 

If the property value is below ₹50 lakh, no TDS applies at all — not on the excess amount, on the whole transaction. This figure is often called the 194-IA TDS limit or the TDS on property purchase above ₹50 lakh rule, and it hasn't changed since 2013. 

Don't confuse this TDS with property purchase tax in general — stamp duty and registration charges are a separate cost paid to your state government when the sale deed is registered, and TDS is a separate deduction paid to the central government. You'll pay both on the same transaction; they don't offset each other. 

Example: You buy a flat for ₹68 lakh. The stamp duty value (the value used for stamp duty and registration) is ₹72 lakh, because the government's guidance value is higher than what you're paying. Since ₹72 lakh is higher and above ₹50 lakh, TDS is calculated on ₹72 lakh, not ₹68 lakh. 

This "whichever is higher" rule was added so buyers couldn't under-declare the sale price to avoid TDS while the government's own valuation stayed higher. If you're unsure what your locality's guidance value is, check your state's applicable rate — in Gujarat this is called the jantri rate. 

TDS Rate: 1%, or 20% Without a PAN 

A seller without a PAN is a real problem — the buyer ends up deducting a fifth of the payment, which usually forces the deal to pause until the PAN issue is sorted out. Always confirm the seller's PAN before finalising the payment schedule. 

This 1% figure is also called the 26QB TDS rate, since it's declared and paid through Form 26QB, covered in the next section. 

Who Deducts TDS and When It Doesn't Apply to NRIs 

The buyer deducts and deposits the TDS, not the seller, and not the bank. This applies whether you're paying in a lump sum, instalments, or through a home loan disbursed directly by your bank to the seller. Using loan money doesn't remove your responsibility to deduct TDS; your bank will usually ask for the 26QB acknowledgment before releasing the full loan amount. 

A confusion for many buyers run into this rule does not apply when the seller is a non-resident (NRI). Section 194-IA covers resident sellers only. 

If you're buying from an NRI seller, a different rule applies — Section 195. TDS is deducted from the capital gains, not the full sale value, at a much higher rate. The buyer also needs a TAN and must file Form 27Q instead of Form 26QB. If you're buying an NRI, don't follow the steps in this article — that's a separate process with its own compliance requirements. 

Joint Buyers or Joint Sellers: Does ₹50 Lakh Apply Per Person? 

The Finance (No. 2) Act, 2024 amended the law, effective 1 October 2024, to clarify that where a property has more than one buyer or seller, the ₹50 lakh threshold is checked against the total (aggregate) consideration for the property, not each person's individual share. So if four people jointly buy a flat for ₹1.2 crore, TDS applies even though each person's share is ₹30 lakh because the total value crosses ₹50 lakh. 

That said, this exact point has been argued in tax tribunals for years. The confusion is mostly about which years the amendment covers, not what the rule says today. 

Before 1 October 2024, several Income Tax Appellate Tribunal rulings, including cases at the Jaipur and Jodhpur benches, had held that the threshold should apply to each co-buyer's individual share, not the total value. In April 2026, the Ahmedabad bench of the ITAT confirmed the same thing for a transaction that took place before the amendment the per-share threshold applied, and the buyer wasn't at fault for skipping TDS. 

For a joint purchase today, the position is settled: apply TDS on the total property value if it's ₹50 lakh or more, even if your own share is smaller, since the 1 October 2024 amendment now covers you. 

If your transaction happened before that date and you skipped TDS because your individual share was under ₹50 lakh, the pre-amendment tribunal rulings are in your favour. It's still worth confirming with a chartered accountant, since this depends on your exact transaction date. 

How to Pay TDS on Property Purchase Online — Form 26QB, Step by Step 

TDS on property is paid using a single combined form called Form 26QB, which acts as both the challan and the return — you may see it referred to as a "TDS challan for property purchase." You don't need a TAN, your PAN is enough. This process covers how to pay TDS on purchase of property and how to deduct TDS on purchase of property — both mean the same thing. 

Until a few years ago, this form was filed through the TIN-NSDL portal, run by Protean eGov Technologies which is why you may still see it referred to as "NSDL TDS on sale of property." That portal has since been merged into the main Income Tax e-filing website, so use the steps below. 

1. Go to the Income Tax e-filing portal (incometax.gov.in) and log in using your PAN. 

2. Click e-File → e-Pay Tax → New Payment. 

3. Select 26QB (TDS on Sale of Property) and click Proceed. 

4. Fill in your (buyer's) PAN, address, and contact details — most of this is auto-filled if you're logged in. 

5. Enter the seller's PAN and address. Double-check this — an incorrect PAN here means the seller won't get TDS credit, and correcting it later is a hassle. 

6. Enter property details: address, type of property, agreement date, total value, and date of payment/credit. 

7. The portal calculates the 1% TDS automatically based on what you enter. 

8. Choose your payment mode — net banking, debit card, or generate a challan to pay at an authorised bank later. 

9. Complete the payment. You'll get an acknowledgment number — save this; you'll need it to download Form 16B later. 

10. Print or download the Form 26QB acknowledgment for your records. 

Do this for every instalment you pay — if you're paying in three parts (booking, part-payment, final payment), you deduct and deposit 1% each time, not just once at the end. 

TDS on Property Purchase Due Date 

TDS deducted must be deposited, and Form 26QB filed, within 30 days from the end of the month in which the payment was made or credited, whichever is earlier. This is also referred to as the TDS deposit on purchase of property deadline. 

Example: If you pay the seller on 12 March, the deduction happens that day, and the due date to deposit it is 30 April (30 days from the end of March). 

How to Download Form 16B (TDS Certificate for the Seller) 

Once the TDS is deposited, you must issue Form 16B to the seller — it's their proof that tax was deducted and paid on their behalf, which they'll need when filing their own income tax return. 

1. Register as a taxpayer on the TRACES portal (using the 26QB acknowledgment number). 

2. Wait 5–7 days after payment for the system to process it. 

3. Go to Downloads → Form 16B (For Buyer). 

4. Enter the acknowledgment number and the seller's PAN. 

5. Download the certificate and share it with the seller. 

What Counts as "Consideration" for TDS? 

TDS isn't calculated only on the flat's base price. If your sale agreement bundles in extra charges, they usually count too: 

• Club membership fees 

• Car parking charges 

• Maintenance/advance maintenance deposits 

• Electricity or water connection charges, if part of the sale deed 

If these are billed separately, outside the sale consideration, they may not attract TDS but if they're written into the same agreement as part of the total price payable to the seller, include them while calculating the 1%. 

Does TDS Apply Agricultural Land, Under-Construction Property, or Builder Purchases? 

• TDS on sale of agricultural land / TDS on agricultural land purchase: rural agricultural land is exempt; no TDS applies regardless of value. Urban agricultural land, within municipal limits, is not exempt and is treated like any other immovable property. 

• TDS on property purchase from builder: under-construction flats bought from a builder are covered too. TDS applies on each instalment paid to the builder, the same way it applies to a resale flat, if the total consideration is ₹50 lakh or more. 

• TDS on home loan disbursement: property bought via home loan still attracts TDS, see the note above under "Who Deducts TDS." 

Penalty and Interest for Not Deducting or Late Payment 

Missing this deadline is more expensive than most buyers expect, because three separate charges can stack up: 

There's also a practical consequence: many sub-registrar offices and housing finance companies now ask for proof of Form 26QB before completing registration or loan disbursement, so delays here can hold up your entire property transaction. 

Common Mistakes Buyers Make 

• Entering the wrong PAN for the seller this is the single most common error, and it can take months to correct through TRACES. 

• Deducting TDS only on the amount paid, not the higher stamp duty value — if the guidance value is higher, TDS must be calculated on that, not the lower agreement price. 

• Forgetting to deduct on every instalment TDS applies each time you pay, not just at the final payment. 

• Assuming the bank handles it automatically — even with a home loan, the buyer is the one legally responsible for deducting and filing Form 26QB, not the lender. 

• Not issuing Form 16B to the seller — sellers need this to claim TDS credit in their own return; skipping this step creates a dispute later. 

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