TDS on Property Purchase: Section 194-IA, 1% & Form 26QB

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Last verified: June 2026, against the Income Tax Act provisions and CBDT rules cited below. Figures apply to FY 2025-26 (AY 2026-27). This is general information, not personal tax advice.

Buying a flat or house for ₹50 lakh or more? The law makes you, the buyer, responsible for deducting 1% TDS on the payment and depositing it with the government using Form 26QB. Skip it and you face interest, late fees and a notice — even though it is the seller’s tax. Here is the Section 194-IA process, step by step.

When TDS applies

Section 194-IA applies when you buy any immovable property (land or building, except agricultural land) where the consideration is ₹50 lakh or more. The buyer deducts 1% and pays the seller the balance. Note: the threshold and the 1% apply to the entire amount, not just the part above ₹50 lakh — so on a ₹70 lakh property, TDS is ₹70,000, not 1% of ₹20 lakh.

Who deducts, and on what value

The buyer deducts the TDS. It is computed on the higher of the sale consideration or the stamp-duty (circle-rate) value. If the seller does not provide a PAN, TDS jumps to 20%. Importantly, 194-IA applies only when the seller is a resident; if the seller is an NRI, the higher TDS rates under Section 195 apply instead.

Form 26QB and the timeline

• Deposit the TDS using a challan-cum-statement in Form 26QB, electronically, within 30 days from the end of the month in which the deduction is made.
• After filing 26QB, download and issue Form 16B (the TDS certificate) to the seller within 15 days of the 26QB due date.
• No TAN is needed — you use your PAN.

Multiple buyers or sellers

If there are joint buyers or sellers, each buyer-seller combination files a separate Form 26QB for their share of the consideration.

Penalties for getting it wrong

• Late deduction/deposit attracts interest (1% or 1.5% per month).
• Late filing of Form 26QB attracts a late fee of ₹200 per day under Section 234E.
• The TDS credit flows to the seller’s account, so accuracy of the seller’s PAN is essential.

FAQs

Is TDS on the amount above ₹50 lakh only?

No. Once the consideration is ₹50 lakh or more, 1% applies to the entire amount, not just the excess.

Do I need a TAN to deduct this TDS?

No. Section 194-IA lets buyers deposit TDS using their PAN via Form 26QB; no TAN is required.

What if the seller is an NRI?

Then 194-IA does not apply — TDS is governed by Section 195, usually at higher rates. Get advice for NRI-seller transactions.

What happens if I forget to deduct it?

You, the buyer, are liable for the TDS plus interest and a ₹200/day late fee, and may receive a notice. Deduct and deposit promptly.