TDS on Property Purchase: Section 194-IA, 1% & Form 26QB
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.
Worked example
You buy a flat for ₹80 lakh from a resident seller, plus ₹3 lakh for car parking and club membership paid to the same seller. TDS applies to the total consideration of ₹83 lakh: 1% = ₹83,000. If paying in instalments, deduct 1% from each instalment. Deposit it with Form 26QB within 30 days from the end of the month of deduction, then download Form 16B and give it to the seller within 15 days.
Late filing and late payment costs
- Interest of 1% a month if TDS is not deducted, and 1.5% a month if deducted but not deposited.
- Late fee of ₹200 a day until the statement is filed, capped at the TDS amount.
- If stamp-duty value is higher than the agreed price, TDS is on the higher figure.
From tax year 2026-27
Under the Income-tax Rules, 2026, Forms 26QB, 26QC, 26QD and 26QE are combined into a single challan-cum-statement, Form 141, and the provision sits within section 393 of the Income-tax Act, 2025. The 1% rate and ₹50 lakh threshold carry over. For an NRI seller, the buyer must deduct under the non-resident provisions at a higher rate and needs a TAN — see NRI property sale TDS.
FAQs
Is TDS on property charged on the stamp duty value?
Yes, on the higher of the sale consideration and the stamp duty value.
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.
