TDS on Property Purchase in India 2026
Buying property worth ₹50 lakh or more? You — the buyer — must deduct 1% TDS and deposit it with Form 26QB, or the interest, fees and penalties land on you. Here is the full rule, the step-by-step filing process, and the very different regime when the seller is an NRI.
Of the higher of the sale price or the stamp duty (circle-rate) value — on the entire amount, not just the part above ₹50 lakh. 20% if the seller has no PAN.
Tested on the aggregate deal value across all buyers and sellers since 1 October 2024 — splitting shares below ₹50 lakh no longer avoids TDS.
From the end of the month of deduction, via Form 26QB — then Form 16B to the seller within 15 more days.
How to deposit TDS: Form 26QB step by step
- 1
Check the trigger: the higher of the agreed price or the stamp duty value is ₹50 lakh or more, and the seller is a resident (NRI sellers follow a different route — see below).
- 2
Collect PANs of every buyer and seller. No TAN is needed — the buyer's PAN is enough. If the seller has no PAN, TDS jumps to 20% under Section 206AA.
- 3
Deduct 1% of the higher of the sale price or stamp duty value when you pay or credit the seller — on each instalment if you pay in stages.
- 4
File Form 26QB on incometax.gov.in (e-Pay Tax → New Payment → 26QB) and pay the TDS with it. One Form 26QB per buyer-seller pair.
- 5
Deposit within 30 days from the end of the month of deduction — TDS deducted any day in July is due by 30 August.
- 6
Register on TRACES as a taxpayer, download Form 16B once the 26QB is processed, and give it to the seller within 15 days of the 26QB due date.
What counts toward the ₹50 lakh
Since 1 September 2019, "consideration" expressly includes charges billed with the property — club membership, car parking, electricity and water connection fees, maintenance and advance fees. They count toward both the threshold and the amount TDS is computed on. Since 1 April 2022, TDS is computed on the higher of the deal price and the stamp duty value — the same government value covered in our state-wise circle-rate guides. Rural agricultural land is outside the rule entirely.
Buying from an NRI? Everything changes
Section 194-IA does not apply — Section 195 does. There is no ₹50 lakh threshold, TDS applies to the entire sale price (not the gain), and the rate for property held over 24 months is 12.5% plus surcharge and cess — roughly 13% to 14.95% all-in. You must obtain a TAN, deposit by the 7th of the next month, file quarterly Form 27Q, and issue Form 16A.
The NRI seller should almost always apply for a lower-deduction certificate (Form 13, Section 197) so TDS is computed on the actual gain — the default deduction usually far exceeds the final tax.
The new Income-tax Act 2025
From 1 April 2026 the Income-tax Act 2025 replaces the 1961 Act. Professional analyses map Section 194-IA to Section 393(1) of the new Act, with Form 26QB being renumbered — but the substance (1%, ₹50 lakh, buyer deducts) is unchanged. Payments made up to 31 March 2026 follow the old form; an official CBDT mapping page was not yet published when we verified this, so treat the new numbers as provisional and follow the e-filing portal's prompts.
Frequently asked questions
Who pays TDS when buying a property worth ₹50 lakh or more?+
The buyer deducts 1% TDS from the payment to a resident seller and deposits it via Form 26QB within 30 days from the end of the month of deduction. The seller receives the net amount plus Form 16B, and claims the TDS credit in their income-tax return.
Is TDS 1% of the amount above ₹50 lakh or the whole amount?+
The whole amount. If the higher of the sale price or stamp duty value is ₹50 lakh or more, TDS is 1% of that entire higher value — a ₹60 lakh purchase means ₹60,000 TDS, not ₹10,000.
Two of us are jointly buying a ₹90 lakh flat with ₹45 lakh shares each. Is TDS needed?+
Yes. Since 1 October 2024 the ₹50 lakh limit applies to the aggregate consideration for the property, not each buyer's share. Each buyer files a separate Form 26QB deducting 1% on their share of the payment.
Do I need a TAN to deposit TDS on a property purchase?+
No — for a resident seller under Section 194-IA, only the PANs of buyer and seller are needed; Form 26QB works without a TAN. But if the seller is an NRI, Section 195 applies and the buyer must obtain a TAN and file Form 27Q instead.
What happens if I forget to deduct or deposit the TDS?+
Interest of 1% per month (failure to deduct) or 1.5% per month (deducted but not deposited), a late-filing fee of ₹200 per day under Section 234E capped at the TDS amount, and a possible ₹10,000–₹1,00,000 penalty under Section 271H. The buyer — not the seller — bears all of this, and the department auto-detects gaps from property registrar data.
How much TDS applies if the seller is an NRI?+
Section 195 applies instead of 194-IA: there is no ₹50 lakh threshold, and for property held over 24 months (sale on or after 23 July 2024) TDS is 12.5% plus surcharge and cess on the full sale price — effectively about 13% to 14.95%. The buyer needs a TAN, and the NRI seller can apply in Form 13 for a lower-deduction certificate so tax is deducted only on the actual gain.
Sources
- Income Tax Dept — TDS from sum paid to buy an immovable property
- Income Tax Dept — Section 194-IA text
- ClearTax — How to file TDS on sale of property
- TaxGuru — New TDS rules on property sales from 1 Oct 2024
- Tax2win — Section 195 TDS on NRI property sales
Verified July 2026 against 2+ sources per rule. Tax law changes by Finance Act — confirm on incometax.gov.in before filing.