TDS on Property Purchase —
Section 194-IA & Form 26QB
The 1% TDS a buyer must deduct on property worth ₹50 lakh or more, the stamp-duty-value rule, how to pay via Form 26QB, issuing Form 16B, and what changes when the seller is an NRI — for FY 2025-26.
When you buy immovable property (other than agricultural land) for ₹50 lakh or more, you as the buyer must deduct TDS at 1% under Section 194-IA and pay it to the government through Form 26QB. Since 1 Oct 2024, the 1% is charged on the higher of the sale consideration or the stamp-duty value, and on the full amount — not just the part above ₹50 lakh. The buyer needs only a PAN (no TAN); if the seller has no PAN, deduct at 20% under Section 206AA. If the seller is an NRI, Section 194-IA does not apply — use Section 195.
TDS on Property — Key Facts
The core rule for a resident-to-resident property sale under Section 194-IA for FY 2025-26. See where this sits in the full TDS rate chart 2025-26.
| Parameter | Detail |
|---|---|
| Applicable section | 194-IA |
| TDS rate (resident seller) | 1% of consideration or stamp-duty value, whichever is higher |
| Threshold | ₹50,00,000 or more (on the whole property, aggregated across all buyers & sellers) |
| TDS computed on | Full value — not just the amount above ₹50 lakh |
| Who deducts | Buyer (transferee) — PAN is enough, no TAN required |
| Form to file / pay | Form 26QB (challan-cum-statement) |
| Deposit deadline | Within 30 days from the end of the month of deduction |
| Certificate to seller | Form 16B from TRACES, within 15 days of the 26QB due date |
| Seller has no PAN | TDS at 20% under Section 206AA |
| Seller is an NRI | 194-IA does not apply — use Section 195 (see below) |
Agricultural land is outside Section 194-IA. Rates are unchanged for FY 2025-26; the stamp-duty-value and aggregate-consideration rules apply from 1 Oct 2024.
For a ₹75 lakh flat the TDS is 1% × ₹75,00,000 = ₹75,000 — not 1% of the ₹25 lakh above the threshold. And since 1 Oct 2024, if the stamp-duty (circle-rate) value is higher than the agreed price, the 1% is computed on that higher stamp-duty value.
How to Pay TDS on Property via Form 26QB
The whole process is online and needs no TAN — only the buyer's and seller's PAN. If you pay the seller in instalments, deduct 1% on each instalment and file a separate Form 26QB each time.
1% Resident seller — ₹75,00,000 flat
1% Instalment — ₹10,00,000 booking
- Check the threshold — the whole property (aggregate of all buyers & sellers) must be ₹50 lakh or more.
- Collect the seller's PAN — without it, TDS is 20% under Section 206AA.
- File Form 26QB on incometax.gov.in → e-File → e-Pay Tax → 26QB; enter both PANs, property details and the amount paid.
- Pay TDS and note the acknowledgement number.
- Download Form 16B from TRACES (tdscpc.gov.in) after 10–15 days and hand it to the seller.
Unlike business TDS (194C, 194J, 194-I), a property buyer does not need a TAN under 194-IA — Form 26QB works on PAN alone. But you still must deduct on every instalment: paying only at registration and ignoring the booking advance is the single most common 26QB default.
Buying a home or plot? Get your Form 26QB filed and Form 16B issued correctly.
Get Form 26QB Help →When the Seller Is an NRI — Section 195
Section 194-IA covers resident sellers only. If the seller is a non-resident, the buyer must deduct TDS under Section 195 at much higher rates, must obtain a TAN, and pays through Challan 281 (not Form 26QB). The TDS is on the whole sale value, so the NRI usually applies for a lower-deduction certificate under Section 197 to limit it to the actual capital-gains tax.
Resident seller (Sec 194-IA)
- TDS 1% of consideration / stamp-duty value
- Buyer needs only PAN — no TAN
- Pay via Form 26QB in 30 days
- Certificate: Form 16B from TRACES
- Fixed 1% — no lower-TDS route
NRI seller (Sec 195)
- LTCG 12.5% (+surcharge +4% cess); higher if STCG
- Buyer must obtain a TAN
- Pay via Challan 281; return in Form 27Q
- Certificate: Form 16A from TRACES
- NRI may apply u/s 197 for lower TDS
| Point | Resident (194-IA) | NRI (195) |
|---|---|---|
| TDS rate | 1% of value | 12.5%+ on LTCG (higher if STCG) |
| Buyer needs TAN | No | Yes |
| Form / challan | Form 26QB | Challan 281 · Form 27Q |
| Certificate to seller | Form 16B | Form 16A |
| Lower-TDS option | — | Section 197 certificate |
NRI surcharge: 10% (gains ₹50L–₹1Cr), 15% (₹1Cr–₹2Cr), 25% (above ₹2Cr), plus 4% cess. Always confirm residential status before deducting.
Seller is an NRI? Get the TAN, Section 195 rate and lower-TDS certificate handled.
Talk to a TDS Expert →Common Mistakes & Consequences
- Deducting only on the excess over ₹50L — TDS is 1% of the full value.
- Ignoring the stamp-duty value — since 1 Oct 2024, use the higher of price or stamp-duty (circle-rate) value.
- Skipping instalments — deduct on each payment, not only at registration.
- Counting the 30 days from registration — it runs from the end of the month of payment/deduction.
- Applying 1% to an NRI seller — that is Section 195 (12.5%+, with TAN), not 194-IA.
| Default | Consequence |
|---|---|
| TDS not deducted | Interest 1%/month u/s 201 from due date to deduction |
| Deducted but not deposited | Interest 1.5%/month u/s 201 to date of deposit |
| Late filing of Form 26QB | Late fee ₹200/day u/s 234E |
| Failure to deduct | Penalty up to 100% of TDS u/s 271C |
Section 206AB (higher rate for non-filers) was omitted w.e.f 1 Apr 2025 — you no longer run a filing-status check on the seller; only the PAN-based 20% rate survives.
Buyer's 194-IA compliance checklist
- Confirm whole-property value ≥ ₹50 lakh
- Collect seller's valid PAN
- Compare price vs stamp-duty value
- Deduct 1% on each payment / instalment
- File & pay Form 26QB within 30 days of month-end
- Download Form 16B from TRACES for the seller
Under the Income-tax Act, 2025 (from AY 2026-27) the property-TDS provision is re-enacted as Section 402. The 1% rate, ₹50 lakh threshold, Form 26QB and Form 16B all continue unchanged. The familiar "194-IA" reference remains valid for FY 2025-26 filings.
TDS on Property — Frequently Asked Questions
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