TDS Guide · FY 2025-26 · AY 2026-27

TDS on Property Sale —
Section 194IA

The 1% TDS the buyer must deduct under Section 194IA, the ₹50 lakh threshold on the higher of price or stamp value, how to file Form 26QB, issue Form 16B, and the special rule when the seller is an NRI.

Updated for FY 2025-26 Income-tax Act 1961 · s.194IA CA-reviewed

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1%Section 194IA rate

₹50LConsideration threshold

26QBDeposit challan-cum-return

30 daysTo deposit TDS

Quick Answer

Under Section 194IA, the buyer of immovable property (other than agricultural land) must deduct 1% TDS from the payment to a resident seller when the sale consideration or the stamp-duty value — whichever is higher — is ₹50 lakh or more. The buyer deposits it using Form 26QB (no TAN needed — PAN is enough) within 30 days from the end of the month of deduction and issues Form 16B to the seller. If the seller is an NRI, Section 195 applies instead at much higher rates.

TDS rate 1%

Threshold ₹50L

No PAN (s.206AA) 20%

NRI seller 195

At a glance

Section 194IA — Key Details

Everything you need to deduct and deposit TDS correctly on a property purchase for FY 2025-26. See the full TDS rate chart 2025-26 for other sections.

Parameter	Details
Section	194IA, Income-tax Act 1961
Who deducts	Buyer of property (individual or entity) — no TAN required
Who bears it	Seller (deducted from the payment made to the seller)
TDS rate	1% of sale consideration or stamp value (higher)
Threshold	Consideration or stamp-duty value ≥ ₹50,00,000
Property type	Immovable property — not agricultural land
Deposit form	Form 26QB (challan-cum-statement) on the TIN / income-tax portal
Deposit deadline	Within 30 days from the end of the month of deduction
TDS certificate	Form 16B (buyer issues to seller, within 15 days)
No PAN of seller	TDS at 20% under Section 206AA
NRI seller	Section 195 applies — not 194IA (TAN needed)

TDS is on the amount paid or credited to the seller; on instalment purchases, deduct 1% on each instalment. Rate and threshold are unchanged for FY 2025-26.

Multiple buyers or sellers? The ₹50 lakh is aggregate

Since 1 October 2024 (Finance Act 2024), the ₹50 lakh threshold is tested on the aggregate consideration for the whole property where there are joint buyers or sellers — not each person's individual share. So a ₹90 lakh flat bought jointly by two buyers (₹45 lakh each) still attracts 1% TDS; each buyer deducts on their own share. You can no longer split a deal below ₹50 lakh to escape TDS.

Step by step

How to File Form 26QB

Form 26QB is a combined challan-cum-statement — the buyer files and pays in one step, with no separate quarterly return and no TAN. Here is the flow from deduction to certificate.

Buyer deducts1% at payment / credit, whichever is earlier

→

File Form 26QBBuyer + seller PAN, property & consideration; pay online

→

Deposit taxWithin 30 days from end of month of deduction

→

Form 16B → sellerDownload from TRACES, hand to seller in 15 days

Open the TDS / e-Pay Tax section on the income-tax portal (or TIN-Protean) and select Form 26QB — TDS on Sale of Property.
Enter buyer PAN and seller PAN, property address, agreement date and the total consideration — the portal computes 1%.
For instalments, enter the amount paid/credited now; TDS applies on each instalment, not only the last.
Pay by net-banking or generate a challan for over-the-counter payment; save the 9-digit acknowledgment number.
After a few working days, log in to TRACES (tdscpc.gov.in) with the buyer PAN, download Form 16B and issue it to the seller.

1% Single buyer — ₹80,00,000 flat

Sale consideration₹80,00,000

TDS @ 1% (194IA)₹80,000

Net paid to seller₹79,20,000

1% Joint buyers — ₹90L (₹45L each)

Each buyer's share₹45,00,000

TDS @ 1% (each buyer)₹45,000

Total TDS on the property₹90,000

TaxClue Insight

A very common error is deducting on the instalment only after the price crosses ₹50 lakh in later payments — TDS on a ₹50-lakh-plus deal applies to every payment from the first, including any advance. Deduct on each instalment from the start to avoid interest and a defective Form 26QB.

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Watch out

Buying From an NRI Seller — Section 195, Not 194IA

Section 194IA applies only when the seller is a resident. If the seller is a Non-Resident Indian, the buyer must deduct under Section 195 — on the capital gain (or the whole consideration if no lower-deduction certificate), at much higher rates, and the buyer needs a TAN. The 1% / Form 26QB route does not apply.

Point	Resident seller (194IA)	NRI seller (195)
Governing section	194IA	195
TDS rate	1% of consideration	20% LTCG / 30% STCG + surcharge + cess
Deducted on	Full consideration	Capital gains (or full value)
TAN needed	No	Yes
Form / return	Form 26QB	Form 27Q + Form 16A
Lower TDS option	Not applicable	Section 197 lower-deduction certificate

For NRI-seller deals, the buyer should insist on the seller's Section 197 certificate or deduct on the full sale value to stay safe. See our guide on TDS on NRI property sale.

Valuation

Stamp-Duty Value vs Sale Consideration

Where the consideration is ₹50 lakh or more but lower than the stamp-duty (circle-rate) value, TDS is computed on the higher of the two (aligned with Sections 43CA / 50C). A safe-harbour applies — if the difference between the agreed price and the stamp value is within 10%, no upward adjustment is needed and TDS stays on the consideration.

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Get it right

Penalties, Interest & Buyer Checklist

The buyer is the deductor and carries the liability. Missing or delaying TDS on a property deal is expensive:

Non-deduction — interest at 1% per month from the date TDS was deductible to the date it is actually deducted.
Non-payment after deduction — interest at 1.5% per month from deduction to deposit.
Late Form 26QB — fee of ₹200/day under Section 234E (capped at the TDS amount).
Continued default can attract a penalty under Section 271H and prosecution under Section 276B.

Confirm consideration or stamp value ≥ ₹50 lakh
Verify seller is resident (else Section 195 + TAN)
Collect valid PAN of buyer and seller
Deduct 1% on each payment / instalment
File Form 26QB within 30 days of month-end
Download and hand Form 16B to the seller
Check the credit reflects in the seller's Form 26AS

New law: 194IA under the Income-tax Act, 2025

The Income-tax Act, 2025 (from AY 2026-27) reorganises the scattered TDS provisions into a compact, table-driven framework (Sections 392-402). The property-TDS rule — 1% when consideration or stamp value is ₹50 lakh or more — is carried over unchanged. For FY 2025-26 filings, "Section 194IA" and Form 26QB remain the correct references.

Payment	Section	Typical rate
Purchase of immovable property (resident)	194IA	1%
Rent of land / building	194I	10%
Rent by individual/HUF > ₹50k/month	194-IB	2%
Payment to non-resident (incl. NRI seller)	195	Per income + DTAA

Related deductions on property income and rent are handled under separate sections — do not confuse 194IA (purchase) with 194I / 194-IB (rent).

Government sourcesBare provision: incometax.gov.in — Section 194IA, Income-tax Act 1961 · Purchase-of-property TDS guide: incometaxindia.gov.in · Aggregate ₹50L rule for multiple buyers/sellers — Finance (No. 2) Act 2024 (eff. 1 Oct 2024) · NRI seller: Section 195, Income-tax Act 1961; new framework: Income-tax Act 2025 (ss. 392-402)

TDS on Property Sale — Frequently Asked Questions

Basics & Rate

What is TDS on property sale under Section 194IA?

Section 194IA requires the buyer of immovable property (other than agricultural land) to deduct 1% TDS from the payment made to a resident seller when the sale consideration or the stamp-duty value — whichever is higher — is ₹50 lakh or more. The buyer deposits this TDS using Form 26QB (no TAN needed, PAN is enough) within 30 days from the end of the month of deduction and issues Form 16B to the seller. The seller gets the credit in Form 26AS and adjusts it against tax when filing the return.

What is the TDS rate on property purchase for FY 2025-26?

1% of the sale consideration (or the stamp-duty value if higher). The rate is unchanged for FY 2025-26 / AY 2026-27. If the seller does not furnish a valid PAN, TDS is deducted at 20% under Section 206AA instead of 1%. There is no surcharge or cess on 194IA TDS for a resident seller.

Is TDS applicable on property purchased for less than ₹50 lakh?

No. Section 194IA applies only when the sale consideration or the stamp-duty value is ₹50 lakh or more. If both are below ₹50 lakh, the buyer deducts no TDS. But note that since 1 October 2024 the ₹50 lakh is tested on the aggregate value of the whole property where there are multiple buyers or sellers, so joint buyers cannot split a ₹50-lakh-plus deal to stay below the limit.

Is agricultural land covered under Section 194IA?

No. Section 194IA specifically excludes agricultural land. TDS under this section applies to residential, commercial and industrial immovable property, land (non-agricultural) and buildings, but not to the sale of rural agricultural land.

Form 26QB & 16B

How do I deposit TDS on property via Form 26QB?

Go to the e-Pay Tax section of the income-tax portal (or TIN-Protean), select Form 26QB — TDS on Sale of Property. Enter the buyer and seller PAN, property details and total consideration; the portal computes 1%. Pay by net-banking or generate a challan for over-the-counter payment, and save the 9-digit acknowledgment number. After a few working days, log in to TRACES with the buyer PAN, download Form 16B and issue it to the seller.

By when must Form 26QB be filed and TDS deposited?

Form 26QB must be filed and the TDS deposited within 30 days from the end of the month in which the deduction was made. For example, TDS deducted in August must be paid by 30 September. Form 26QB is a combined challan-cum-statement, so there is no separate quarterly TDS return for a property buyer.

What is Form 16B for property purchase?

Form 16B is the TDS certificate the buyer issues to the seller as proof that 1% TDS was deducted and deposited. It is downloaded from the TRACES portal (tdscpc.gov.in) using the buyer PAN and must be handed to the seller within 15 days of the due date of Form 26QB. The seller uses it to verify the credit shown in Form 26AS and claim it in the income-tax return.

Is a TAN required to deduct TDS on property under 194IA?

No. Section 194IA is an exception — the buyer deducts and deposits using only the PAN of the buyer and seller through Form 26QB, without needing a TAN. A TAN is required only when the seller is an NRI and TDS is deducted under Section 195, or for other regular TDS sections.

Instalments & Valuation

How is TDS deducted when I pay in instalments?

When the total consideration is ₹50 lakh or more, TDS at 1% is deducted on every payment — including any advance and each instalment — not only on the final payment. A separate Form 26QB is filed for each instalment, showing the total consideration and the amount paid in that instalment. Deducting only after the price crosses ₹50 lakh in later instalments is a common and costly mistake.

What if the sale price is below the stamp-duty value?

If the consideration is ₹50 lakh or more but lower than the stamp-duty (circle-rate) value, TDS is computed on the higher of the two, in line with Sections 43CA and 50C. A safe-harbour applies — if the gap between the agreed price and the stamp value is within 10%, no upward adjustment is needed and TDS stays on the consideration.

NRI & Special Cases

What is the TDS rate when buying property from an NRI seller?

When the seller is an NRI, Section 194IA does not apply — Section 195 does. The buyer deducts TDS on the capital gain (or the full sale value if there is no lower-deduction certificate), typically 20% plus surcharge and cess on long-term capital gains and 30% plus surcharge and cess on short-term gains. The buyer needs a TAN and files Form 27Q. The NRI seller can obtain a Section 197 lower-deduction certificate if the actual tax is less.

How is the ₹50 lakh threshold applied when there are joint buyers or sellers?

Since 1 October 2024 (Finance Act 2024), the ₹50 lakh threshold is applied to the aggregate consideration for the entire property, not to each person's individual share. So if a property worth ₹90 lakh is bought jointly by two buyers at ₹45 lakh each, TDS still applies; each buyer deducts 1% on their own share and files a separate Form 26QB. Splitting a deal below ₹50 lakh no longer avoids TDS.

Do I still need to check the seller's return-filing status before deducting?

No. Section 206AB, which required checking whether the seller had filed income-tax returns and deducting at a higher rate for non-filers, was repealed with effect from 1 April 2025. For FY 2025-26 you only need a valid PAN from the seller; a missing PAN triggers the 20% rate under Section 206AA.

Penalties & Compliance

What happens if I don't deduct or deposit TDS on property?

If the buyer fails to deduct, interest accrues at 1% per month from the date TDS was deductible; if deducted but not deposited, interest is 1.5% per month until paid. Late filing of Form 26QB attracts a fee of ₹200 per day under Section 234E (capped at the TDS amount), and continued default can attract a penalty under Section 271H and prosecution under Section 276B. The buyer is treated as the assessee-in-default.

Has Section 194IA changed under the new Income-tax Act, 2025?

The Income-tax Act, 2025 (applicable from AY 2026-27) reorganises TDS into a compact, table-driven framework (Sections 392-402), but the property-TDS rule — 1% when the consideration or stamp value is ₹50 lakh or more — is carried over unchanged. For FY 2025-26 filings, Section 194IA and Form 26QB remain the correct references most buyers use.

Can the seller claim credit for the 1% TDS deducted?

Yes. Once the buyer files Form 26QB and issues Form 16B, the 1% TDS appears in the seller's Form 26AS and Annual Information Statement. The seller claims it as a prepaid tax while filing the income-tax return and can obtain a refund if it exceeds the actual capital-gains tax. This is why buyers must file Form 26QB with the seller's correct PAN.

Done-for-you

Related TaxClue Services

TDS Return FilingForm 26QB filing, challans and Form 16B for your property purchase, done for you.Explore →Income Tax Return FilingReport the sale, claim TDS credit and compute capital gains correctly.Explore →TDS Rate Chart 2025-26Every section, rate and threshold for FY 2025-26 in one place.Explore →Capital Gains CalculatorWork out the tax on your property sale before you deduct or file.Explore →

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