TDS on Property Purchase — 1% Rate, Form 26QB & Section 194IA Guide (Tax Year 2026-27)

Updated: 3 June 2026 | Income-tax Act, 2025 | Section 194IA

The buyer of immovable property must deduct TDS at 1% of the purchase price if the total consideration is ₹50 lakh or more. The buyer pays this TDS to the government via Form 26QB within 30 days from the end of the month in which TDS was deducted. TDS is deducted on the full sale price (not just the excess over ₹50L). The seller's PAN is mandatory — without it, TDS rises to 20%. This is governed by Section 194IA of the Income-tax Act, 2025.

₹50 Lakh

Threshold above which buyer must deduct TDS on property purchase
If the agreed purchase price is ₹50 lakh or above, the buyer deducts 1% TDS on the total consideration — not just the excess. Below ₹50 lakh: no TDS obligation under Section 194IA.

Terminology note: Section 194IA existed in the Income Tax Act, 1961, and has been re-enacted as Section 194IA of the Income-tax Act, 2025 (effective 01-Apr-2026). The section number remains the same. Form 26QB continues to be the challan-cum-statement for this TDS. "Financial Year" is now Tax Year under the 2025 Act. The 30-day deposit deadline is counted from the end of the month of deduction.

Key Facts — TDS on Property at a Glance

Parameter	Detail
Applicable section	Section 194IA, Income-tax Act, 2025
TDS rate (resident seller)	1% of sale consideration
Threshold	₹50,00,000 (₹50 lakh) or more
TDS computed on	Full sale consideration (not just the amount above ₹50L)
Form to be filed	Form 26QB (on TIN-NSDL portal)
Due date for payment	Within 30 days from the end of the month in which TDS was deducted / payment was made
TDS certificate issued to seller	Form 16B (downloaded from TRACES)
Seller PAN mandatory?	Yes — without PAN, TDS rate is 20% under Section 206AA
Who deducts?	Buyer (transferee) of immovable property
Applicable to?	Resident seller only. For NRI seller, use Section 195 (see below)

How to Pay TDS on Property via Form 26QB — Step by Step

The entire process is done online on the TIN-NSDL portal. No TAN is required for the buyer — only the buyer's PAN and seller's PAN.

Check the threshold. Verify that the total agreed sale consideration is ₹50 lakh or more. If yes, TDS at 1% is mandatory. If multiple sellers are involved (e.g., joint ownership), the threshold applies to each buyer-seller pair's share — file a separate Form 26QB for each combination.
Collect PAN details. Obtain the seller's PAN card number. Without the seller's PAN, TDS must be deducted at 20% under Section 206AA of the Income-tax Act, 2025. The buyer's own PAN is also required.
Go to TIN-NSDL portal. Visit tin.tin.nsdl.com → Services → TDS on Sale of Property → "Online form for furnishing TDS on property (Form 26QB)".
Fill Form 26QB. Enter: Buyer PAN, Seller PAN, financial year (Tax Year), property type (land/building), complete property address, total sale consideration, and the amount being paid in the current transaction. If paying in instalments, fill Form 26QB for each instalment at the time of that payment.
Pay TDS online. Choose net banking (immediate confirmation) or generate a challan to pay at an authorised bank branch. The TDS amount = 1% × instalment/total payment. Keep the acknowledgement number (15-digit) for records.
Download Form 16B from TRACES. After 5–7 working days, log in to tdscpc.gov.in (TRACES) using your PAN, go to Downloads → Form 16B, enter the acknowledgement number and download. Issue Form 16B to the seller within 15 days of the due date of furnishing Form 26QB.

TDS on Property — When Seller Is an NRI (Section 195)

If the seller is an NRI, Section 194IA does not apply. The buyer must deduct TDS under Section 195 of the Income-tax Act, 2025 at much higher rates.

Parameter	Resident Seller (Sec 194IA)	NRI Seller (Sec 195)
TDS section	Section 194IA	Section 195
LTCG rate (held > 24 months)	1% (on total price)	12.5% + surcharge + 4% cess
STCG rate (held ≤ 24 months)	1% (on total price)	30% + surcharge + 4% cess
Form used	Form 26QB	Challan 281 (via TAN)
Buyer needs TAN?	No — PAN sufficient	Yes — buyer must obtain TAN
Lower TDS option for seller	No (fixed 1%)	Yes — NRI can apply for lower TDS certificate (Section 197)

Surcharge for NRI sellers: 10% surcharge if LTCG/STCG is ₹50L–₹1Cr; 15% if ₹1Cr–₹2Cr; 25% if above ₹2Cr. Plus 4% health and education cess on tax + surcharge.

Common Mistakes When Deducting TDS on Property

Mistake 1 — TDS on ₹50L excess only: TDS at 1% applies on the total sale price, not just the amount above ₹50 lakh. Example: property purchased for ₹75L → TDS = 1% × ₹75L = ₹75,000. Not 1% × ₹25L (the excess).

Mistake 2 — Single Form 26QB for joint buyers or sellers: If there are 2 buyers and 2 sellers, there are 4 buyer-seller combinations — 4 separate Form 26QB filings are required. Each Form 26QB should reflect that buyer's share of the consideration paid to that specific seller.

Mistake 3 — Depositing TDS within 30 days from registration (not 30 days from month-end): The correct deadline is 30 days from the end of the month in which the payment was made or property was registered. Example: payment made on 15 July → TDS must be deposited by 30 August (not 14 August).

Mistake 4 — Not deducting TDS on instalments: TDS must be deducted on each instalment payment as it is made — not only at registration. If you pay ₹10L on booking a ₹70L property, TDS of ₹10,000 (1% of ₹10L) is due within 30 days from end of that month.

Mistake 5 — Applying Section 194IA to NRI sellers: Section 194IA applies only when the seller is a resident Indian. If the seller is an NRI, Section 195 applies with TDS at 12.5%–30% plus surcharge and cess — not 1%.

Consequences of Not Deducting TDS on Property

Default	Consequence
TDS not deducted	Interest at 1% per month from date TDS was due to date of actual deduction
TDS deducted but not deposited	Interest at 1.5% per month from deduction date to deposit date
Late filing of Form 26QB	Penalty of ₹200 per day under Section 234E of the Income-tax Act, 2025
Failure to deduct entirely	Penalty up to 100% of TDS amount under Section 271C of the Income-tax Act, 2025
Disallowance of expenditure	30% of purchase price may be disallowed as deduction if TDS not deducted (relevant for business buyers)

Frequently Asked Questions

What is 1% TDS on property purchase and when does it apply?

Under Section 194IA of the Income-tax Act, 2025 (re-enacted from Section 194IA of the Income Tax Act, 1961), the buyer of immovable property must deduct TDS at 1% of the sale consideration if the total purchase price is ₹50 lakh or more. The TDS is deducted at the time of payment or registration, whichever is earlier. Importantly, TDS applies on the total purchase price — not just the amount exceeding ₹50 lakh. The threshold is per-property, not per-payment: if you pay in instalments for a ₹60L property, TDS applies on every instalment.

How to file Form 26QB — step by step?

Form 26QB is filed on the TIN-NSDL portal (tin.tin.nsdl.com) under "TDS on Property". Steps: (1) Go to TIN-NSDL > Services > TDS on Sale of Property. (2) Click "Online Form for furnishing TDS on Property (Form 26QB)". (3) Fill in PAN of buyer and seller, property details, total sale consideration, and amount paid. (4) Choose payment method (net banking or over-the-counter at authorised bank). (5) Pay TDS. (6) Download the acknowledgement (Form 26QB receipt). The buyer then issues Form 16B (TDS certificate) to the seller after downloading from TRACES portal within 15 days of the Form 26QB due date.

What if the seller does not have a PAN card?

If the seller does not furnish their PAN, the buyer must deduct TDS at 20% instead of 1% under Section 206AA of the Income-tax Act, 2025. This higher deduction is mandatory regardless of the actual transaction value. The seller should apply for a PAN card (Form 49A) before the property registration to avoid the higher TDS rate. Additionally, the buyer cannot issue Form 16B without the seller's PAN — which prevents the seller from claiming TDS credit.

How is TDS on property handled when the seller is an NRI?

When the seller is an NRI, the buyer cannot use Form 26QB / Section 194IA. Instead, TDS must be deducted under Section 195 of the Income-tax Act, 2025. The rates are significantly higher: Long-Term Capital Gains (property held > 24 months) — 12.5% plus applicable surcharge and 4% cess; Short-Term Capital Gains — 30% plus surcharge and cess. The TDS is deducted on the full sale consideration (not just the gain). The NRI seller can apply to the Income Tax Officer for a lower TDS certificate (under Section 197 of the Income-tax Act, 2025) to reduce TDS to only the actual capital gains tax liability.

How to get Form 16B — the TDS certificate for property purchase?

Form 16B is the TDS certificate for property transactions. After filing Form 26QB and paying the TDS, the buyer downloads Form 16B from the TRACES portal (tdscpc.gov.in). Steps: (1) Register on TRACES as a taxpayer using PAN. (2) Login > Downloads > Form 16B. (3) Enter the acknowledgement number from Form 26QB. (4) Submit the request — Form 16B is generated within 5–7 working days. (5) Download and provide Form 16B to the seller within 15 days of the due date of furnishing the TDS return. The seller uses Form 16B to claim TDS credit while filing their income tax return.

TDS Overview Capital Gains Calculator Income Tax Return Filing NRI Taxation Guide PAN-Aadhaar Linking

Need Help with TDS on Property?

Our CA team handles Form 26QB filing, TDS calculation for NRI sellers (Section 195), lower TDS certificate applications, and Form 16B issuance — 100% online.

Get TDS Help →

◆ Available in 71 Cities

Tds On Property Near You

Expert CA/CS assistance for tds on property across India. Click your city for local details.

→ New Delhi → Mumbai → Bengaluru (Bangalore) → Hyderabad → Chennai → Kolkata → Pune → Ahmedabad → Noida (UP) → Gurgaon (Gurugram) → Jaipur → Lucknow → Chandigarh → Surat → Kochi (Cochin) → Faridabad → Ghaziabad → Greater Noida → Panipat → Sonipat → Manesar (IMT) → Dharuhera → Mathura → Palwal → Agra → Kosi Kalan → Aligarh → Khair → Jewar (Noida International Airport) → Kanpur → Varanasi (Kashi) → Prayagraj (Allahabad) → Meerut → Bareilly → Moradabad → Gorakhpur → Firozabad → Saharanpur → Muzaffarnagar → Bulandshahr → Hapur → Karnal → Kurukshetra → Ambala → Hisar → Rohtak → Yamunanagar → Rewari → Bhiwani → Jodhpur → Udaipur → Kota → Ajmer → Bikaner → Ludhiana → Amritsar → Jalandhar → Patiala → Mohali (SAS Nagar) → Bathinda → Dehradun → Haridwar → Rudrapur → Shimla → Solan (Baddi-Barotiwala-Nalagarh) → Bhopal → Indore → Gwalior → Jammu → Srinagar → Panchkula

Ask Veda