TDS on property purchase in India: 1% from ₹50 lakh, how to file and what changed in 2026
A buyer's guide to TDS on property: when 1% applies, the ₹50 lakh test with joint buyers, stamp duty value, PAN rules, the form that replaced 26QB, deadlines and penalties.
If you buy a property other than rural agricultural land from a resident seller, and the consideration or the stamp duty value is ₹50 lakh or more, you must deduct 1% TDS from the amount you pay. You deposit it with the government and give the seller a TDS certificate. Without a valid seller PAN the rate is 20%. This used to be section 194-IA of the Income-tax Act, 1961. From 1 April 2026 it falls under section 393 of the Income-tax Act, 2025, and the old Form 26QB has been replaced by a unified challan-cum-statement (Form 141). The deposit is still due within 30 days from the end of the month in which you deduct.
TDS is not an extra cost to the buyer. It comes out of the price. The obligation and the penalties, though, fall on the buyer.
When you must deduct
| Situation | TDS by buyer? | Rate |
|---|---|---|
| Resident seller, consideration or stamp duty value ₹50 lakh or more | Yes | 1% (20% without valid PAN) |
| Resident seller, both values below ₹50 lakh | No | – |
| Rural agricultural land | No | – |
| Seller is an NRI | Yes, under the non-resident provision, not this one | Tax on capital gain at non-resident rates; see the NRI guide |
| Under-construction flat from a builder | Yes, on each instalment once the total crosses the threshold | 1% |
| Compulsory acquisition by government | Different rules | – |
Which value? Apply 1% to the higher of the consideration and the stamp duty value (the circle rate value). This has been the rule since 1 April 2022. If the agreement says ₹48 lakh but the circle rate value is ₹51 lakh, TDS applies and is 1% of ₹51 lakh.
Joint buyers or sellers. Since 1 October 2024 the ₹50 lakh test applies to the total consideration for the property, not to each person's share. Two buyers each paying ₹30 lakh for a ₹60 lakh flat must each deduct 1% on their own payment.
What counts as consideration. Amounts the buyer pays for the property itself, including charges such as club membership, car parking, electricity and water facility fees and maintenance fees, and advance fees of a similar nature, form part of it. Whether GST shown separately on a builder's invoice should be left out of the TDS base is not clearly settled for property purchases. Practice varies, so ask your chartered accountant or the builder's finance team which base they use, and keep the working.
Step by step: how to deduct and deposit
- Collect the seller's PAN and check that it is valid and linked to Aadhaar. An inoperative PAN can trigger the 20% rate.
- Deduct 1% from each payment you make: token, agreement payment, instalments and final payment.
- File the challan-cum-statement on the e-filing portal. Choose the property schedule, enter both PANs, property details, value and payment dates, and pay through net banking or an authorised bank. This replaced Form 26QB from 1 April 2026. Deductions made before that date stay in the old form.
- Deadline: within 30 days from the end of the month of deduction. Tax deducted on 5 March is due by 30 April.
- Download the TDS certificate for the seller from the TRACES portal once the deposit is processed, usually a few days later. Give it to the seller within the time allowed.
- Keep records: the challan acknowledgement, the certificate and the bank transfer proof go into your property file.
You do not need a TAN for this resident-seller deduction. From 1 October 2026 a resident individual or HUF buying from a non-resident seller also uses this challan-cum-statement (Form 141, Schedule E), at the non-resident rates. See the NRI guide.
Worked example: instalments
Illustrative under-construction flat at ₹72,00,000, paid in three stages:
| Payment | Amount | TDS at 1% | Paid to builder |
|---|---|---|---|
| Booking (10%) | ₹7,20,000 | ₹7,200 | ₹7,12,800 |
| Slab stage (40%) | ₹28,80,000 | ₹28,800 | ₹28,51,200 |
| Possession (50%) | ₹36,00,000 | ₹36,000 | ₹35,64,000 |
| Total | ₹72,00,000 | ₹72,000 | ₹71,28,000 |
Each deduction needs its own filing, due 30 days after the end of that month. Use the property TDS calculator for each stage.
What happens if you miss it
- Interest: 1% a month if you did not deduct at all, and 1.5% a month if you deducted but did not deposit, counted in months or parts of a month.
- Late fee: ₹200 a day for a late statement, up to the amount of TDS.
- Penalty: the assessing officer can impose a penalty for failure to deduct.
- Assessee in default: the department can demand the TDS itself from you, not only from the seller.
- Seller's credit: the seller cannot claim credit for tax you never deposited. Your relationship with the seller will suffer, and you will be chasing receipts after registration.
Mistakes in PAN, amount or date can be corrected through the correction facility on TRACES, but it takes time. Check every field before you pay.
FAQ
Is TDS payable if I am buying with a home loan?
Yes. The bank disburses to the seller, but the obligation is the buyer's. Many banks ask for proof of TDS before releasing the final disbursement, or disburse 99% and let you deposit the 1% yourself. Agree with the bank and seller who does what before the day of registration.
Does TDS apply to a resale flat under ₹50 lakh with a high circle rate?
Yes, if the stamp duty value is ₹50 lakh or more, even when the price is lower.
The seller has no PAN. What should I do?
You must deduct at 20%, which the seller will usually resist. Insist that the seller obtains a PAN before registration. An instant e-PAN is available on the e-filing portal for people with Aadhaar.
Is TDS deducted on the stamp duty I pay?
No. Stamp duty and registration are paid to the state. TDS is calculated on what you pay the seller, or the stamp value if that is higher.
Sources
- Income Tax Department e-filing portal — property TDS challan-cum-statement and e-PAN
- TRACES — download TDS certificates and request corrections
- Income Tax Department — Income-tax Act, 2025 and CBDT circulars
- See the overview of buying and selling costs and the buyer's total cost example
