TDS on Property Purchase in India – Complete Guide 2026 | Process, Forms & Exemptions
Anurag Sodani • June 10, 2026
TL;DR: TDS on property purchase in India is governed by Section 194-IA of the Income Tax Act, 1961. If you buy any immovable property worth more than ₹50 lakhs, you — the buyer — must deduct 1% TDS from each payment made to the seller, deposit it with the government via Form 26QB, and issue a Form 16B TDS certificate to the seller.
Buying a home above ₹50 lakhs comes with a compliance step most first-time buyers don’t expect. TDS isn’t the seller’s job. It’s yours — as the buyer. Miss it, and you face penalties. Handle it right, and it takes less than 30 minutes online. Here’s the full picture.
What is TDS?
TDS stands for Tax Deducted at Source. It is a mechanism under the Income Tax Act, 1961 where tax is collected at the point of the transaction itself — not at year-end.
Instead of the seller paying tax later on their property sale income, the buyer deducts a percentage upfront and deposits it directly with the government. TDS on property purchase falls specifically under Section 194-IA.
Why is TDS on Property Important?
TDS on property purchase creates a mandatory paper trail on high-value real estate deals. It prevents undeclared income and ensures the government receives advance tax on the seller’s capital gains at the time of the transaction.
For buyers, compliance is non-negotiable. Failure to deduct or delayed deposit attracts interest and penalties under the Income Tax Act.
What is Section 194-IA?
Section 194-IA of the Income Tax Act mandates TDS on the purchase of immovable property — excluding agricultural land — where the total consideration is ₹50 lakhs or more.
Key facts about Section 194-IA:
- TDS rate: 1% of total consideration
- Threshold: Total property value must exceed ₹50 lakhs
- No TAN required — buyer’s PAN and seller’s PAN are sufficient
- TDS applies to each instalment payment, not just the final amount
- If seller has no valid PAN, TDS rate increases to 20%
The government introduced this provision in 2013 to formally bring residential and commercial real estate transactions within India’s TDS framework.
Properties Covered Under Section 194-IA
Section 194-IA covers most property types in India.
Covered:
- Residential flats, apartments, builder floors
- Independent houses and villas
- Commercial units and office spaces
- Plots and non-agricultural land
Excluded:
- Agricultural land as defined under the Income Tax Act
- Any property with total consideration below ₹50 lakhs
The provision applies to both new purchases and resale property. Therefore, if you’re buying a resale flat, the same TDS obligation applies equally.
Step-by-Step: When and How to Deduct TDS on Property Purchase
Buyers must deduct TDS on every instalment they pay—not just at the time of registration. Here’s the step-by-step process:
Step 1 — Check applicability. Confirm whether the total agreed sale price exceeds ₹50 lakhs. If it does, TDS applies on every payment made.
Step 2 — Calculate TDS. Deduct 1% from each payment instalment. For a ₹75 lakh property — TDS per ₹10 lakh payment = ₹10,000.
Step 3 — Deduct at each payment stage. Whether it’s the booking amount, progress payment, or final balance — deduct 1% each time and pay the seller the net amount.
Step 4 — File Form 26QB within 30 days. Deposit the TDS and file the return online through the Income Tax e-filing portal within 30 days from the end of the month in which you deduct the tax. Income Tax e-filing portal
Step 5 — Issue Form 16B to the seller. Download Form 16B from TRACES and hand it to the seller within 15 days from the due date of Form 26QB.
Details Required for TDS Payment
Keep these details ready before filing Form 26QB:
- Buyer: Name, PAN, address, mobile number
- Seller: Name, PAN, contact number
- Property: Full address, city, PIN code, property type
- Transaction: Total sale consideration, instalment amount, date of payment
- Banking: Your bank account details for online challan payment
If there are multiple buyers or sellers, each buyer files a separate Form 26QB for their respective share.
Example: TDS Calculation on Property Purchase
Example 1 — Property above ₹50 lakhs (TDS applicable):
Rahul buys a flat in Ahmedabad for ₹75 lakhs, paid in three instalments.
| Instalment | Amount | TDS @ 1% | Paid to Seller |
|---|---|---|---|
| Booking | ₹15,00,000 | ₹15,000 | ₹14,85,000 |
| On Possession | ₹30,00,000 | ₹30,000 | ₹29,70,000 |
| Final Payment | ₹30,00,000 | ₹30,000 | ₹29,70,000 |
| Total | ₹75,00,000 | ₹75,000 | ₹74,25,000 |
Rahul deposits ₹75,000 total with the government via three separate Form 26QB filings.
Example 2 — Property below ₹50 lakhs (TDS not applicable):
Priya buys a flat for ₹42 lakhs. Since the total consideration is below ₹50 lakhs, no TDS applies. Priya pays the full ₹42 lakhs directly to the seller.
When is TDS Deduction Not Necessary?
You do not need to deduct TDS on a property purchase in the following situations:
- Total sale consideration is ₹50 lakhs or below
- The property is agricultural land as defined under the Income Tax Act
- The property qualifies as rural agricultural land outside municipal limits
One important clarification: the ₹50 lakh threshold applies to the total deal value, not individual instalments. Even if each instalment is below ₹50 lakhs, TDS still applies if the total consideration exceeds the limit.
What are the factors that affect the payment of TDS for the purchase of property in India?
When purchasing a property in India, buyers must determine the applicable TDS (Tax Deducted at Source) based on a few factors:
1. Property Value:
If the property value is ₹ 50 lakhs or more: TDS is applicable.
If the property value is less than ₹50 lakhs, buyers do not need to deduct TDS.
2. TDS Rate:
If PAN of the seller is available: 1%
If PAN of the seller is not available: 20%
3. Type of Property:
TDS applies to all immovable property types, such as land and buildings.
Exception: No TDS is required for purchasing rural agricultural land.
What is Form 26QB?
Form 26QB is a challan-cum-TDS return filed by the property buyer. It simultaneously records the transaction details and facilitates payment of TDS to the government.
Unlike regular TDS returns that taxpayers file quarterly, buyers must file Form 26QB within 30 days from the end of the month in which they deduct TDS. Buyers can complete the filing process entirely online through the Income Tax e-filing portal. They do not need a TAN, as their PAN is sufficient for filing the form.
What is Form 16B?
Form 16B is the TDS certificate for property purchase. The buyer issues it to the seller as proof that TDS has been deducted and deposited with the government.
The seller needs Form 16B to claim TDS credit while filing their income tax return. Consequently, the buyer must provide it within 15 days from the due date for furnishing Form 26QB. Form 16B is automatically generated on the TRACES portal after successful Form 26QB processing.
Difference Between Form 16A and Form 16B
Both are TDS certificates — but they serve different purposes.
| Feature | Form 16A | Form 16B |
|---|---|---|
| Covers | Non-salary TDS (rent, interest, professional fees) | Property purchase TDS only |
| Issued by | Employer/deductor | Property buyer |
| Relevant section | Various TDS sections | Section 194-IA |
| Frequency | Quarterly | Per transaction |
How to Download Form 26QB
Step 1: Visit https://www.tdscpc.gov.in/ and log in using your PAN as the registered taxpayer.
Step 2: Navigate to Downloads → Form 26QB.
Next Step 3: Enter your acknowledgement number from the filed Form 26QB.
Last Step 4: Download the PDF and save it for your records.
Steps to Pay TDS via Challan 26QB and Get Form 16B
Step 1: Log in at https://eportal.incometax.gov.in/ using your PAN.
Step 2: Go to e-Pay Tax → Form 26QB (TDS on Property Sale).
Next Step 3: Fill in buyer details, seller details, property address, and the instalment amount being paid.
Step 4: Enter TDS amount — 1% of the payment made.
Step 5: Complete payment via net banking or debit card. Download and save the challan receipt.
Step 6: After 5–7 working days, log in to TRACES and download Form 16B. Hand it to the seller promptly.
How to Claim TDS Refund Online
If excess TDS was deducted or the property deal was cancelled, the seller claims a refund through ITR filing — not through a separate application.
Step 1: Log in to https://eportal.incometax.gov.in/.
Step 2: File your ITR for the relevant financial year. The TDS deducted will reflect in your Form 26AS and AIS.
Step 3: Report the TDS as tax already paid. If TDS exceeds your total tax liability, the excess is automatically treated as a refund.
Step 4: Ensure your bank account details are updated on the portal. Refunds are typically processed within a few weeks to months after filing.
Frequently Asked Questions (FAQs)
Can I claim a refund of TDS deducted on property purchase?
Yes, but only the seller claims it — not the buyer. The seller files an ITR for the relevant year, claims the TDS deducted as pre-paid tax, and receives the excess as a refund from the Income Tax Department.
How to pay TDS for a property purchased in India?
Log in to the Income Tax e-filing portal, select e-Pay Tax, choose Form 26QB, fill in buyer and seller details, pay online, and save the challan. File within 30 days from the end of the deduction month.
Does TDS apply to all property purchases?
No. TDS under Section 194-IA applies only when the total property consideration exceeds ₹50 lakhs. Properties below ₹50 lakhs and agricultural land are exempt from TDS.
What is the difference between Form 16A and Form 16B?
Form 16A covers TDS on non-salary income like rent, bank interest, and professional fees. Form 16B is specifically for TDS on property purchase under Section 194-IA. Both serve as proof of tax deducted.
How to pay TDS to an NRI seller for a property sale?
When the seller is an NRI, Section 195 applies — not Section 194-IA. The buyer needs a TAN, deducts TDS at applicable capital gains rates (20% for long-term, 30% for short-term), and files Form 27Q instead of Form 26QB.
People Also Ask (PAA)
How much TDS is applicable on the sale of property?
TDS is 1% of the total sale consideration under Section 194-IA for resident sellers. If the seller does not provide a valid PAN, TDS is deducted at 20%.
Can TDS be deducted without a TAN number?
Yes. Section 194-IA is a unique provision — buyers do not need a TAN. The PAN of both buyer and seller is sufficient to file Form 26QB and comply with TDS requirements.
Who pays TDS on a resale flat — the buyer or the seller?
The buyer. The buyer deducts 1% from each payment made to the seller and deposits it with the government via Form 26QB. The seller receives the net amount after TDS deduction.
Can TDS be deducted on the accreditation fee or society charges?
TDS under Section 194-IA is calculated on the total consideration paid for the property. If society transfer charges, parking fees, or other amounts form part of the agreed sale consideration, they are included in the TDS base.
Conclusion
TDS on property purchase is one of those compliance requirements that feels complicated — but really isn’t once you understand the flow. Deduct 1%, file Form 26QB within 30 days, issue Form 16B. That’s the core of it.
If you’re buying a home and want a clear picture of your total financial obligations — from TDS to EMI — use the Home Loan EMI Calculator and Eligibility Calculator to plan your purchase with confidence.
Exploring home loan options or have questions about your home purchase? Visit our FAQs page for straightforward answers.
Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. TDS provisions are subject to change. Consult a qualified chartered accountant for guidance specific to your transaction.
