Quick answer
Is TDS applicable on purchase of property?
Yes. TDS on purchase of property applies when you buy immovable property, other than agricultural land, worth ₹50 lakh or more from a resident seller. The buyer deducts tax from the payment, deposits it online through Form 26QB using both PANs, and gives the seller a Form 16B certificate. If the seller is an NRI, different, higher TDS rules apply.
- Applies at ₹50 lakh or more per property
- The buyer deducts, not the seller
- No TAN needed for a resident seller
- NRI sellers: buyer needs TAN and deducts more
When does TDS on purchase of property apply?
The buyer must deduct TDS when the consideration for immovable property, other than agricultural land, is ₹50 lakh or more and the seller is resident in India. Below ₹50 lakh, this deduction does not apply.
Points that catch buyers out:
- It covers flats, houses, shops, offices and plots, whether ready or under construction. Rural agricultural land is excluded.
- The threshold is per property, not per buyer. Two co-buyers of a ₹70 lakh flat each deduct on their own share, even though each share is below ₹50 lakh.
- Instalment payments count. For a builder flat paid in stages, TDS is deducted on each payment.
- Stamp duty value matters. In recent years the 1961 Act has tied the deduction to the higher of the sale price and the stamp duty value. Confirm the current rule for your registration date.
The ₹50 lakh rule is long-established under the Income-tax Act 1961. The Income-tax Act 2025, in force from 1 April 2026, renumbers the provision, so a purchase made from that date falls under the new Act's section and form. Check the e-filing portal for the current form name before paying.
How much TDS on purchase of property should you deduct?
For a resident seller, the standard rate under section 194-IA of the 1961 Act has been 1% of the consideration, and a higher rate applies if the seller does not give a valid PAN. Confirm the rate for your transaction date on the portal.
| Item | Position |
|---|---|
| Threshold | Consideration of ₹50 lakh or more |
| Standard rate | 1% (higher if the seller has no valid PAN) |
| Who deducts | The buyer, at the time of payment or credit |
| Form to pay and report | Form 26QB, a challan-cum-statement |
| TAN needed? | No, the buyer uses their PAN |
| Certificate to seller | Form 16B, downloaded from TRACES |
| Late filing fee | ₹200 a day under section 234E, capped at the TDS amount |
Rate and form names are the long-standing 1961 Act position; the 2025 Act renumbers both. The 234E fee is from the TaxHeal summary of TDS late fees, checked October 2026.
Need help with TDS on purchase of property? Talk to a chartered accountant in Delhi today. First call is free.
How do you file Form 26QB and pay the TDS?
Form 26QB is filled on the income tax e-filing portal: enter the buyer's and seller's PANs and addresses, the property details, the amount paid and the TDS, then pay through net banking or another listed method. There is no separate quarterly return.
- 1
Collect details
Get the seller's PAN, address and residential status, the property address, the agreement date and the total consideration.
- 2
Open the property TDS form
Log in to the e-filing portal, go to e-Pay Tax and choose the property TDS option, which takes you to Form 26QB or its renamed equivalent.
- 3
Enter both parties
Fill in buyer and seller PANs, the share of each where there are several, and the payment amount and date.
- 4
Pay the tax
Pay through net banking, a debit card or another listed mode, and save the challan receipt with its acknowledgement number.
- 5
Issue Form 16B
After processing, download Form 16B from TRACES and give it to the seller, who claims the credit in their return.
When is Form 26QB due?
Form 26QB must be filed and the tax paid within a short period after the end of the month in which the TDS was deducted. Check the exact time limit on the e-filing portal for your payment date, because late filing attracts a daily fee.
Many buyers in Delhi deduct TDS when they hand over the final cheque at registration, then forget to file. The fee under section 234E starts from the due date and runs until filing, capped at the TDS amount, and interest for late payment is charged separately. Filing Form 26QB on the same day you pay the seller avoids both.
What changes when the seller is an NRI?
If the seller is a non-resident, the ₹50 lakh rule and Form 26QB do not apply. The buyer deducts TDS under the provisions for payments to non-residents, usually at a much higher rate, needs a TAN, and files a non-resident TDS return.
The deduction is generally based on the capital gains tax that would apply plus surcharge and cess, and it applies regardless of the property value. The NRI seller can apply for a lower deduction certificate before the sale if the actual tax will be lower. Because the cost of getting this wrong falls on the buyer, always confirm the seller's residential status in writing. Our NRI tax filing page explains the seller's side, including refunds and sending the money abroad.
| Point | Resident seller | NRI seller |
|---|---|---|
| Value threshold | ₹50 lakh or more | No threshold |
| Usual rate basis | 1% of consideration (1961 Act) | Capital gains rate plus surcharge and cess |
| Buyer needs TAN | No | Yes |
| Filing | Form 26QB, one-time | Non-resident TDS return (27Q under the 1961 Act) |
| Certificate | Form 16B | Form 16A or its new equivalent |
What does the seller do with the TDS?
The seller claims the TDS as a credit in their own income tax return for the year of sale, after checking that it appears in Form 26AS and AIS. The TDS is not the final tax on the sale; the actual capital gains tax may be more or less.
If the buyer made a mistake in the seller's PAN or the amount, the credit will not show, and the seller should ask the buyer to correct the statement. Sellers should report the sale in the right ITR form, usually ITR-2 for individuals without business income. See our income tax return filing service for help with the capital gains computation.
Common mistakes with TDS on property
The usual errors are missing TDS altogether, using Form 26QB for an NRI seller, entering the wrong PAN, deducting on only one co-buyer's share, and not issuing Form 16B.
- Skipping TDS on builder instalments. Deduct on each stage payment, not only at possession.
- Not checking residency. An NRI seller changes the whole process and rate.
- Wrong PAN or year. These leave the seller without credit and lead to correction requests.
- One form for many parties. Each buyer and seller pair generally needs its own entry.
- Forgetting Form 16B. Without it, the seller cannot easily match the credit.
Buyers who later get a demand for short deduction can follow our income tax notice reply steps. Families buying in Paschim Vihar, Pitampura or Rohini can bring the sale agreement to our Netaji Subhash Place office. Moneymji and Khubchandani & Co., listed in our chartered accountant firms in Delhi directory, both handle TDS work.
Frequently asked questions
Is TDS deducted on property below ₹50 lakh?
Not under the resident-seller rule, which starts at ₹50 lakh of consideration. But if the seller is an NRI, TDS applies whatever the value. Also check whether the stamp duty value, rather than the agreed price, takes the deal above ₹50 lakh.
Does the buyer need a TAN for Form 26QB?
No. When the seller is resident, the buyer files Form 26QB using their own PAN. A TAN is needed only when the seller is a non-resident, because the buyer then deducts as a regular deductor and files a non-resident TDS return.
Who pays TDS on property, the buyer or the seller?
The buyer deducts it from the amount paid to the seller and deposits it. Economically it comes out of the seller's money, and the seller claims credit for it in their return. The legal duty to deduct and file sits with the buyer.
What if there are two buyers and one seller?
Each buyer deducts TDS on the amount they pay and files a separate Form 26QB. The ₹50 lakh test applies to the property's total consideration, so co-buyers must deduct even if their individual shares are smaller.
Does TDS apply to the full price including parking and club charges?
In recent years the 1961 Act has treated charges such as parking, club membership and similar amenities as part of the consideration for this purpose. Check the current definition for your transaction date before computing the deduction.
What happens if I forgot to deduct TDS on a property I bought?
You can still deduct and file late, paying interest and the late fee under section 234E. The department can treat the buyer as a defaulter for the TDS not deducted, so correct it before a notice arrives rather than after.
Has the Income-tax Act 2025 changed property TDS?
The 2025 Act, in force from 1 April 2026, renumbers the property TDS provision and its form. We have not verified the new text for any change in the ₹50 lakh threshold or rate, so check the portal for purchases made after that date.
Is TDS on property needed for a gift or inheritance?
This deduction is linked to a transfer for consideration, meaning a sale. A genuine gift or inheritance has no payment to deduct from. Other tax rules can apply to gifts, so take advice if family property is moving between relatives.