What is TDS on property purchase under Section 194-IA?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-07-28 · ~4 min read

⚡ Quick answer

When you buy immovable property (other than agricultural land) worth ₹50 lakh or more, you — the buyer — must deduct 1% TDS on the sale consideration under Section 194-IA, deposit it to the government using Form 26QB within 30 days from the end of the month of payment, and give the seller a Form 16B certificate. Importantly, the 1% applies to the entire amount, not just the part above ₹50 lakh, and you don't need a TAN — your PAN is enough.

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Buying a home or plot worth ₹50 lakh or more comes with a tax responsibility many buyers don't expect: you have to deduct TDS from the payment to the seller and deposit it with the government. Get it wrong and you face interest and penalties. This guide explains exactly how property TDS under Section 194-IA works, the forms and deadlines, and the common mistakes to avoid — in plain language.

1When property TDS applies

Section 194-IA applies when you buy any immovable property — a flat, house, building or land (other than agricultural land) — for ₹50 lakh or more. The duty to deduct and deposit the TDS is on the buyer, not the seller.

⚠️ ImportantThe 1% is on the full sale consideration, not just the excess over ₹50 lakh. So on a ₹70 lakh flat, you deduct 1% of ₹70 lakh = ₹70,000, not 1% of ₹20 lakh.

2How to deduct and deposit it

The process is simpler than most TDS because you don't need a TAN:

At the time of payment, deduct 1% of the total consideration and pay the seller the balance.
Deposit the deducted TDS using Form 26QB (a combined challan-cum-statement) on the income-tax/TIN portal.
Do this within 30 days from the end of the month in which you made the payment.
After depositing, download Form 16B from the TRACES portal and give it to the seller as their TDS certificate.

3Special cases

A few situations change the amount or process:

Seller has no PAN: TDS is 20% instead of 1% — always collect the seller's PAN.
Seller is an NRI: this section doesn't apply; NRI property sales fall under Section 195 with higher TDS at capital-gains rates.
Multiple buyers or sellers: each buyer files a separate Form 26QB for their share.
Home loan / instalments: deduct TDS on each instalment as it's paid.

💡 ExampleRohit buys a ₹80 lakh flat from a resident seller, paying in two instalments. On each payment he deducts 1% (₹40,000 each, ₹80,000 total), pays the seller the rest, files Form 26QB within 30 days of each month-end, and hands the seller two Form 16B certificates. No TAN needed — just his PAN and the seller's.

4Deadlines and penalties

Miss the deadlines and it gets expensive:

Late deduction or deposit attracts interest at 1% / 1.5% per month under Section 201.
Late filing of Form 26QB attracts a fee of ₹200 per day under Section 234E (capped at the TDS amount).
Failure to deduct can make the buyer liable for the tax itself, plus penalty.

Key takeaways

Buying property worth ₹50 lakh+ (non-agricultural): the buyer deducts 1% TDS under Section 194-IA.
The 1% is on the entire consideration, not just the amount above ₹50 lakh.
No TAN needed — deposit via Form 26QB within 30 days of the month-end using your PAN.
Give the seller Form 16B (downloaded from TRACES) as their TDS certificate.
Seller without PAN → 20% TDS; NRI seller → Section 195 (not 194-IA), at higher rates.

Frequently asked questions

Is TDS on property 1% of the whole amount or only above ₹50 lakh?

It's 1% of the entire sale consideration once the value is ₹50 lakh or more — not just the portion above ₹50 lakh.

Do I need a TAN to deduct TDS on property?

No — Section 194-IA is an exception. You deposit the TDS using Form 26QB with your PAN; no TAN is required, which keeps it simple for individual buyers.

What if I'm buying from an NRI?

Section 194-IA doesn't apply to NRI sellers. Instead, TDS is deducted under Section 195 at the applicable capital-gains rate (much higher than 1%), and you do need a TAN. Get professional help for NRI property purchases.

When do I have to deposit the property TDS?

Within 30 days from the end of the month in which you made the payment (or credited the seller). Deposit it via Form 26QB; late deposit attracts interest and a Section 234E fee.