TDS on property: the one per cent the buyer must deduct

When you buy immovable property, other than agricultural land, for fifty lakh rupees or more, you must hold back one per cent of what you pay and deposit it with the government in the seller's name. It is the seller's income tax, collected early, and the law makes the buyer responsible for collecting it.

A tax, not a fee

Stamp duty and the registration fee are charges on the buyer. This one is different: the one per cent belongs to the seller's tax account. You pay nothing extra; part of the price goes to the government instead of the seller, who gets credit for it against their own tax.

The law puts the duty on the person who pays, not the person who receives.

The rule, line by line

From 1 April 2026 the rule sits in section 393(1) of the Income-tax Act, 2025. Many people still call it 194-IA, the section it replaced; the substance is the same.

Two lines in that table catch people out.

The threshold is counted on the whole deal. Where two people buy together, or two people sell together, the fifty lakh is the total paid by all the buyers to all the sellers. A couple buying a sixty-lakh flat in equal shares cannot each say "my thirty lakh is under the limit".

The base is the higher figure. If the stamp duty value of the property is above the price you agreed, the one per cent is worked out on the stamp duty value.

What you file, and by when

The old Form 26QB has gone. Since 1 April 2026 the deduction is reported on Form 141, a single challan-cum-statement that covers property, rent and a few other payments. Property is its Schedule B.

1. Deduct at each payment. Every instalment you pay, including the token, carries its one per cent. Hold it back from that payment.
2. Deposit and file within thirty days of the month's end. Form 141 is filed online, against your own PAN, within thirty days from the end of the month in which you deducted. It asks for every buyer, every seller, each one's share and the stamp duty value.
3. Give the seller the certificate. Download the certificate, now called Form 132 (it replaced Form 16B), from the TRACES website and hand it to the seller within fifteen days of the Form 141 due date. A certificate made any other way is not valid.
4. Keep the proof. The challan, the filed Form 141 and a copy of Form 132 belong in the same folder as your sale deed.

Ask for the seller's PAN on the first day

Form 141 needs the seller's PAN. Where the seller does not furnish one, the deduction is at a higher rate than one per cent, and the higher amount comes out of the seller's money. Ask for a copy of the PAN card with the first set of documents, and check the name on it against the name on the title papers.

Who carries the mistake

This is what nobody tells you at the registry. A seller who says "give me the full amount, I will sort out my own tax" is asking you to carry their obligation. If you pay the whole price and nothing is deducted or deposited, the seller keeps the money. The default stays with you.

The notice goes to the person the law told to deduct, the buyer, with interest for the delay and a fee for late filing, often long after the house-warming.

The seller who lives abroad

One question changes everything, and it belongs before the price is agreed: is the seller a resident of India?

If the seller is a non-resident, the one per cent rule does not apply at all. The deduction falls under a different provision, section 393(2), the old section 195. The rate is materially higher, because it depends on the kind of gain and on surcharge, and Form 141 cannot be used: it is only for resident sellers. The buyer will usually need a TAN to deposit the tax.

There is deliberately no figure here. On a sale by a non-resident, sit down with a chartered accountant before the token changes hands, because the amount withheld can be large enough to change the deal.

What this guide does not cover

The seller's own tax on the gain is in the guide to capital gains. Rates and forms change with each Finance Act; this is general information, not tax advice. Confirm with a chartered accountant before you pay.

Know the land before you get to the tax.

Questions people ask

Is TDS on property purchase paid by the buyer or the seller?

The buyer deducts it from the price and deposits it, but it is the seller's tax. The seller receives ninety-nine per cent and gets credit for the one per cent in their own return.

Is TDS applicable on property below 50 lakh?

No. The one per cent applies where the consideration is fifty lakh rupees or more, counted on the total paid by all buyers to all sellers.

Is Form 26QB still used for TDS on property in 2026?

No. From 1 April 2026 it is replaced by Form 141, Schedule B, and the seller's certificate Form 16B is replaced by Form 132.

What happens if the buyer does not deduct TDS on property?

The default stays with the buyer. The notice comes to the person who should have deducted, with interest for the delay and a fee for late filing.

What is the TDS rate when the seller is an NRI?

The one per cent rule does not apply. A different provision, section 393(2), applies at a materially higher rate that depends on the gain, so take a chartered accountant's view before you pay.

Where the facts come from. The facts and figures in this post come from verified government sources and verified RERA-registered brokers.

Indori Zameen is a private platform. It is not a government body and is not affiliated with one — always confirm a record with the concerned authority before you commit money.