How TDS on Property Sales Works: Section 194-IA Rs. 50 Lakh Threshold Explained

TDS on Property Purchase in India: Section 194-IA, Form 26QB and Form 141

What is Section 194-IA TDS on property purchase? The buyer deducts 1% TDS (Section 393(1) of the Income-tax Act 2025 from 1 April 2026, Section 194-IA before) on the higher of consideration or stamp duty value, when either is ₹50 lakh or more. Deposit it within 30 days of month-end in Form 141 (earlier Form 26QB) and give the seller Form 132 (earlier Form 16B).

If you are buying a flat, an apartment, an independent house, a plot of urban land, or a commercial unit in India for Rs 50 lakh or more, the law assigns a tax compliance task to you, the buyer. You must deduct 1% of the consideration as TDS, deposit it with the government using the challan-cum-statement (Form 26QB for deductions up to 31 March 2026, Form 141 from 1 April 2026), and issue a TDS certificate (Form 16B, or Form 132 from 1 April 2026) to the seller. This is one of the most commonly missed compliance items for first-time home buyers because most people assume the registrar's office, the builder, or the seller is handling it. They are not.

Agricultural land is outside this rule, but the exclusion depends on where the land sits; our guide to TDS on agricultural land sale under Section 194-IA covers the municipality distance tests and converted land.

This guide walks through Section 194-IA end to end: who must deduct, how to compute the TDS, how to file the challan-cum-statement on the e-filing portal, how to download the TDS certificate from TRACES, what changed in 2022 and 2024, how to handle joint buyer and joint seller cases, what to do when the seller is an NRI, and the penalties for getting it wrong.

What Section 194-IA Says

Section 194-IA of the Income Tax Act 1961 was introduced by the Finance Act 2013 (from 1 June 2013) and has been refined several times since. It governs deductions made up to 31 March 2026. From 1 April 2026 the same obligation sits in Section 393(1) of the Income-tax Act 2025 (Table serial 3(i)), with the same 1% rate and Rs 50 lakh threshold. The rule has four moving parts:

1. Triggering transaction: transfer of any immovable property (other than agricultural land) by a resident transferor.
2. Threshold: total consideration of Rs 50 lakh or more.
3. Rate: 1% of the consideration or the stamp duty value, whichever is higher (see the 2022 change below).
4. Deductor: the buyer (transferee), regardless of whether the buyer is an individual, HUF, partnership, company, or otherwise.

The buyer must deduct TDS at the time of credit or payment, whichever is earlier. For most property deals this means at the time you make a payment to the seller (booking amount, instalment, or final balance).

Importantly, Section 194-IA does not require the buyer to have a TAN. The buyer's PAN is sufficient. This is unique among TDS sections and was deliberately designed to keep the compliance burden manageable for individual home buyers.

Who Is Responsible: The Buyer, Not the Seller

A common misconception is that the seller pays the TDS, the registrar deducts it, or the builder takes care of it. None of that is correct under Section 194-IA.

The legal responsibility sits squarely with the buyer:

• The buyer must compute and deduct 1% from each payment to the seller.
• The buyer must file the challan-cum-statement (Form 26QB, or Form 141 from 1 April 2026) and deposit the TDS with the government.
• The buyer must download the TDS certificate (Form 16B, or Form 132 from 1 April 2026) from TRACES and give it to the seller.
• If the buyer fails on any of these, the buyer (not the seller) faces interest under Section 201 and penalty under Section 271C.

The seller's only role is to provide a valid PAN. If the seller does not provide a PAN, TDS must be deducted at 20% under Section 206AA, instead of 1%.

When the Bank Pays the Builder From Your Home Loan

Many first-time buyers learn about this TDS late because neither the builder nor the lender mentions it. The duty does not move to the bank when it releases your home loan straight to the builder or seller. You are the buyer, and the loan disbursement is still a payment of your purchase price, so 1% of every disbursement is your TDS to deposit.

In practice, most buyers either ask the bank to release 99% of each tranche and pay the 1% themselves, or let the full tranche go and pay the TDS from their own funds while recovering it from the seller. Either way, file the challan-cum-statement for the month in which each disbursement is made.

What Is the "Consideration" for the 1% TDS

The Rs 50 lakh threshold and the 1% rate apply to the total consideration for the transfer of the property. This includes:

• The base sale price (the price agreed in the sale agreement)
• Club membership fees, parking charges, advance maintenance, electricity and water connection charges, and any other amounts paid to the builder or seller in connection with the property
• Floor rise charges, preferred location charges (PLC), and similar add-ons
• All instalments under a construction-linked or possession-linked plan

GST charged separately on an under-construction property is generally left out of the TDS base, following CBDT Circular 23/2017 (no TDS on the GST component shown separately in the agreement or invoice). There is no clarification specific to Section 194-IA, so keep the GST amount clearly separated in the agreement and payment receipts.

The Finance (No. 2) Act 2019 added an Explanation to Section 194-IA, effective 1 September 2019, which says the consideration includes club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee and similar charges incidental to the transfer.

2022 Change: Stamp Duty Value Now Counts

Before 1 April 2022, the 1% TDS was computed on the agreement value. The Finance Act 2022 amended Section 194-IA to align it with Section 43CA and Section 50C: the TDS is now computed on the higher of:

• The total consideration (agreement value plus all add-ons), or
• The stamp duty value of the property (the value adopted by the state government for stamp duty purposes, also called circle rate or guidance value).

This change is effective 1 April 2022. No TDS is needed only when the consideration and the stamp duty value are both below Rs 50 lakh. If the stamp duty value is higher than the agreement value, you must compute 1% on the stamp duty value, even though the actual money paid is the agreement value.

The Budget 2024 change was different: the Finance (No. 2) Act 2024, effective 1 October 2024, provides that where there is more than one transferor or transferee, the consideration is the aggregate amount paid by all buyers to all sellers (see the threshold section below).

A practical example:

• Agreement value: Rs 48 lakh
• Stamp duty value: Rs 55 lakh
• Rule before 1 April 2022: no TDS (agreement value below Rs 50 lakh threshold)
• Rule from 1 April 2022: TDS at 1% on Rs 55 lakh = Rs 55,000

How the Rs 50 Lakh Threshold Works

The Rs 50 lakh is judged on the total transaction value, not on each instalment or each buyer's or seller's share. The most common scenarios:

Single buyer, single seller, full payment upfront: Straightforward. If the consideration is Rs 50 lakh or more, deduct 1% on the full amount and file one challan-cum-statement.

Single buyer, single seller, instalments (under-construction property): The threshold is judged once on the total consideration. If the total agreement value is Rs 80 lakh, every single instalment (even an early Rs 5 lakh booking amount) is subject to TDS at 1%. Each instalment is reported in the challan-cum-statement for the month of that instalment, due within 30 days from the end of that month. Instalments paid in different months cannot be batched into one filing.

Joint buyers (e.g., husband and wife purchasing together): Each buyer deducts 1% on the share they pay to the seller. If a Rs 80 lakh property is bought 50:50 by two co-owners, each deducts Rs 40,000 on Rs 40 lakh. Since 1 October 2024 the Rs 50 lakh threshold is checked on the aggregate Rs 80 lakh, not on the per-buyer Rs 40 lakh, so TDS is mandatory even though each buyer's share is below Rs 50 lakh.

Joint sellers (e.g., siblings inheriting a property): The TDS for each seller is 1% of that seller's share of the consideration.

Property above Rs 1 crore: The rate does not step up. Section 393(1) Table Sl. No. 3(i) has a single 1% rate with no higher slab, and under Section 2 of the Finance Act, 2026 neither surcharge nor the 4% health and education cess is added to this TDS when the seller is resident. A Rs 1.5 crore flat with a stamp duty value of Rs 1.4 crore means TDS of Rs 1,50,000 (1% of the higher figure). Surcharge only enters the picture when the seller is a non-resident, which falls under a different section (see the NRI section below).

How many forms: Form 26QB (deductions up to 31 March 2026) takes one buyer PAN and one seller PAN, so it has to be filed for every buyer and seller combination. Two buyers and two sellers means four Form 26QBs. Form 141 (from 1 April 2026) lets you enter all sellers with their PAN and percentage share in one form, and the portal also asks for co-buyers' names and their share of the purchase. Check the portal guidance for your case before filing.

How to File the Challan-cum-Statement: Step by Step

Form 141 (and Form 26QB before it) is a combined challan-cum-statement. Filing it deposits the TDS with the government and also reports the deduction to the Income Tax Department in one workflow. Here is the full procedure.

Step 1: Gather the Information

You will need:

• Buyer details: PAN, full name, complete address, mobile, email
• Seller details: PAN, full name, complete address. If joint sellers, all sellers' PANs and the share each is receiving
• Property details: full address, type (land, building, both), date of agreement, date of payment
• Financial details: total consideration, stamp duty value, amount paid in this instalment, TDS amount (1% of the relevant base)
• Date of payment and date of deduction (these can be the same)

Step 2: Log In to the Income Tax e-Filing Portal

The form is filed on the e-filing portal; the old TIN-NSDL/Protean route is no longer used for property TDS.

1. Log in to incometax.gov.in/iec/foportal/ using the buyer's PAN (Form 141 can be filed only after login).
2. Go to e-File > e-Pay Tax > New Payment.
3. For deductions from 1 April 2026, choose the Income-tax Act 2025 option and select Form 141, then the schedule for TDS on transfer of immovable property. For deductions up to 31 March 2026, select 26QB (TDS on Sale of Property).

Step 3: Fill In the Form

The form has four sections:

1. Buyer details: PAN, name, address, contact. The portal autofills name and address from the PAN database; correct it if needed.
2. Seller details: PAN and name. The portal handles the PAN and pulls the registered name. Mismatches will block submission.
3. Property details: address, type, date of agreement, date of payment.
4. Tax details: total consideration, stamp duty value, amount paid in this instalment, rate (1%), TDS amount, interest (if any), fee (if any).

The portal calculates the TDS automatically once you enter the consideration and confirm the rate. Cross-verify the figure before proceeding.

Step 4: Pay the TDS

After submitting the form, choose the payment mode:

• Net banking (most authorised banks)
• Debit card (selected banks)
• Pay at the bank counter (visit an authorised branch with the printed challan and a cheque)
• Payment gateway (UPI, credit card and debit card of non-authorised banks)

On successful payment, the portal generates a challan with a Challan Identification Number (CIN), Bank Reference Number (BRN), and a token. Save the challan as PDF.

Step 5: Wait for TRACES to Process

After you pay, TRACES processes the statement, usually within a few working days. Once processed, the deduction reflects in the seller's Form 26AS, AIS, and TIS, and the certificate (Form 16B, or Form 132 from 1 April 2026) becomes available for download by the buyer through TRACES, the same portal used to download other TDS certificates such as Form 16A.

Step 6: Download and Issue the TDS Certificate

1. Log in to tdscpc.gov.in (TRACES) as a taxpayer using the buyer's PAN.
2. Go to Downloads > Form 16B (For Buyer) (for deductions from 1 April 2026, the certificate is Form 132).
3. Enter the assessment year or tax year, the seller's PAN, and the acknowledgement number of the challan-cum-statement.
4. Submit the request. TRACES processes it and makes the certificate available under Downloads > Requested Downloads within a few hours.
5. Download the certificate as PDF and email or hand it over to the seller.

The deadline to issue the certificate is within 15 days from the due date of the challan-cum-statement. For example, if you paid the seller in May 2026, Form 141 is due by June 30, 2026, and Form 132 must reach the seller by July 15, 2026.

If you would rather not work the portal yourself, Tax Garden's TDS filing service prepares and files the challan-cum-statement (Form 26QB, or Form 141 from 1 April 2026), pays the TDS through your bank and sends the certificate to the seller before the 15-day deadline.

Due Dates Summary

A worked example:

• Payment to seller on April 15, 2026 → TDS deducted on April 15
• Form 141 due by May 30, 2026 (30 days from end of April)
• Form 132 (TDS certificate) due by June 14, 2026

For instalment payments, this clock restarts for each instalment.

When the Seller Is an NRI: Section 195, Not Section 194-IA

Section 194-IA applies only when the seller is a resident of India. If the seller is a Non-Resident Indian (NRI) or a foreign national selling Indian property, Section 195 applies instead. The differences are significant:

For the buyer's step-by-step process, see our guide to TDS on property purchase from an NRI. For the seller's side, see the NRI capital gains tax and TDS guide.

For an NRI seller, the buyer often pays TDS on the full consideration unless the NRI seller obtains a Lower Deduction Certificate (LDC) under Section 197 from the Assessing Officer specifying the actual capital gains and a lower TDS amount. Filing Form 27Q (Form 144 from 1 April 2026) is procedurally heavier than Form 26QB or Form 141 and usually requires a tax consultant.

If you are not certain whether the seller is a resident or an NRI, ask for the seller's residential status declaration in writing and verify the seller's PAN. A wrongly chosen route (using the 1% resident route when Section 195 applies, or vice versa) leaves the buyer exposed to short-deduction interest and penalty. In Jitendra Sharma v. JCIT (ITAT Indore, ITA 500-502/Ind/2018, order dated 14 October 2020), three buyers of a Rs 75 lakh property deducted 1% under Section 194-IA from a seller whose sale deed showed a US address. They then paid the balance TDS at 20.6% plus about Rs 1.03 lakh interest each. The Tribunal deleted the Rs 5.15 lakh Section 271C penalty on each buyer for reasonable cause, but only after the shortfall and interest had been paid. An Indian address or an Indian PAN does not prove the seller is resident; residence depends on days in India under Section 6.

Penalties: What Happens If You Miss the TDS

The Income Tax Act treats these failures seriously, and the buyer carries the full liability. The 1961 Act sections below apply to defaults on deductions up to 31 March 2026; for deductions from 1 April 2026 the same interest, fee and penalty sit in Sections 398(3), 427(1) and 448 of the Income-tax Act 2025.

Section 201(1A), Now Section 398(3): Interest on Late Deduction or Late Deposit

For detailed coverage of Section 201 interest, see our complete Section 201 interest guide.

• 1% per month (or part of a month) if TDS is not deducted, from the date it should have been deducted to the date of actual deduction.
• 1.5% per month (or part of a month) if TDS is deducted but not deposited on time, from the date of deduction to the date of deposit.

Section 234E, Now Section 427(1): Late Filing Fee for the Challan-cum-Statement

If Form 26QB (or Form 141) is filed after the 30-day window, a fee of Rs 200 per day of delay applies, capped at the TDS amount. This is in addition to Section 201 interest.

Section 271C, Now Section 448: Penalty for Failure to Deduct

If you fail to deduct TDS at all, the Assessing Officer can levy a penalty under Section 271C equal to the amount of TDS not deducted. On a Rs 80 lakh purchase where Rs 80,000 should have been deducted, the penalty alone is Rs 80,000, on top of the original TDS still being payable plus interest.

Section 271H: Penalty for Late or Incorrect Filing

If the challan-cum-statement is not filed within one year of the due date, an additional penalty of Rs 10,000 to Rs 1,00,000 can be levied under Section 271H. It also applies to incorrect filings (wrong PAN, wrong amount, wrong section code).

Practical Risk: Ongoing Liability Until Cured

Importantly, Section 201 keeps the interest clock running until the TDS is actually deposited. A buyer who realises five years later that the TDS was missed will pay 1% per month interest for the entire period, plus the original TDS, plus a possible 271C penalty. The faster you cure a missed deduction, the smaller the liability.

Common Mistakes to Avoid

Treating the threshold as per-buyer or per-seller: The Rs 50 lakh threshold is on the total consideration. Joint buyers cannot escape TDS by splitting the purchase below Rs 50 lakh per head.

Forgetting instalment payments: Each instalment is a separate trigger. Buyers under construction-linked plans often deduct TDS only on the final payment and miss the booking amount and intermediate instalments. Each missed instalment attracts its own interest under Section 201.

Wrong residential status for the seller: Having an Indian PAN does not make the seller a resident. The 1% rate applies only if the seller is a tax resident of India for the year of transfer. Always verify residential status in writing.

Missing the stamp duty value comparison: Post-October 1, 2024, you must compare the agreement value with the stamp duty value and apply 1% on the higher. Many buyers continue to compute TDS on the agreement value alone, which understates the deduction.

Getting joint sellers wrong: Under Form 26QB each seller needs a separate form. Under Form 141 all sellers go into one form, but each seller's PAN and share must be entered correctly.

Late certificate issuance: The seller cannot claim the TDS credit cleanly until the certificate (Form 16B, or Form 132 from 1 April 2026) is in hand. Sellers often delay registration of the property or insist on the 1% being held in escrow until Form 16B is received. Issuing Form 16B promptly is good practice and a contractual obligation in many sale deeds.

Assuming the builder or registrar handles it: They do not. Sub-registrars verify stamp duty payment, not TDS. Builders may help the buyer with the procedure as a service, but the legal liability stays with the buyer.

Quick Compliance Checklist for the Buyer

1. Confirm the seller's residential status (resident vs NRI) and PAN.
2. Compare the agreement value with the stamp duty value; pick the higher as the TDS base.
3. Check whether the threshold of Rs 50 lakh on total consideration is met.
4. Compute 1% TDS on the relevant base for each payment to each seller.
5. Pay the TDS and file Form 26QB (Form 141 from 1 April 2026) within 30 days from the end of the month of deduction.
6. Save the challan PDF.
7. Wait a few working days, then download the certificate (Form 16B, or Form 132 from 1 April 2026) from TRACES.
8. Hand the certificate to the seller within 15 days of the challan-cum-statement due date.
9. Repeat for every instalment and every seller.

Tax Garden Handles Property TDS End to End

Tax Garden's TDS filing service cover Form 141 (earlier Form 26QB) filing for property buyers. We confirm the seller's residential status, compare the agreement value against the stamp duty value, report joint buyers and joint sellers correctly, deposit the TDS within the 30-day window, download the TDS certificate from TRACES, and hand it to the seller. For NRI sellers, we also handle Section 195 TDS: the TAN application and the quarterly statement (Form 27Q, or Form 144 for deductions from 1 April 2026) on the TAN route, and the PAN-based deposit for individual buyers from 1 October 2026.

For related compliance, see our guides on the TDS rate chart for FY 2026-27, TDS and TCS changes for FY 2026-27, TDS and TCS section mapping under the new Act, TDS return filing on Form 24Q and 26Q, and our income from house property guide for what happens after you take possession.

Frequently Asked Questions

How much TDS is deducted on a property purchase above Rs 50 lakh?

1%, under Section 194-IA of the Income Tax Act 1961 for payments up to 31 March 2026 and under Section 393(1) (Table Sl. No. 3(i)) of the Income-tax Act 2025 from 1 April 2026, calculated on the higher of the total consideration or the stamp duty value, and deducted when either of the two is Rs 50 lakh or more. The consideration includes parking, club membership and similar charges, but not GST shown separately. For a flat bought for Rs 80 lakh with a stamp duty value of Rs 85 lakh, TDS is Rs 85,000.

Is TDS on property deducted on the full amount or only on the amount above Rs 50 lakh?

On the full amount. Section 194-IA(1) requires 1% of the whole consideration or the stamp duty value, whichever is higher, and Section 194-IA(2) only decides whether TDS applies at all: none is due if both are below Rs 50 lakh. Rs 50 lakh is a threshold, not an exemption. For a flat bought for Rs 60 lakh with a stamp duty value of Rs 58 lakh, TDS is Rs 60,000, not Rs 10,000 on the Rs 10 lakh above the threshold.

What is the new section for TDS on property purchase under the new Income Tax Act?

From 1 April 2026, Section 194-IA is replaced by Section 393(1), Table Sl. No. 3(i), of the Income-tax Act 2025. The substance is unchanged: the buyer deducts 1% of the consideration or the stamp duty value, whichever is higher, when either is Rs 50 lakh or more, at the time of credit or payment, whichever is earlier. Payments made up to 31 March 2026 stay under Section 194-IA of the 1961 Act with Form 26QB; payments from 1 April 2026 use Form 141.

Is TDS higher on a property purchase above Rs 1 crore?

No. For a resident seller the rate stays 1% whatever the price, because Section 393(1) Table Sl. No. 3(i) has no higher slab, and the Finance Act, 2026 adds neither surcharge nor cess to TDS when the payee is resident. On a Rs 1.2 crore flat, TDS is Rs 1,20,000. Surcharge applies only if the seller is a non-resident, where TDS is deducted under Section 393(2) instead.

Who deducts TDS when the bank pays my home loan directly to the builder?

You do. The buyer stays responsible for the 1% TDS even when the lender disburses the loan straight to the builder or seller, because each disbursement is part of your purchase price. Deposit 1% of every disbursement through the challan-cum-statement for the month it was paid, usually by asking the bank to release 99% or by paying the TDS from your own funds.

How and when do I deposit TDS on a property purchase?

File the challan-cum-statement, Form 26QB for payments made in FY 2025-26, on the e-filing portal using your own PAN and the seller's PAN, and pay the TDS in the same flow. It is due within 30 days from the end of the month in which the TDS was deducted, separately for every instalment. Then download Form 16B from TRACES and give it to the seller within 15 days of that due date. For payments from 1 April 2026, the same steps use Form 141 (deposit within 30 days from the end of the month of deduction, Rules 218 and 219(5) of the Income-tax Rules 2026) and the certificate is Form 132, due within 15 days of the Form 141 due date (Rule 215).

Do I need a TAN to deduct TDS on property purchase?

No. A buyer deducting TDS on a resident seller's property (Section 194-IA up to 31 March 2026, Section 393(1) from 1 April 2026) does not need a TAN. Your PAN is enough, and the deposit is linked to the seller's PAN so it appears in their Form 26AS. This keeps compliance simple for individual home buyers, though you still have to file the challan-cum-statement and issue the TDS certificate (Form 16B, or Form 132 from 1 April 2026) to the seller for every payment.

How does the Rs 50 lakh threshold work when there are joint buyers or sellers?

From 1 October 2024, the threshold is tested on the total consideration for the property, not on each buyer's or seller's share. If a couple buys a Rs 80 lakh flat equally, each must deduct 1% on the Rs 40 lakh they pay, even though each share is below Rs 50 lakh. Form 26QB (deductions up to 31 March 2026) is filed for every buyer and seller combination; Form 141 (from 1 April 2026) lets all sellers and their shares be reported in one form.

What if the seller of the property is an NRI?

The 1% resident-seller rule (Section 194-IA, or Section 393(1) from 1 April 2026) does not apply. The buyer must deduct TDS under Section 195 (Section 393(2) from 1 April 2026) on the capital gain portion or, without a lower deduction certificate, usually on the full sale price, at rates such as 12.5% for long-term gains plus surcharge and cess. Up to 30 September 2026 the buyer needs a TAN and files Form 27Q (Form 144 from 1 April 2026). From 1 October 2026, a resident individual or HUF buyer can deposit this TDS through a PAN-based challan without a TAN. Always confirm the seller's residential status in writing before paying.

What is the penalty for filing the property TDS form late?

A fee of Rs 200 per day under Section 234E applies from the due date until filing, capped at the TDS amount. Interest under Section 201(1A) is also charged at 1% a month for late deduction and 1.5% a month for late deposit. If TDS is not deducted at all, a penalty equal to the tax can be levied under Section 271C, and the seller cannot claim the credit.

Sources

This guide is verified against Section 194-IA, Section 195, Section 197, Section 201, Section 206AA, Section 234E, Section 271C, and Section 271H of the Income Tax Act 1961, Rules 30, 31 and 31A of the Income Tax Rules 1962, the Finance (No. 2) Act 2019 (consideration includes incidental charges), the Finance Act 2022 (higher of consideration or stamp duty value, from 1 April 2022) and the Finance (No. 2) Act 2024 (aggregate consideration for multiple buyers or sellers, from 1 October 2024). For deductions from 1 April 2026: Sections 393(1) (Table Sl. No. 3(i), 1% of the higher of consideration or stamp duty value, threshold Rs 50 lakh), 393(2), 398(3), 427(1) and 448 of the Income-tax Act 2025 as amended by the Finance Act 2026 (official text read 2026-10-23), Section 2(7) and 2(17)(i) of the Finance Act 2026 (no surcharge or cess on TDS paid to residents; read 2026-10-28), Form 141 and Form 132 under the Income-tax Rules 2026, and the Form 141 user manual on the e-filing portal. Form 16B and Form 132 downloads are on TRACES (tdscpc.gov.in). Rates, thresholds, and section references should be confirmed against incometaxindia.gov.in and the latest Finance Act before filing any specific transaction.