TDS on Property Purchase (Section 194-IA): What Buyers Must Know

Any buyer purchasing immovable property (land or building, not agricultural land) valued at ₹50 lakh or more must deduct 1% TDS on the purchase price under Section 194-IA, and deposit it using Form 26QB within 30 days from the end of the month in which the deduction was made. This applies to the buyer, not the seller — and missing it makes the buyer personally liable.

How to calculate and deposit TDS on property

1. Confirm the property value (sale consideration or stamp duty value, whichever is higher, from a recent amendment) is ₹50 lakh or above
2. Deduct 1% of the sale value at the time of payment to the seller (or credit, whichever is earlier)
3. Pay the remaining 99% to the seller
4. File Form 26QB online on the TIN-NSDL/Income Tax portal within 30 days of month-end
5. Download and issue Form 16B (TDS certificate) to the seller within 15 days of filing 26QB

What if there are multiple buyers or sellers?

Form 26QB must be filed separately for each buyer-seller combination — a property with 2 buyers and 1 seller requires 2 separate 26QB filings, each reflecting the respective share of consideration.

Does the buyer need a TAN?

No — Section 194-IA specifically exempts individual buyers from needing a TAN (Tax Deduction Account Number); the buyer's PAN is sufficient for Form 26QB filing, unlike most other TDS provisions.

Consequences of not deducting or depositing TDS

• Interest at 1% per month for non-deduction, and 1.5% per month for deduction-but-non-deposit
• A late fee of ₹200/day for delayed Form 26QB filing (capped at the TDS amount)
• The buyer can be treated as an "assessee in default", personally liable for the unpaid tax

What sellers should check

Sellers should confirm the buyer actually deposited the TDS and obtain Form 16B — this TDS is reflected as a tax credit in the seller's Form 26AS and can be claimed against their total tax liability for the year.

Buying or selling property above ₹50 lakh? Our tax team handles the 194-IA compliance correctly on both sides.