TDS on Property Sale (194-IA)

This is Section 194-IA. It does not apply to rural agricultural land, and it does not apply when the seller is a non-resident. Those two exceptions catch a lot of people.

What are the rules, exactly?

Read from the Income Tax Department on 6 September 2026. No TAN is required for this deduction, which is why the whole thing runs through Form 26QB rather than a quarterly TDS return.

Who deducts, and on what amount?

The buyer deducts. The obligation is on the person paying, and the tax is deducted from the money going to the seller. So on a ₹90,00,000 sale you pay the seller ₹89,10,000 and pay ₹90,000 to the government on the seller’s PAN.

The base is the higher of the agreed price and the stamp duty value. That second limb matters where the circle rate exceeds the negotiated price, which happens in slower markets. Check the stamp duty value before you compute anything. Our page on circle rate versus market rate explains where that number comes from.

Where there are two buyers and two sellers, the consideration is aggregated. A ₹80,00,000 flat bought jointly by a couple does not become two ₹40,00,000 transactions below the threshold. That reading is wrong and the section says so.

What you have to file, and by when

File Form 26QB within 30 days from the end of the month in which the deduction was made. It is a combined challan and statement, so filing it and paying the tax are the same step. There is no TAN and no quarterly return.

Then download Form 16B and give it to the seller, within 15 days of the Form 26QB due date. The seller needs it to claim credit for the tax against their capital gains liability. Withholding it creates an argument you do not need at the end of a property deal.

If the payment is in instalments, as it usually is for an under-construction property, deduct on each instalment and file a Form 26QB for each one. One form for the whole deal is a common error and it puts the credit in the wrong period.

The mistakes that cost buyers money

Three recur, and the buyer pays for all of them.

The first is paying the seller the full amount and then depositing the TDS separately. That is a 1% gift. The deduction has to come out of the seller’s money, and the sale agreement should say so explicitly.

The second is a wrong PAN. Form 26QB posts the credit to the PAN you type. Get it wrong and the seller cannot claim the credit, and correcting it is slow. Verify the PAN against the seller’s identity document at the time of the agreement, not after.

The third is missing the deadline. Late deduction and late payment attract interest, and late filing of Form 26QB attracts a fee for each day of delay. None of this falls on the seller. Diarise the date the moment you pay any instalment. If you are working through the full transaction, our property registration process and hidden costs of buying pages set out the rest of the sequence.

What changes if the seller is an NRI?

Section 194-IA does not apply. It covers payments to a resident transferor only. A purchase from a non-resident falls under Section 195 instead, and that is a materially different obligation.

Two practical differences. The rate is not 1%, and it is applied on the capital gain or the sale value depending on the certificate obtained, so it is far larger. And the buyer needs a TAN, files a quarterly TDS return, and cannot use Form 26QB at all.

Establish the seller’s residential status in writing before the agreement. A buyer who applies 1% to an NRI seller is the person the department pursues, not the seller. See NRI taxation and NRI property rules. For the seller’s own liability, our capital gains on property page covers the computation.