TDS on Property Purchase Above ₹50 Lakh: Section 194-IA Explained

One of the most commonly missed steps by first-time buyers isn't a registration formality — it's a tax obligation that falls on YOU, the buyer, not the seller. Under Section 194-IA of the Income Tax Act, if the sale consideration of an immovable property (other than agricultural land) is ₹50 lakh or more, the buyer must deduct TDS at 1% of the sale value before paying the seller, and deposit it with the government.

Who is responsible — buyer or seller?

The buyer. This surprises people because in most other TDS contexts (salary, rent) it's obvious who's deducting from whom, but here the buyer is treated as the deductor. If you skip this and pay the seller the full amount, the shortfall and any interest/penalty exposure falls on you, not the seller.

How much and on what value

1% of the total sale consideration is deducted — and importantly, this is calculated on the HIGHER of the actual sale value or the stamp duty value (broadly similar in spirit to how registration charges use guideline value), so under-declaring the sale price doesn't reduce your TDS obligation either.

How to actually pay it — Form 26QB

TDS under this section is paid online via Form 26QB on the Income Tax e-filing portal, using the buyer's and seller's PAN. This needs to be done within the prescribed time from the month of payment/credit to the seller. Once paid, you download Form 16B (a TDS certificate) and hand it to the seller — they need it to claim credit for the tax already deducted when they file their own return.

Common mistakes buyers make

• Paying the seller the full amount and forgetting TDS entirely, until the seller's CA flags it later
• Deducting 1% but forgetting to actually file Form 26QB and pay it to the government
• Not issuing Form 16B to the seller, causing them tax-credit mismatches
• Assuming this only applies to under-construction or builder properties — it applies to resale too

Rates, thresholds and exemptions above are the rules as commonly applied at the time of writing — tax and stamp duty rules change, so confirm current figures with a registered CA or the relevant government portal (Income Tax e-filing portal, tnreginet.gov.in) before relying on them for an actual transaction.