TDS on Purchase of Immovable Property in India: Complete Guide for 2026

When buying a flat, house, plot or commercial property, the buyer may have to deduct tax before paying the seller. This guide explains the threshold, rate, calculation, online filing and consequences of non-compliance, including changes effective from 1 April 2026.

1. When is TDS required on a property purchase?

For a purchase from a resident seller, a buyer must generally deduct tax at source if either the total sale consideration or the stamp duty value is Rs. 50 lakh or more. The property must be land other than excluded rural agricultural land, or a building or part of a building. A buyer who is an individual is also covered; the obligation is not limited to businesses.

TDS is deducted when the consideration is credited to the seller or paid, whichever occurs earlier. The Rs. 50 lakh test is applied to the property transaction, not separately to each buyer's or seller's share.

2. Relevant statutory definitions

The agricultural land exclusion is technical: land described as agricultural in sale documents is not automatically excluded if its location brings it within the statutory urban-area definition.

3. TDS rate and calculation

The ordinary TDS rate for a resident seller with a valid PAN is 1% of the higher of the consideration and the stamp duty value, subject to the applicable law. If the seller does not furnish a valid PAN, higher-rate rules can apply; verify the seller's PAN before payment.

If both sale consideration and stamp duty value are below Rs. 50 lakh, this specific resident-seller property TDS provision generally does not apply. TDS is a credit against the seller's income-tax liability, not an additional stamp duty or registration fee.

4. How to deduct, pay and report TDS online

1. Obtain the sale agreement, buyer and seller PAN details, property address, payment schedule and stamp duty valuation.
2. Check whether the seller is resident or non-resident for income-tax purposes; citizenship alone does not determine residential status.
3. Calculate TDS on the applicable base and deduct it at the earlier of credit or payment, including qualifying instalments.
4. Sign in to the official e-Filing portal and select the applicable TDS challan-cum-statement facility.
5. For relevant deductions from 1 April 2026, use Form 141, Schedule B for transfer of immovable property from a resident seller. For qualifying deductions up to 31 March 2026, the earlier Form 26QB mechanism continues to apply.
6. Enter transaction and deduction details, generate the challan reference, pay the tax and retain the acknowledgment.
7. Verify that the transaction is reflected in the seller's tax credit records and issue the prescribed TDS certificate.

Form 141 is a unified form, but only one transaction category can be selected per form. The portal's workflow and applicable rules should be followed for multiple buyers or sellers.

5. Due dates and TDS certificates

For property TDS under the challan-cum-statement mechanism, the tax payment and statement are generally due within 30 days from the end of the month in which tax was deducted. The Income Tax Department states that this timetable is retained under the Income-tax Rules, 2026. For the earlier Form 26QB regime, the prescribed certificate was Form 16B, generally issued within 15 days after the statement due date. For new-law transactions, check the applicable certificate format and portal instructions rather than assuming the old form number applies.

6. Special situations

Joint buyers and joint sellers

Do not divide a Rs. 80 lakh purchase into two Rs. 40 lakh shares and assume no TDS is payable. The threshold is tested using aggregate consideration for the property. Each buyer must correctly report and deposit the tax attributable to that buyer's share under the applicable form instructions.

Builder instalments and under-construction property

Check TDS at each applicable payment or credit event, including instalments. The purchase agreement should identify whether separately charged amounts form part of the statutory consideration.

Buying from an NRI or other non-resident seller

Do not apply the ordinary 1% resident-seller rule automatically. Different withholding provisions, rates and documentation apply. From 1 October 2026, eligible resident individual or HUF buyers may use Form 141, Schedule E for certain non-resident property transfers under Section 393(2). Other buyers may have different reporting requirements. Obtain transaction-specific advice on taxability, withholding and any lower-deduction certificate.

Property purchased below Rs. 50 lakh

Always compare both the agreed consideration and the stamp duty value. If either reaches Rs. 50 lakh, the threshold can be met.

7. What happens if TDS is not deducted or deposited?

Late deduction, late deposit or incorrect reporting can trigger interest, late-filing fees, penalties and other consequences under the applicable law. The buyer should promptly determine the correct amount, deposit any shortfall with applicable interest and submit or correct the prescribed statement. Where an error relates to PAN, amount, date or property particulars, use the portal's correction procedure and retain the revised acknowledgment.

Do not rely solely on a clause in the sale deed stating that the seller will pay income tax: statutory TDS responsibility generally remains with the buyer.

8. Buyer checklist before registration

• Confirm seller's tax residential status and PAN.
• Compare agreed price with stamp duty value.
• Check whether the transaction crosses Rs. 50 lakh.
• Calculate TDS including applicable incidental consideration.
• Identify the correct form based on the date of deduction and seller's residential status.
• Keep challan acknowledgment, TDS statement and certificate with the registered sale deed.

Frequently asked questions

Is TDS payable if the property price is exactly Rs. 50 lakh?

Yes, if the transaction is otherwise covered. The statutory threshold is Rs. 50 lakh or more.

Is a TAN required to deduct property TDS from a resident seller?

For the specified PAN-based property TDS challan-cum-statement mechanism, a separate TAN is generally not required.

Is Form 26QB still used in 2026?

It remains relevant for deductions governed by the 1961 Act, including qualifying transactions up to 31 March 2026. Form 141, Schedule B, applies to relevant resident-seller property deductions governed by the 2025 Act from 1 April 2026.

Can the seller claim the TDS amount?

Yes. Properly reported TDS is generally available as a tax credit to the seller, subject to the applicable tax credit rules.

Does the 1% rule apply to an NRI seller?

No. A non-resident seller requires separate analysis under the applicable withholding provisions.

Official references

For current filing requirements, consult the Income Tax Department TDS Compliance guidance, Form 141 FAQs and Tax Payments guidance.

Updated: 13 November 2026. This article is general legal information; actual withholding depends on the transaction facts and applicable statutory rules.