TDS on Transfer of Immovable Property Other Than Agricultural Land
A buyer purchasing specified immovable property from a resident seller may have to deduct tax at source from the purchase consideration. From 1 April 2026, the relevant rule is contained in Section 393 of the Income-tax Act, 2025. Legacy Section 194-IA of the Income-tax Act, 1961 continues to matter for transactions governed by the earlier Act.
Who has to deduct TDS on property?
The obligation is placed on the transferee, commonly the buyer, when consideration is paid to a resident transferor for transfer of qualifying immovable property. Transactions involving a non-resident seller are governed by the provisions applicable to payments to non-residents and should not be treated as ordinary resident-seller property TDS.
What is immovable property?
For this TDS category, the provision concerns land other than the excluded agricultural land, or a building or part of a building. The statutory definition and the exclusion for agricultural land must be checked under the Act applicable to the transaction.
Current threshold and tax base
The current property-TDS framework retains the Rs. 50 lakh statutory threshold for the specified transaction. The buyer should examine the consideration together with the stamp duty value where required by the current provision. The deduction base and threshold test should be applied to the transaction as a whole in accordance with Section 393 and the prescribed form.
What is consideration for transfer?
Consideration is not limited to the basic sale price where the statute includes incidental transfer charges. The legacy rule expressly included charges such as club membership fee, car-parking fee, electricity or water facility fee, maintenance fee, advance fee and similar charges incidental to transfer. For a current transaction, apply the corresponding definition and computation under the Income-tax Act, 2025.
When is TDS deducted?
Property TDS is linked to the statutory payment or credit event. Where consideration is paid in instalments, the deduction and reporting obligations should be examined for each relevant payment in accordance with the current provision and Form 141 instructions.
Form 141, Schedule B
The Income Tax Department has introduced Form 141 as the challan-cum-statement for specified deductions under Section 393(1). Schedule B covers transfer of immovable property. It captures information relating to the property, agreement, stamp duty value, total consideration, buyer and seller details, payment particulars and TDS.
The buyer should use the current e-Filing utility and instructions for the applicable tax year. For transactions governed by old Section 194-IA, the legacy Form 26QB procedure remains relevant to that period.
Transition from Section 194-IA to Section 393
| Relevant transaction | Applicable law | Provision / form |
|---|---|---|
| Payment or credit governed by law up to 31 March 2026 | Income-tax Act, 1961 | Section 194-IA / Form 26QB |
| Payment or credit on or after 1 April 2026 where the 2025 Act applies | Income-tax Act, 2025 | Section 393(1), Table Serial No. 3(i) |
| Current challan-cum-statement | Income-tax Rules, 2026 | Form 141, Schedule B |
Legacy Section 194-IA of the Income-tax Act, 1961
The uploaded provision required deduction at the earlier of credit or payment and recorded a TDS rate of 1 percent. It also provided that no deduction was required where the consideration for transfer was less than Rs. 50 lakh.
Section 203A, which generally dealt with the requirement to obtain and quote a tax deduction account number, did not apply to a person required to deduct tax under legacy Section 194-IA.
Legacy definition of agricultural land
For old Section 194-IA, agricultural land meant agricultural land in India other than land situated in an area referred to in the specified portions of Section 2(14)(iii) of the Income-tax Act, 1961. Accordingly, merely describing land as agricultural did not by itself determine the TDS result.
Legacy definition of immovable property
Immovable property meant land other than the specified agricultural land, or any building or part of a building.
Practical property TDS checklist
Confirm seller status: establish whether the seller is resident for income-tax purposes.
Identify the property: check whether it is land, a building or part of a building and whether any agricultural-land exclusion applies.
Check the value: examine the purchase consideration, incidental charges and stamp duty value as required by current law.
Apply the correct date: determine whether the transaction is governed by the 1961 Act or the 2025 Act.
Deduct and report: use Section 393(1), Table Serial No. 3(i) and Form 141 Schedule B for qualifying current transactions.
Multiple parties: where there are multiple buyers or sellers, follow the current form instructions and statutory aggregation rules rather than testing each share in isolation without checking the provision.
Related Income Tax provisions
Commission, brokerage and property TDS: Sections 194H and 194-IA
Rent paid by certain individuals or HUFs: Section 194-IB
Payment under specified agreement: Section 194-IC
For an actual transaction, verify the current statutory rate, threshold, stamp duty value rule, residential status and filing instructions applicable to the relevant tax year.