TDS on Sale of Property: What Buyers and Sellers Both Need to Know

The rule, in one line

When buying immovable property (other than agricultural land) valued at ₹50 lakh or more, the buyer must deduct 1% TDS on the sale consideration or the stamp duty value - whichever is higher - and deposit it with the government, paying the seller only the remaining 99%.

Why the buyer, not the seller

This is a genuinely common point of confusion: TDS is normally a story about employers and interest-paying banks deducting tax before paying you. Here, the buyer takes on that deducting role for a property transaction - a rule specifically designed to make high-value property deals easier for the tax department to track.

How to actually do it (no TAN required)

1. Deduct 1% of the sale consideration (or stamp duty value, if higher) at the time of payment.
2. Deposit it using Form 26QB - a challan-cum-statement filed online, within 30 days from the end of the month the deduction happened in.
3. Issue Form 16B to the seller - the TDS certificate, downloadable from the TRACES portal, which the seller needs to claim credit for this TDS in their own income tax return.

Unlike most TDS deductors, a property buyer doesn't need to obtain a TAN (Tax Deduction Account Number) specifically for this - Form 26QB is designed for one-off individual buyers.

What happens if it's missed

Failing to deduct or deposit this TDS can attract interest and penalties on the buyer - and can also complicate the property's registration or the seller's own tax filing, since the seller's Form 26AS/AIS will show a mismatch if the TDS was never actually deposited.

A citation note

This provision is widely known by its old name, Section 194-IA of the Income-tax Act, 1961. For transactions where the sale is completed on or after 1 April 2026, the corresponding provision under the Income-tax Act, 2025 is Section 393(1) - the 1% rate and ₹50 lakh threshold carried forward unchanged in the renumbering.

(Rate, threshold, and section citation checked as of September 2026.)

The takeaway

If you're buying property above ₹50 lakh, budget for handling this TDS yourself as part of the transaction - it's a buyer obligation, not something the seller or the registrar's office handles automatically on your behalf.