Property TDS in India: Complete Buyer & Seller Guide (Section 194-IA)

Property TDS in India: Complete Buyer & Seller Guide (Section 194-IA)

Buying or selling property in India involves several tax compliances. One of the most important—and often misunderstood—requirements is TDS on property transactions under Section 194-IA of the Income Tax Act. This guide explains what Property TDS is, who must deduct it, rates, deadlines, and common mistakes to avoid.

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What is Property TDS?

Property TDS is the Tax Deducted at Source that a buyer must deduct when purchasing an immovable property (land, flat, villa, or building) from a resident seller.

Applicable when sale value ≥ ₹50 lakh

TDS rate: 1% of the sale consideration

Deducted by the buyer, not the seller

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When is Property TDS Applicable?

Property TDS applies if all the following conditions are met:

Property is located in India

Seller is a Resident Indian

Sale consideration is ₹50,00,000 or more

Property type: residential, commercial, or land (excluding agricultural land)

> ⚠️ If the seller is NRI, different rules apply under Section 195 (higher TDS rates).

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TDS Rate on Property Purchase

Particulars Details

Section 194-IA

TDS Rate 1%

Threshold ₹50 lakh

Deductor Buyer

Deductee Seller

TAN Required ❌ No

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When Should TDS Be Deducted?

TDS must be deducted at the earlier of:

Payment date, or

Credit to seller’s account

This includes advance payments, booking amount, or installment payments.

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How to Pay Property TDS (Step-by-Step)

1. Visit the Income Tax e-filing portal

2. Select Form 26QB – Challan-cum-statement

3. Enter buyer & seller details

4. Enter property details and sale value

5. Pay TDS online (net banking)

6. Download Form 16B and issue it to the seller

⏰ Deadline: Within 30 days from the end of the month in which TDS is deducted.

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What is Form 26QB?

Form 26QB is a single challan-cum-return used to:

Deposit TDS

Report property transaction details

A separate Form 26QB is required for:

Each buyer–seller combination

Each installment (if payments are in parts)

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Penalty for Late Payment or Non-Compliance

Default Penalty

Late deduction Interest @ 1% per month

Late payment Interest @ 1.5% per month

Late filing of 26QB ₹200/day (max = TDS amount)

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Common Mistakes to Avoid

❌ Not deducting TDS on advance payment

❌ Assuming seller will pay TDS

❌ Using wrong PAN details

❌ Missing the 30-day deadline

❌ Confusing resident seller with NRI rules

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Property TDS Example

Property value: ₹75,00,000

TDS @ 1% = ₹75,000

Buyer pays seller = ₹74,25,000

₹75,000 paid to Income Tax Department via Form 26QB

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Is TDS Required on Stamp Duty Value?

TDS is calculated on the actual sale consideration, not on stamp duty value.

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How Snehaloka Properties Helps

At Snehaloka Properties, we assist buyers and sellers with:

Property TDS calculation

Form 26QB filing

Seller & buyer compliance support

Legal documentation guidance

📞 Contact us for hassle-free property transactions.

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Frequently Asked Questions (FAQs)

Q. Is TDS applicable below ₹50 lakh?

No.

Q. Is TAN required for buyer?

No, PAN is sufficient.

Q. Can TDS be paid offline?

No, payment is online only.

Q. Who issues Form 16B?

Buyer issues Form 16B to seller.

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Final Thoughts

Property TDS is a buyer’s responsibility and non-compliance can lead to penalties. Understanding the process ensures a smooth and legally safe property transaction.

For expert real estate guidance in Bangalore, trust Snehaloka Properties.