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Buying a property worth ₹50 lakh or more in India? Before you hand over the full payment to the seller, there is one legal obligation you must not miss deducting TDS under Section 194 IA of the Income Tax Act. Most buyers only find out about this rule after the deal is done and by then, the late fees, interest, and penalties have already started adding up. The Income Tax Department holds the buyer responsible, not the seller. So if you skip this step, even unknowingly, you are the one who pays the price. Section 194 IA was introduced on 1 June 2013 with a straightforward purpose: to bring accountability to high-value real estate transactions. Before this rule existed, property deals were routinely under-reported to avoid stamp duty and capital gains tax. Today, every purchase of immovable property above ₹50 lakh requires the buyer to deduct 1% TDS from the sale consideration, deposit it with the government, and file a challan in the seller’s name — creating a paper trail that the Income Tax Department can verify. And in 2026, there is something new every buyer and seller needs to know. India’s Income-tax Act, 2025 has come into effect from 1 April 2026. Section 194IA is now Section 393(1) under the new Act. Form 26QB has been replaced by Form 141 (Schedule B). Form 16B is now Form 132. The rate and threshold have not changed but the forms have, and filing the wrong one can create compliance problems.
Section 194IA of the Income Tax Act, 1961 makes it mandatory for any buyer of immovable property to deduct Tax Deducted at Source (TDS) at 1% from the sale consideration paid to a resident seller, provided the consideration or the stamp duty value of the property is ₹50 lakh or more. The section was inserted into the Act with effect from 1 June 2013 to bring transparency to high-value real estate transactions and ensure the seller’s income is reported to the Income Tax Department. In simple terms: if you are buying a house, flat, plot, or commercial property worth ₹50 lakh or more from an Indian resident, you must deduct 1% of the payment as TDS before handing money to the seller and deposit that deducted amount with the government.
| Key Number | What It Means |
|---|---|
| 1% | TDS rate on the higher of consideration or stamp duty value |
| ₹50 Lakh | Threshold — applies on aggregate consideration |
| 30 Days | Deadline to deposit TDS from the end of the month in which deduction is made |
| No TAN | Buyer can use their own PAN for compliance; TAN is not required |
Before June 2013, there was no mechanism to track cash or cheque payments in property transactions. Buyers and sellers routinely under-reported sale consideration to evade stamp duty and capital gains tax. Section 194IA plugged this gap by requiring the buyer to deduct TDS and file a challan that names both buyer and seller — creating an automatic paper trail that the Income Tax Department can match against ITR filings.
India’s new Income-tax Act, 2025 came into force from 1 April 2026 (Tax Year 2026-27). Section 194IA is now mapped to Section 393(1), Table Sl. No. 3(i) of the new Act. The TDS rate (1%), threshold (₹50 lakh), and 30-day deadline remain unchanged. What has changed are the form names and section references.
| Item | Income-tax Act, 1961 (Up to Tax Year 2025-26) | Income-tax Act, 2025 (From Tax Year 2026-27) |
|---|---|---|
| Section Number | Section 194-IA | Section 393(1) [Table Sl. No. 3(i)] |
| Challan-cum-Statement | Form 26QB | Form 141 — Schedule B |
| TDS Certificate | Form 16B | Form 132 |
| Annual Tax Statement | Form 26AS | Form 168 |
| TDS Rate | 1% | 1% (Unchanged) |
| Threshold | ₹50 Lakh | ₹50 Lakh (Unchanged) |
| Deposit Deadline | 30 Days from Month-End | 30 Days from Month-End (Unchanged) |
| TAN Required? | No (Use PAN) | No (Use PAN — Unchanged) |
Form 141 is a single unified form that consolidates what were previously four separate PAN-based forms: Form 26QB (property), Form 26QC (rent by Individual/HUF), Form 26QD (contractor/professional), and Form 26QE (VDA). For property transactions, you will use Schedule B of Form 141. Which form should you use? If the payment or credit to the seller occurred before 1 April 2026 → file Form 26QB. If the payment or credit occurs on or after 1 April 2026 → file Form 141 (Schedule B) on the income tax e-filing portal.
The buyer (transferee) is responsible for deducting TDS not the seller. There is no exemption for any class of buyer. Whether you are a salaried individual, a self-employed professional, a partnership firm, a private limited company, or a trust if you are purchasing immovable property meeting the conditions, you must deduct TDS.
The seller must be a resident of India for Section 194IA to apply. If the seller is a Non-Resident Indian (NRI), Section 194IA does not apply the buyer must instead deduct TDS under Section 195 at applicable capital gains rates.
Practical Example:
TDS calculation: Higher of ₹75L or ₹72L = ₹75 lakh. TDS = 1% × ₹75,00,000 = ₹75,000 Amount paid to seller = ₹75,00,000 − ₹75,000 = ₹74,25,000
Mr. Rahul deposits ₹75,000 via Form 141 (Schedule B) within 30 days of month-end.
The TDS rate under Section 194IA is 1% of the higher of the sale consideration or the stamp duty value. Crucially, no surcharge and no Health & Education Cess are added to this rate — unlike most other TDS sections. The effective rate remains a flat 1%. There is one exception: if the seller does not provide their PAN to the buyer, TDS must be deducted at 20% under Section 206AA. Always collect the seller’s PAN before the transaction.
TDS under Section 194IA is triggered when either the sale consideration or the stamp duty value is ₹50 lakh or more. The exact rule is: TDS does not apply only if both the consideration and the stamp duty value are below ₹50 lakh. If either one crosses ₹50 lakh, TDS applies on the higher of the two.
This is one of the most common mistakes buyers make. TDS applies on the total sale consideration, not just the portion exceeding ₹50 lakh.
Example: Property consideration: ₹60 lakh TDS = 1% of ₹60,00,000 = ₹60,000
Incorrect thinking: “TDS applies only on ₹10 lakh (the excess over ₹50L) = ₹10,000”
Correct calculation: TDS on the full ₹60 lakh = ₹60,000
The stamp duty value is the value assessed by the State Government for stamp duty purposes (also called circle rate or ready reckoner rate). Since Finance Act 2022, TDS must be deducted on the higher of the two even if the actual sale price is lower than the circle rate. This prevents undervaluation of properties to avoid TDS.
| Scenario | Sale Consideration | Stamp Duty Value | TDS Base | TDS @ 1% |
|---|---|---|---|---|
| Normal | ₹70 Lakh | ₹65 Lakh | ₹70 Lakh | ₹70,000 |
| Stamp Duty > Sale Price | ₹55 Lakh | ₹62 Lakh | ₹62 Lakh | ₹62,000 |
| Both Below ₹50 Lakh | ₹45 Lakh | ₹43 Lakh | — | No TDS |
| One Crosses ₹50 Lakh | ₹48 Lakh | ₹52 Lakh | ₹52 Lakh | ₹52,000 |
Since 1 September 2019, the Income Tax Act has clarified that sale consideration includes all incidental charges payable to the developer or seller, not just the base price of the property. According to the official Income Tax Department notification, the following are part of consideration:
When calculating TDS, add all these charges to the base property price to arrive at the total consideration on which 1% TDS applies.
TDS under Section 194IA must be deducted at the earlier of: (a) when the consideration is credited to the seller’s account, or (b) when the payment is made in cash, cheque, demand draft, or any other mode.
Many buyers mistakenly wait until registration to deduct TDS. This is incorrect. Because the law requires deduction at the time of each credit or payment whichever is earlier every installment, booking amount, and advance payment triggers TDS if the total consideration is ₹50 lakh or more.
Under-Construction Installment Example:
Total property price: ₹80 lakh (under-construction flat)
Total TDS across all installments: ₹80,000
For Tax Year 2026-27 onwards (payments made on/after 1 April 2026), use Form 141 Schedule B on the Income Tax e-Filing Portal. Here is the complete process:
Step 1: Log in to the Income Tax e-Filing Portal Visit incometax.gov.in. Log in using your PAN (buyer’s PAN) and password. If not registered, create an account using your PAN.
Step 2: Navigate to e-Pay Tax → New Payment Go to e-File → e-Pay Tax → New Payment. Select Income Tax Act, 2025 as the applicable Act.
Step 3: Select Form 141 Click Proceed on the Form 141 tile. A pop-up will ask for Deductee Type — select Non-Corporate Deductee (for individual/HUF sellers) or Corporate Deductee (for company sellers).
Step 4: Choose Schedule B Select Schedule B TDS on transfer of immovable property under Section 393(1) [Table Sl. No. 3(i)] (previously known as Form 26QB).
Step 5: Enter Transaction Details Fill in: Buyer’s PAN and name, Seller’s PAN and name, property address (full address with PIN code), total sale consideration, stamp duty value (circle rate value), TDS amount (1% of the higher), and date of payment/credit. If paying in installments, enter the installment amount for each form filed.
Step 6: Make the Online Payment Pay via net banking, debit card, or NEFT/RTGS. Download and save the Challan Receipt — this is your proof of TDS payment.
Step 7: Download Form 132 (TDS Certificate) from TRACES After successful filing, log in to TRACES (tdscpc.gov.in). Download Form 132 (equivalent to the old Form 16B) and issue it to the seller within 15 days from the due date of filing.
Note for Tax Year 2025-26 transactions (before 1 April 2026): Use Form 26QB under the Income Tax Act, 1961 on the same portal. Download Form 16B from TRACES for the seller. Steps are essentially the same — only the form
TDS must be deposited within 30 days from the end of the month in which the deduction is made. For example, if you pay the seller on 15 July 2026, TDS must be deposited by 31 August 2026.
The TDS certificate (Form 132 / Form 16B) must be issued to the seller within 15 days from the due date of furnishing the challan-cum-statement.
| Payment Month | TDS Deposit Deadline | Form 132 Issuance Deadline |
|---|---|---|
| April 2026 | 31 May 2026 | 15 June 2026 |
| May 2026 | 30 June 2026 | 15 July 2026 |
| June 2026 | 31 July 2026 | 15 August 2026 |
| July 2026 | 31 August 2026 | 15 September 2026 |
| August 2026 | 30 September 2026 | 15 October 2026 |
These four sections are frequently confused with each other. Here is a definitive side-by-side comparison:
| Feature | 194I (TDS on Rent — Businesses) | 194IA (TDS on Property Purchase) | 194IB (TDS on Rent — Individuals/HUF) | 194IC (TDS on JDA) |
|---|---|---|---|---|
| What it Covers | Rent for land, building, plant/machinery | Purchase of immovable property | Rent paid by Individuals/HUF not under tax audit | Monetary payment under Joint Development Agreement |
| TDS Rate | 10% (Land/Building/Furniture), 2% (Plant/Machinery) | 1% | 2% (From 1 Oct 2024; was 5% earlier) | 10% |
| Threshold | ₹6 Lakh per year (Raised by Budget 2025) | ₹50 Lakh | ₹50,000 per month | No Threshold |
| Deductor | Any person except Individual/HUF not under audit | Any Buyer (Any Person) | Individual/HUF not liable to tax audit | Resident paying under JDA |
| TAN Required? | Yes | No (Use PAN) | No (Use PAN) | Yes |
| Filing Form (IT Act 1961) | Form 26Q (Quarterly) | Form 26QB (Per Transaction) | Form 26QC (Once a Year) | Form 26Q |
| Filing Form (IT Act 2025) | Regular TDS Return | Form 141 — Schedule B | Form 141 — Schedule A | Regular TDS Return |
| TDS Certificate | Form 16A → Form 131 | Form 16B → Form 132 | Form 16C → Form 132 | Form 16A → Form 131 |
A significant amendment effective from 1 October 2024 changed how the ₹50 lakh threshold is calculated for properties with multiple buyers or sellers. Previously, there was ambiguity about whether the threshold applied to each buyer’s or seller’s individual share. That ambiguity is now resolved.
From 1 October 2024: Where there is more than one buyer or more than one seller, the consideration for the purpose of the ₹50 lakh threshold test is the aggregate of amounts paid or payable by all buyers to all sellers for that property. This means even if your individual share is below ₹50 lakh, TDS applies if the total property value is ₹50 lakh or more.
Joint Buyer Example:
For properties with 2 buyers and 2 sellers, a total of 4 separate forms must be filed — one for each unique buyer-seller combination.
Section 194IA does not apply in the following situations:
If you are buying property from an NRI (Non-Resident Indian), Section 194IA does not apply. Instead, you (the buyer) must deduct TDS under Section 195 on the capital gains portion of the sale price and the rates are significantly different.
| Feature | Resident Seller (Section 194IA) | NRI Seller (Section 195) |
|---|---|---|
| TDS Rate | 1% of Full Consideration | 20%+ on LTCG or Slab Rate on STCG (plus Surcharge & Cess) |
| Threshold | ₹50 Lakh | No Threshold |
| TDS Base | Full Sale Consideration | Capital Gains Amount |
| Form | Form 141 / Form 26QB | Form 27Q |
| LTCG Rate (w.e.f. 23 July 2024) | N/A | 12.5% Without Indexation |
| Lower Deduction Option | Section 197 / Form 13 | Section 197 / Form 13 |
NRI sellers can apply for a lower or nil deduction certificate under Section 197 (using Form 13 on the income tax portal). If granted, the buyer deducts TDS at the rate specified in the certificate rather than the standard rate. NRIs from countries with a Double Taxation Avoidance Agreement (DTAA) with India may also be eligible for reduced TDS rates under the applicable treaty.
Red Flag for Buyers: Always verify the residential status of the seller before the transaction. Accepting the seller’s verbal confirmation is not sufficient. Ask for documentation (e.g., valid Indian PAN, proof of Indian address, or a declaration of residential status). If you incorrectly apply Section 194IA when Section 195 was required, you as the buyer become liable for the entire TDS shortfall, plus interest and penalties.
Non-compliance with Section 194IA can be extremely costly for both buyer and seller. Here is a complete breakdown verified from the official Income Tax Department:
Interest Failure to Deduct 1% per month from the date TDS was due until the date it is actually deducted. Governed by Section 201(1A).
Interest Failure to Deposit After Deduction 1.5% per month from the date of deduction until the date of deposit. Governed by Section 201(1A).
Late Filing Fee Section 234E ₹200 per day for every day Form 26QB or Form 141 is not filed. Capped at the total TDS amount. Applies automatically and cannot be waived.
Penalty Failure to Deduct (Section 271C) Penalty up to the amount of TDS that was not deducted.
Penalty Failure to Deposit After Deduction (Section 221) Additional penalty on the TDS amount not deposited.
Prosecution Failure to Deposit (Section 276B) If TDS is deducted but not deposited with the government, the buyer faces prosecution under Section 276B. No person is punishable if they can prove there was a reasonable cause for the failure.
Penalty Failure to File TDS Statement (Section 271H) Minimum ₹10,000, maximum ₹1,00,000.
Penalty Failure to Issue TDS Certificate (Section 272A) ₹500 for every day Form 16B or Form 132 is not issued to the seller.
Impact on the Seller If the buyer does not file TDS, the deduction will not appear in the seller’s Form 168 (Form 26AS under IT Act 2025) or AIS. The seller cannot claim TDS credit while filing their ITR, effectively making them pay tax twice on the same income. The seller must then chase the buyer for compliance which is a painful and avoidable situation.
✓ Confirm seller is a resident Indian (not NRI). If NRI → use Section 195. ✓ Check total consideration AND stamp duty value. If either is ₹50 lakh or more → TDS applies. ✓ Collect seller’s PAN before any payment. If no PAN → deduct at 20% under Section 206AA. ✓ Deduct TDS at 1% of the higher of consideration or stamp duty value on EACH payment or installment. ✓ Include all incidental charges (parking, club, maintenance, advance fee) in the consideration base. ✓ For Tax Year 2025-26 (payments before 1 April 2026): file Form 26QB within 30 days of month-end. ✓ For Tax Year 2026-27 onwards (payments on/after 1 April 2026): file Form 141 — Schedule B within 30 days of month-end. ✓ Download Form 132 (or Form 16B) from TRACES and issue to the seller within 15 days of the filing deadline. ✓ If joint buyers: each buyer files a separate form for their share of consideration. ✓ Seller: verify TDS credit in Form 168 (Form 26AS equivalent under IT Act 2025) / AIS.
The buyer (transferee) is responsible for deducting TDS under Section 194IA. The seller does not deduct TDS on their own income — they receive the net amount after the buyer’s deduction. The buyer then deposits the TDS with the government.
No. TDS under Section 194IA does not apply if both the sale consideration and the stamp duty value are below ₹50 lakh. However, if either one is ₹50 lakh or more, TDS applies on the higher of the two.
Yes. TDS must be deducted at the time of each payment or credit to the seller/builder, whichever is earlier. This means TDS applies on advance payments, booking amounts, and each installment not only at the time of registration provided the total consideration is ₹50 lakh or more.
No. Section 194IA applies only when the seller is a resident of India. When the seller is an NRI, the buyer must deduct TDS under Section 195. The rates are much higher (based on capital gains, not a flat 1%), and there is no ₹50 lakh threshold for NRI sellers.
Section 194IA is TDS on the purchase of immovable property (1% rate, ₹50 lakh threshold). Section 194IB is TDS on rent paid by individuals or HUF who are not under tax audit (2% rate from 1 October 2024, ₹50,000/month threshold). They cover entirely different types of transactions.
Form 141 is a unified challan-cum-statement introduced under the Income-tax Act, 2025. It replaces Form 26QB (and also Form 26QC, 26QD, 26QE). For TDS on property purchase, taxpayers must use Schedule B of Form 141 for all transactions in Tax Year 2026-27 onwards (payments on/after 1 April 2026). For earlier transactions, Form 26QB continues to apply. The underlying requirement deposit within 30 days of month-end is unchanged.
Yes. If a property deal is cancelled after TDS has been deducted and deposited, the seller can claim a refund of the TDS amount while filing their Income Tax Return. Alternatively, they can apply through the TRACES portal. The buyer may also file a correction in Form 26QB/Form 141 with supporting documentation about the cancellation.
If the seller does not furnish their PAN, TDS must be deducted at 20% (instead of 1%) under Section 206AA. This is a significant financial burden for the seller. Always collect the seller’s PAN before making any payment.