TDS on Property Sale – Who Pays, Rate & Rules
Understand who pays TDS on property sales, applicable rates, the ₹50 lakh threshold, and the latest Income-tax Act, 2025 rules. Get guidance on TDS deduction and filing compliance.
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What Is TDS on Sale of Property Under Section 393?
| Particulars | Details |
|---|---|
| Property Value | ₹50 lakh or above in sale consideration or stamp duty value, for qualifying resident-seller transactions. |
| Rate of TDS | 1% of sale consideration or stamp duty value, whichever is higher, when applicable. |
| When Is TDS Deducted? | At the time of payment or credit to the seller, whichever is earlier, as applicable. |
| Who Deducts TDS? | The property buyer deducts, deposits and reports the applicable TDS. |
| Applicable Section | Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)). |
| TDS Filing Form | Form 141, Schedule B for qualifying resident-property transactions in 2026. |
| TDS Refund | The seller may claim eligible TDS credit and a refund through their income-tax return if total eligible credits exceed final tax liability. |
Tax Deducted at Source (TDS) on property sale is a tax collected by the buyer from the payment made to the seller. The buyer deposits this tax with the Income Tax Department on the seller's behalf.
Under Section 194-IA (Now Section 393(1), Table Sl. No. 3(i) of the Income-tax Act, 2025), qualifying purchases of immovable property from a resident seller attract 1% TDS when the sale consideration or stamp duty value is ₹50 lakh or more.
This rule generally covers eligible transfers of land or buildings, other than agricultural land excluded under the relevant statutory definition. The responsibility to deduct and deposit the tax rests with the buyer, not the seller.
Example: TDS on a ₹60 Lakh Property Sale
Suppose you purchase a residential property from a resident seller for ₹60 lakh. Assume the stamp duty value is also ₹60 lakh.
Result: The buyer deducts ₹60,000 as TDS, deposits it with the government and pays the remaining ₹59,40,000 to the seller. The seller can claim the eligible ₹60,000 TDS credit against their income-tax liability.
Does the Same 1% TDS Apply When the Seller Is an NRI?
No. The 1% property TDS provision discussed above generally applies to qualifying payments to resident sellers. Where the seller is non-resident, the buyer must instead examine Section 195 (Now Section 393(2)), the sum chargeable to tax and the applicable rates in force.
NRI transactions have separate withholding and reporting requirements. For a detailed explanation, read our guide on TDS rules when an NRI sells property.
Key Documents Required for TDS on Property Sale
Before filing Form 26QB (Now Form 141, Schedule B), keep these documents and details ready. Accurate information helps buyers complete property TDS compliance correctly.
PAN of Buyer and Seller
Keep the correct PAN details of all buyers and sellers. A valid PAN is essential for accurate TDS reporting and tax-credit matching.
Sale Agreement and Payment Details
Keep the sale agreement, agreed consideration, payment dates, instalments and advance-payment records. These help determine when TDS must be deducted.
Property Address and Stamp Duty Value
Keep the complete property address, PIN code, property type and applicable stamp duty valuation or circle rate. Compare the valuation with the transaction consideration.
Aadhaar and Contact Information
Keep Aadhaar details where applicable for identification and PAN–Aadhaar linking checks. Also confirm registered mobile numbers and email addresses for OTP and e-filing communication.
Important PAN rule: If the seller does not furnish a valid PAN, higher-rate TDS provisions may apply, potentially requiring 20% deduction instead of the ordinary 1% rate. Under the Income-tax Act, 2025, the higher deduction provision is Section 397(2). Buyers should verify the applicable treatment before making payment rather than filing with incorrect PAN details.
TDS Rules for Property Sold by a Resident Indian
When purchasing immovable property from a resident seller, TDS is generally governed by Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)) under the Income-tax Act, 2025.
₹50 Lakh Threshold and 1% TDS
TDS applies to a qualifying property transfer where either the sale consideration or the stamp duty value is ₹50 lakh or more.
The rate is generally 1% of the higher of the consideration or stamp duty value.
If both values are below ₹50 lakh, this particular property TDS provision does not ordinarily require deduction.
Sale price: ₹48 lakh
Stamp duty value: ₹52 lakh
TDS = 1% of ₹52 lakh
= ₹52,000
Impact of Circle Rate or Stamp Duty Value
The circle rate or guidance value helps determine the property's stamp duty value for registration purposes.
If the stamp duty value exceeds the actual sale consideration, the higher stamp duty value can become the 1% TDS calculation base.
Buyers should obtain the relevant valuation before finalising their payment and deduction calculations.
Sale price: ₹60 lakh
Stamp duty value: ₹70 lakh
TDS = 1% of ₹70 lakh
= ₹70,000
Can Parking, Club Membership or Maintenance Charges Be Excluded?
Not simply by showing them separately in the agreement. For property TDS purposes, consideration can include incidental transfer charges such as club membership fees, car parking charges, electricity or water facility fees, maintenance fees and similar amounts connected with the transfer. Artificially splitting these charges to keep the stated property price below ₹50 lakh can result in an incorrect TDS calculation. Buyers should review the complete consideration, stamp duty value and applicable rules before deducting tax.
What Types of Property Are Covered Under TDS Rules?
Property TDS can apply to qualifying transfers of land, buildings and parts of buildings. The correct rules depend on the seller's tax residential status, transaction value and statutory exclusions.
Plots & Land
Residential and commercial plots, subject to statutory exclusions.
Residential Houses
Independent houses, villas and eligible residential buildings.
Shops & Offices
Shops, offices and qualifying commercial premises.
Flats & Apartments
Residential flats, apartments and qualifying building units.
Is Agricultural Land Exempt from Property TDS?
Not every agricultural land transaction is exempt. Section 194-IA (Now Section 393(1), Table Serial No. 3(i)) excludes qualifying agricultural land as defined for that provision.
Specified rural agricultural land generally falls outside the resident-property TDS rule. Urban agricultural land may still be covered. The legal classification depends on the land's location and statutory criteria, not merely its description in the sale deed.
TDS on Property Purchased from an NRI vs a Resident Seller
The applicable TDS provisions change when the seller is a non-resident for Indian income-tax purposes. The familiar 1% resident-property TDS rate should not automatically be applied to an NRI sale.
Resident Property Seller
Section 194-IA (Now Section 393(1), Table Serial No. 3(i))
For qualifying transfers, TDS generally applies when the sale consideration or stamp-duty value is ₹50 lakh or more, subject to statutory conditions.
The deduction is generally calculated at 1% of the higher of the consideration and stamp-duty value, using the applicable rules.
Current reporting: Form 26QB (Now Form 141, Schedule B).
Schedule B is available for qualifying buyers across taxpayer categories.
NRI / Non-Resident Property Seller
Section 195 (Now Section 393(2), Table Serial No. 17)
There is generally no equivalent ₹50 lakh threshold for withholding on sums chargeable to tax paid to a non-resident seller.
The applicable withholding depends on the chargeable amount, nature of the gain, relevant rates, surcharge, cess, PAN and any valid lower or nil deduction certificate.
From 1 October 2026: Eligible resident individual and HUF buyers can use Form 141, Schedule E for qualifying NRI property transactions.
Other buyer categories generally use the applicable TAN-based TDS procedure.
Example: An NRI Sells Indian Property for ₹1 Crore
Suppose a non-resident seller transfers Indian property for ₹1 crore. The buyer should not simply assume that 1%, 12.5% or 30% of the entire sale price is always the correct deduction.
The seller's acquisition cost, holding period, applicable tax provisions and any lower-deduction certificate must be considered.
Lower deduction: Where eligible, the seller can seek a certificate under Section 197 (Now Section 395(1)) before the relevant payment or credit. The buyer must follow the terms of any valid certificate.
Property TDS Is Not the Seller's Final Capital Gains Tax
TDS is a withholding obligation on the buyer, while capital gains tax is determined by the seller's actual taxable gain and applicable income-tax provisions.
A sale may produce a short-term or long-term gain depending on the holding period. For the seller-side calculation, see our guide to short-term capital gain on property sale.
Property TDS Payment, Form 141 Filing and Deadlines
The buyer must deduct, deposit and report applicable property TDS within the prescribed time.
| Activity | Requirement |
|---|---|
| Who deducts TDS? | The buyer responsible for the qualifying payment or credit. |
| Resident-seller rate | Generally 1% where the ₹50 lakh condition and other statutory requirements are satisfied. |
| When to deduct? | At the applicable payment or credit event, whichever occurs earlier. |
| Deposit deadline | Generally within 30 days from the end of the month of deduction for Form 141 transactions. |
| Form 141 filing deadline | Generally within one month from the end of the month of deduction. |
| Resident-seller statement | Form 141, Schedule B, for qualifying purchases. |
| Eligible NRI transaction | Form 141, Schedule E, available to resident individual/HUF buyers from 1 October 2026. |
| TDS certificate | Obtain the prescribed certificate through TRACES and provide it to the seller within the applicable deadline. |
| Seller's TDS credit | The seller may claim eligible TDS credit against final income tax and seek a refund where entitled. |
Important for Instalment Payments
Property TDS obligations can arise before final registration, including on advances or instalments where the statutory deduction event has occurred. Each relevant month should be reviewed separately.
How to File Property TDS Using Form 141
Follow these steps for qualifying property purchases from resident sellers under Section 393(1), Table Serial No. 3(i).
Verify the Seller and Calculate TDS
Confirm the seller's Indian tax-residential status, property type, consideration and stamp-duty value.
Calculate the applicable withholding before making payment or credit, including instalment payments.
Sign In to the Income Tax Portal
Visit the official Income Tax e-Filing Portal and log in using the buyer's PAN.
Navigate to e-File → e-Pay Tax → Select Income Tax Act, 2025 → New Payment → Form 141.
Select Schedule B
Choose the correct deductee category and select Schedule B — TDS on Transfer of Immovable Property.
Schedule B is for qualifying resident-seller property transfers. Do not choose it for a non-resident seller.
Enter Buyer, Seller and Property Details
Complete the prescribed transaction fields using accurate documentation.
- Buyer and seller PAN
- Property type and full address
- Agreement and registration dates
- Consideration and stamp-duty value
- Payment dates and instalment details
- Applicable TDS amount
Review, Submit and Pay
Verify the calculation, buyer and seller information, deduction month and payment particulars.
Complete submission and payment using the available method. Save the challan receipt and acknowledgement.
Download and Provide the TDS Certificate
After processing, use the TRACES portal to obtain the applicable TDS certificate.
Check the deductor, deductee and deduction details before providing the certificate to the seller. Form 16B is the familiar earlier certificate name; use the currently prescribed certificate.
NRI Property Buyers: Use the Correct Schedule
For qualifying property purchases from a non-resident seller, an eligible resident individual or HUF buyer may use Form 141, Schedule E from 1 October 2026.
This schedule is separate from Schedule B and concerns withholding under Section 393(2). Buyers not eligible for Schedule E generally follow the applicable TAN-based filing procedure.
Refer to the official Form 141 filing guide and the Schedule E instructions when completing a non-resident property transaction.
Common Challenges Indian Property Buyers Face and How to Avoid Them
Property transactions involving multiple owners, delayed payments or missing documents can lead to incorrect TDS reporting. Here are four common issues and practical solutions.
Multiple Buyers and Sellers
Joint family purchases may involve multiple co-buyers and co-sellers. Under the earlier Form 26QB process, separate buyer–seller combinations generally required separate filings. A transaction with two buyers and two sellers could therefore require four combinations.
Seller Does Not Share PAN
Buyers sometimes face delays because the seller does not provide a valid PAN. Higher-rate TDS provisions can apply, potentially increasing withholding to 20% instead of the ordinary resident-property 1%.
Portal or Banking Delays
Payment failures, transaction limits, incomplete challans or portal availability issues can delay TDS compliance.
Excluding Additional Property Charges
Parking, club membership, maintenance and similar charges connected with the property transfer may form part of the relevant consideration. Separately listing these amounts does not automatically exclude them from TDS.
What Happens If You Miss the Property TDS Deadline?
Failure to deduct, deposit or report property TDS can attract interest, late filing fees and, in applicable cases, additional penalties.
Late Deduction of TDS
Interest is generally calculated for every month or part of a month from the date tax was deductible until actual deduction. Section 201(1A) (Now Section 398) contains the relevant interest rules.
Late Deposit After Deduction
Interest generally applies for every month or part of a month from the date tax was deducted until it is deposited with the government.
Late TDS Statement Filing Fee
The familiar Section 234E rule under the Income-tax Act, 1961 provides a ₹200-per-day fee, capped at the tax deductible or collectible. For 2026 transactions, apply the relevant provisions of the Income-tax Act, 2025.
Non-Filing or Incorrect Statements
Depending on the relevant tax year, applicable provision and circumstances, separate penalties may apply for missed or incorrect TDS statements. Under the earlier Section 271H framework, the penalty could range from ₹10,000 to ₹1,00,000, subject to statutory exceptions.
Important: Interest, late filing fees and penalties are different legal consequences. Not every delayed filing automatically attracts the maximum penalty. Applicability, relief and calculations depend on the governing law and circumstances.
Under the Income-tax Act, 2025, Section 398 covers the 1% and 1.5% interest framework. Confirm the applicable filing fee and penalty provisions for the transaction period before calculating outstanding dues.
Conclusion: Make Property TDS Compliance Easier
Understanding property TDS rules helps buyers deduct the correct amount, deposit it on time and provide accurate tax-credit information to the seller.
Whether the property has multiple owners or the seller is a resident or NRI, confirm the applicable section, transaction value, deduction rate and reporting form before making payment.
For Tax Year 2026–27, qualifying resident-property transactions generally use Form 141, Schedule B. Older transactions governed by the Income-tax Act, 1961 used Form 26QB.
Need Help with Property TDS Filing or Corrections?
Easy Return can assist with understanding applicable TDS rules, preparing transaction details, reviewing filing requirements and resolving common compliance issues.
Get Expert Help on WhatsApp ↗Frequently Asked Questions About TDS on Property Sale
Find answers about property TDS rates, the ₹50 lakh limit, Form 141, payment deadlines, joint ownership, NRI sellers and penalties.
01 Who is responsible for paying TDS on the sale of property?
The buyer is responsible for deducting and depositing applicable TDS when purchasing immovable property. The amount is deducted from the payment due to the seller and deposited with the government on the seller's behalf.
The seller can claim eligible TDS credit against their final income-tax liability.
02 What is the TDS rate on property sale under Section 393 in 2026?
For qualifying purchases from a resident seller, Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)) generally requires 1% TDS.
The deduction is calculated on the higher of the property's sale consideration or stamp duty value, where the statutory threshold and other conditions apply. Payments to non-resident sellers have separate withholding rules.
03 Is TDS required if the property value is exactly ₹50 lakh?
Yes. For a qualifying resident-seller transaction, the ₹50 lakh threshold includes a value of exactly ₹50 lakh.
If either the sale consideration or stamp duty value reaches ₹50 lakh, the buyer generally needs to deduct 1% TDS, subject to the applicable statutory conditions.
04 What if the circle rate is higher than the actual sale price?
The applicable TDS calculation generally uses the higher of sale consideration and stamp duty value.
For example, if a property is sold for ₹48 lakh but its stamp duty value is ₹52 lakh, then 1% of ₹52 lakh = ₹52,000 may be deductible, assuming the resident-property provision applies.
05 Is TDS deducted on every instalment for an under-construction property?
Yes, where the property transaction is subject to TDS. The buyer must examine the tax deduction obligation at each applicable payment or credit event, including advance instalments.
TDS should not automatically be postponed until final registration or possession. Keep a record of instalments, tax deducted and the corresponding payment dates to avoid mismatched reporting.
06 How is property TDS handled when there are multiple buyers and sellers?
Where there are multiple buyers or sellers, identify each party's ownership share, payment allocation and residential status.
Under the earlier Form 26QB framework, separate buyer–seller combinations generally required separate challan-cum-statements. For transactions governed by the new law, follow the applicable Form 141, Schedule B instructions for multiple parties. The threshold rules must be evaluated for the relevant property transaction.
07 Is PAN mandatory for the seller in a property TDS transaction?
The buyer should obtain and verify the seller's valid PAN before making the relevant payment.
If the seller does not furnish a valid PAN, higher-rate TDS provisions may apply, potentially resulting in 20% deduction instead of the ordinary 1% rate. The correct treatment must be checked under the provisions applicable to that transaction.
08 Which form replaces Form 26QB for property TDS in 2026?
For transactions governed by the Income-tax Act, 2025, qualifying resident-property TDS is reported using Form 141, Schedule B.
Form 26QB (Now Form 141, Schedule B) reflects the transition from the earlier Income-tax Act, 1961 filing framework. Buyers should use the form applicable to the transaction's tax year.
09 What is the deadline for depositing TDS and filing Form 141?
For the prescribed property challan-cum-statement procedure, the buyer generally must furnish Form 141 within 30 days from the end of the month in which TDS is deducted.
For example, if deduction occurs in October 2026, the ordinary 30-day month-end deadline falls on 30 November 2026, subject to any applicable official extension.
The relevant tax should be paid through the prescribed challan-cum-statement process, and the acknowledgement should be retained.
10 What happens if property TDS is deducted or paid late?
Under Section 201(1A) (Now Section 398(3)), interest generally applies at 1% per month or part of a month for failure to deduct TDS on time.
Where TDS has been deducted but deposited late, the applicable interest rate is generally 1.5% per month or part of a month.
Delayed TDS statements can also attract applicable late filing fees and, in relevant circumstances, penalties. These consequences should be calculated under the law governing the transaction period.
11 Do the same TDS rules apply when purchasing property from an NRI?
No. The ordinary resident-property 1% TDS rule does not automatically apply to a non-resident seller.
Chargeable payments to non-residents are generally assessed under Section 195 (Now Section 393(2)), using applicable rates in force and any valid certificate or determination.
From 1 October 2026, eligible resident individual/HUF buyers may use Form 141, Schedule E without TAN solely for the specified transaction. Other buyers must follow their applicable deduction and filing process.
2026 tax-law note: The Income-tax Act, 2025 applies from 1 April 2026. Section 194-IA (Now Section 393(1), Table Sl. No. 3(i)) covers qualifying resident-property TDS transactions. Section 195 (Now Section 393(2)) governs relevant payments to non-residents. Exact deduction and reporting requirements depend on the seller's residential status, transaction details and applicable law.
CA Sagar Batra
ICAI Registered Chartered Accountant · 10+ Years of Professional Experience · 12,000+ Tax Filings
Chartered Accountant with experience in taxation, compliance and business advisory. His work covers Income Tax, GST, TDS, tax notices, business compliance and financial documentation for individuals and businesses across India.