TDS on Property Sale -
Who Pays, Rate
What is TDS on Sale of Property section 393 IT Act 2026?
By: Sagar Batra | Published: 24/03/2026 | Reading Time: Approx. 7 – 8 Min
| Particulars | Details |
| Property value | Rs.50 lac or above |
| Rate of TDS | 1% of Property value |
| When deducted | Time of making payment to Seller |
| Who deduct TDS | Buyer deducts TDS and deposit. |
| TDS Refund | Yes, TDS can be claimed refund by Seller |
Under Section 393 of the New Income Tax Act, 2026, anyone buying an immovable property valued at ₹50 lakh or more must deduct TDS. As the buyer, you hold the legal responsibility to deduct this tax from your payment to the seller. You then deposit this amount directly with the government.
Think of it like this: If you are buying a house worth ₹60 lakh, you need to deduct 1% of the total amount (₹60,000) as TDS and pay it to the government. The remaining ₹59,40,000 is paid to the seller. This process helps the government keep track of large transactions and ensures sellers pay the appropriate taxes.
Get Expert Help for Property TDS (Form 26QB)
Filing Form 26QB is mandatory for property buyers.
Key Documents Required for TDS on Property Sale (Form 26QB)
Before you begin the registration process, make sure these documents are ready for both parties :
- PAN Card: Mandatory for both buyer and seller. If the seller refuses to share their PAN due to tax fears (a common situation in some regions), you are bound by law to deduct TDS at 20%. Always insist on the PAN upfront.
- Sale Agreement: A registered copy is needed to verify actual transaction values and payment terms.
- Property Details: Full address, pin code, and the property type (residential, commercial, land).
- Aadhaar Number: Increasingly requested due to legal updates; helps with verification during online TDS return filing.
TDS Rules for Property Sold by a Resident Indian
When you buy property from someone residing in India, Section 194-IA applies.
The ₹50 Lakh Threshold and TDS Rate
TDS is applicable if your property deal is ₹50 lakh or more. Even if it’s exactly ₹50 lakh, you must deduct TDS. The rate is a flat 1%. For property slightly below ₹50 lakh, there’s no TDS.
Cultural Note: In many states, buyers negotiate to split the cost of documentation, parking, or club membership out of the main agreement to avoid TDS. Be careful—if authorities find these “extras” make the total consideration cross ₹50 lakh, you’re liable for TDS on the entire combined value.
The Impact of Circle Rates
Most deals in cities like Delhi, Mumbai, or Jaipur involve comparing the “circle rate” or guidance value set by local authorities. If the stamp duty value (circle rate) exceeds the sale price and exceeds ₹50 lakh, TDS is calculated on this higher value. Always cross-check the sub-registrar’s value before registration.
Get Expert Help for Property TDS (Form 26QB)
Filing Form 26QB is mandatory for property buyers.
What type of Properties are covered in TDS rule?
The TDS is required to be deducted on all type of Properties except Agriculture Land-
- Plot
- Residential House
- Shop/ Commercial Spaces
- Flats
TDS Rules for Property Sold by an NRI
Many NRIs invest in Indian real estate. Selling these properties often involves emotional and tax complexities.
Capital Gains and TDS Rates for NRIs
Unlike resident sellers, the TDS for an NRI depends on the property’s holding period:
Type of Capital Gain | Holding Period | Base TDS Rate | Effective TDS Rate (incl. Surcharge & Cess) |
Long-Term Capital Gain | >24 months | 12.5% | 13% to 14.95% |
Short-Term Capital Gain | 24 months or less | 30% | 31.2% to 35.88% |
Effective rates vary based on total income and surcharge slabs. These are much higher than the 1% for resident Indians.
Practical NRI Example:
If an NRI sells property for ₹1 crore, the buyer typically deducts 12.5% of the sale as TDS (₹12.5 lakh). If the seller gets a lower/nil TDS certificate by filing Form 13 with the IT department, TDS can be applied only to the capital gains, not the full sale value.
Pro Tip: NRIs often underestimate the complexity—ensure the seller applies for the lower deduction certificate early in the sale process. Communicate timelines and documentation clearly, especially when sellers are abroad and depend on local relatives/agents.
Step-by-Step Guide: How to Pay TDS and Due dates of filling TDS Returns Form 26QZ
| Activity | Timeline / Detail |
| Property value | Rs.50 lac or above |
| Rate of TDS | 1% of Property value |
| Who deduct TDS | Buyer deducts TDS and deposit. |
| TDS Deduction | At time of payment (to Seller) |
| TDS Deposit (Form 26QB) | Within 30 days from month-end of deduction |
| Form 16B Issue | Within 15 days of filing of Form 26QB |
| TDS Refund | Yes, TDS can be claimed refund by Seller |
Whether you’re in Chandigarh or Chennai, the process is the same—but minor portal delays and local banking practices can impact your timeline. Here’s how to do it right.
Step 1: Deduct TDS on Every Payment
TDS must be deducted at payment. For under-construction properties paid in installments, deduct 1% TDS on every single payment, not just the last one.
Story from the Field:
Mr. Rajesh, a salaried professional from Pune, sold his flat for ₹85 lakh. The buyer almost paid the full amount, but the bank officer paused the deal:
“Sir, the buyer must deduct 1% TDS first.”
EasyReturn tax experts stepped in: “We’ll help with Form 26QB, payment, and Form 16B. Relax, you’ll get your money in a compliant, safe way.”
Such stories are common—the right guidance ensures stress-free transactions.
Step 2: Pay the TDS Using Form 26QB
Get Expert Help for Property TDS (Form 26QB)
Filing Form 26QB is mandatory for property buyers.
After deduction, you have 30 days to deposit the amount using Form 26QB (online). Here’s the process:
Here is explained with actual Screenshot of Income Tax Portal form 26QB, which can help in better understanding.
- Go to the official IT e-Filing portal.
- Navigate to ‘e-Pay Tax‘ > ‘New Payment‘ > ‘26QB (TDS on Sale of Property)
- Enter details—
- PANs & Address of Seller
- Property Address
- Property Agreement date
- TDS Amount
Select – Type of Property
Get Expert Help for Property TDS (Form 26QB)
Filing Form 26QB is mandatory for property buyers.
Fill Payment Details – Actual date of Payment
- Choose your payment method (Net Banking, UPI, Debit Card, etc.).
- Download the receipt
Be patient: Some regional banks have portal issues, especially around deadlines. File early in the month for smooth processing.
Step 3: Generate and Issue Form 16B
After payment, log in to the TRACES portal and request Form 16B (TDS Certificate):
- Use your PAN to register as a taxpayer.
- Fill in the relevant AY, seller’s PAN, and acknowledgment number.
- Download Form 16B and hand it over to the seller within 15 days.
Common Challenges Indian Buyers Face (and Solutions)
A unique blend of cultural and systemic issues make Indian property TDS tricky:
Multiple Co-Owners
Joint family purchases are common. Every buyer-seller combination needs a separate Form 26QB. For two buyers and two sellers, you file four forms, not one.
Hesitant Sellers
Sellers may not want to share PAN, fearing scrutiny. If you proceed, TDS goes up to 20% (as per Section 206AA). Don’t cut corners—clarify legal consequences and insist on full documentation.
Server Glitches and Bank Delays
Several banks and government portals see heavy traffic near deadlines. Always make the TDS payment soon after deducting—don’t wait until the last day.
Underestimating “Extras” in Value
Adding amounts for parking, club membership, or preferred location fees to stay under the ₹50 lakh cap is risky. The government may recalculate your TDS on the total real transaction value.
Penalties for Missing the Deadline
Get Expert Help for Property TDS (Form 26QB)
Filing Form 26QB is mandatory for property buyers.
- Late Deduction: Interest at 1% per month.
- Late Payment: Interest at 1.5% per month.
- Late Filing Fee: ₹200 per day.
- Serious Defaults: Fines of ₹10,000 to ₹1,00,000 for non-filing or deliberate evasion.
Real India, Real Stories: Why Expert Help Matters
India’s property market is vibrant but complex. Services like Easy Return help people navigate these waters with less stress—handling paperwork, correcting mistakes, managing refunds, and offering updates via WhatsApp, phone, and even in regional languages.
If you feel lost, don’t hesitate to consult a tax professional. A small investment in professional advice today saves you huge penalties and anxiety later.
Conclusion
Understanding the TDS mechanism is a crucial part of your property-buying and selling journey in India. By deducting the right amount and filing Form 26QB on time, you protect yourself from hefty penalties and legal troubles. Keep your paperwork ready, talk openly with all parties involved, and use trusted tax services like Easy Return to make the process smooth and compliant.