TDS on Property Sales: What Buyers Must Deduct
1% Deduction Above ₹50 Lakh
PAN, TAN & Filing Rules Simplified
By Vishwas Kumar
New Delhi: May 29, 2026:
Tax Deducted at Source (TDS) under Section 194IA of the Income Tax Act applies to property transactions. It ensures tax compliance and prevents evasion in high-value deals. In 2024, the government clarified rules to make compliance easier, especially for joint buyers and sellers.
Key Rules
- Threshold:
- TDS applies if property value exceeds ₹50 lakh.
- Rate: 1% of sale consideration.
- Applicability:
- Buyer must deduct TDS, not the seller.
- Applies to all immovable property (land, building, flat) except agricultural land.
- Joint Buyers/Sellers:
- Each buyer must deduct TDS proportionately.
- Each seller’s PAN must be quoted.
- Payment & Filing:
- TDS must be deposited using Form 26QB within 30 days.
- Buyer must issue Form 16B (TDS certificate) to seller.
- Budget 2024 Clarification:
- Reinforced that each buyer must deduct separately, even in joint deals.
- Digital filing streamlined via TRACES portal.
Impact on Buyers & Sellers
- Buyers:
- Must deduct and deposit TDS on time.
- Failure leads to penalty and interest.
- Sellers:
- Receive net amount after TDS.
- Can claim credit in income tax return.
- Market Effect:
- Ensures transparency in high-value property deals.
- Reduces scope for under-reporting.
Example
- Property Value: ₹80 lakh
- Buyer must deduct 1% = ₹80,000
- Deposit via Form 26QB within 30 days
- Seller receives ₹79.2 lakh net, but can claim ₹80,000 credit in ITR
Detailed FAQ
Q1. Who deducts TDS on property?
The buyer, not the seller.
Q2. What is the threshold?
₹50 lakh. If property value exceeds this, 1% TDS applies.
Q3. Does it apply to agricultural land?
No, agricultural land is exempt.
Q4. How is TDS deposited?
Through Form 26QB online within 30 days of payment.
Q5. What certificate is issued to seller?
Form 16B, downloaded from TRACES portal.
Q6. What if there are joint buyers?
Each buyer must deduct and deposit TDS separately.
Q7. Can seller claim credit?
Yes, in their income tax return.
Q8. What happens if buyer fails to deduct?
Penalty, interest, and possible disallowance of expense.
Analytical Note
TDS on property transactions is a compliance safeguard that ensures tax transparency in India’s real estate sector. While it adds responsibility for buyers, it protects sellers by providing tax credit. The Budget 2024 clarification on joint buyers strengthens enforcement and reduces loopholes.
The takeaway: always deduct and deposit 1% TDS on property deals above ₹50 lakh—failure can lead to penalties, but compliance is simple with online filing.