When you buy a property in India in 2026, there is one thing the Income Tax Department expects you to do before you shake hands and hand over the cheque: deduct 1% TDS under Section 194-IA if the price of that property is ₹50 lakh or more and if it is not agricultural land.

You pay that deducted tax using Form 26QB, and you hand the seller a small document called Form 16B, which shows that tax was actually deposited in their name.

To help you avoid all confusion and stay fully compliant on this, here we bring you a detailed guide about TDS on property purchase 2026. 

Why this matters?

It sounds like paperwork, but there are four very practical reasons why Section 194-IA TDS property rules matter: 

• It shows clean compliance, both for you and the seller
• The seller gets tax credit, which affects capital gains calculation
• It creates a clear audit trail of money movement
• You avoid penalties, interest, and notices for non-deduction

In short, it is not a random technical form. This is the income tax department’s way of ensuring large property transactions do not disappear outside the tax system.

A checklist: What to look for before you pay

Before you head for the property registration office, you should check a few things. Here we bring you a comprehensive checklist: 

• Is the property non-agricultural?
• Is the higher of sale price or stamp duty value from ₹50 lakh? You need to calculate 1% TDS on property above 50 lakh. 
• Do you have the seller’s PAN?
• Calculate 1% on the higher value, not just the sale deed amount. 
• Deposit Form 26QB TDS on property within 30 days from the month-end
• Download Form 16B from TRACES and give it to the seller

If you can tick all of those, you have covered nearly 90% of what Section 194-IA expects from a buyer.

TDS on Property Purchase: A Step-by-Step Guide 

When you read Section 194-IA in the bare Act, it looks like six lines and two definitions. But when you actually buy a flat, the real-world questions are different. For example, what if there are two buyers or what if the stamp duty value is higher or what if the seller says they do not have a PAN?

So let us go step by step in how an actual buyer handles TDS on purchase of property in 2026.

Step 1: Confirm that TDS applies

TDS applies only when one of the following two conditions are true:

• The property is non-agricultural and immovable such as flats, villas, plots, commercial units.
   
• The higher of sale consideration or stamp duty value is ₹50 lakh or more

The law changed a few years earlier, and from 2022 onwards, the threshold is not only on the sale deed price. The rule is simple, take the higher number and calculate TDS.

Let’s explain this with an example:

Sale deed shows: ₹48 lakh

Stamp duty valuation: ₹52 lakh

Here, TDS applies because ₹52 lakh crosses the threshold.

What does not count here?

• Rural agricultural land
• Parking bought separately, and if not, it’s valuation as part of property value.
• GST amounts in some cases
• Clubhouse membership, extra electricity load, in case it is charged separately.

When in doubt, check the stamp duty valuation from the registrar office. In big cities, banks often show it to you in the loan file.

Step 2: Collect seller KYC and PAN

After you confirm TDS applies, get the seller’s PAN. If the seller does not provide PAN, the law forces you to deduct TDS at 20%, not 1%. This is mandated by Section 206AA. 

In real deals, this situation is rare, but it happens when the seller is an NRI with no Indian PAN or when the sale is through a guardian. In both cases, do not ignore it.

Ask for the following:

• Copy of PAN card
• Address as per PAN
• Mobile number and email address, needed for Form 26QB
• Proof of ownership and sale deed draft

Save these in a single folder. It will help later if TRACES asks you to verify anything.

Step 3: Calculate TDS correctly

The biggest mistake is calculating TDS on the sale deed value even when the stamp duty value is higher.

After the amendment, the rule goes like this:

1% on the higher of sale consideration or stamp duty value

Let us take a simple numeric example.

Sale price stated: ₹1.02 crore

Stamp duty value: ₹1.05 crore

Bank loan: ₹70 lakh and the rest is paid by buyer

TDS = 1% of ₹1.05 crore = ₹1,05,000

Even when the bank disburses ₹70 lakh and as a buyer you only pay ₹32 lakh, the TDS will be levied on the entire valuation amount, not just on the payment you made from your account at the time of purchase. 

Step 4: When to deduct TDS

Section 194-IA says:

Deduct TDS at the earlier of:

• Credit to seller’s account
• Payment

So if you sign the sale agreement and transfer ₹5 lakh booking amount today, and the loan disburses next month, you deduct TDS on each payment. It is not something you should do after registration.

Banks usually deduct from the seller’s disbursement. If the bank does that, confirm that the challan is in your name, not the builder’s. The buyer must be the deductor.

Example timeline goes like this:

Booking advance: ₹5 lakh, deduct TDS on this

Final disbursement: ₹95 lakh, deduct TDS on this

Total TDS = 1% of full applicable value

This matters when payments are staggered, especially in under-construction flats.

Step 5: Pay using Form 26QB online

Form 26QB is the single-shot TDS challan plus statement for property purchases. Here you do not need TAN.

Go to the TIN-NSDL or Income Tax e-pay portal, choose 26QB, and fill in the details.

You will need:

• Buyer PAN
• Seller PAN
• Complete address of property
• Consideration value
• Stamp duty value
• Date of agreement
• Date of payment
• Amount paid
• TDS calculated
• Payment modes such as net banking or debit card.

Be careful with spelling the names exactly as PAN database, otherwise TRACES will reject the download request later.

Step 6: Deposit within 30 days

The timeline for the deposit is 30 days from the end of the month in which TDS was deducted. So if you paid the seller and deducted TDS on 10 February, your deadline is 30 March, not 10 March.

This mention of end of month plus 30 days confuses many people, so let us put two examples:

• Payment on 01 April → Last date = 31 May
• Payment on 29 April → Last date = 31 May

If you miss this, you pay interest per month or part thereof. We cover that in penalties section.

Step 7: Download Form 16B 

Once you pay TDS and the challan is confirmed, go to TRACES, the government TDS portal.

Register using:

• PAN
• date of birth
• challan details

Then request Form 16B, which is basically the TDS certificate for the seller.

The processing time varies. It often shows up in:

• 3–7 days for individuals
• Sometimes up to 15 days in heavy periods

When you get Form 16B, print it, sign digitally or manually, and give the seller a copy. They will need it when they file income tax returns and calculate capital gains.

Step 8: Reconciliation and mistakes

Once the seller files returns, they will look at Form 26AS or AIS, which shows the TDS credit. If something goes wrong, it usually belongs to one of the following:

• wrong PAN
• wrong challan number
• wrong property details
• name mismatch
• multiple buyers and wrong allocation

In any of these cases, you can request a correction in 26QB. Banks and CAs do such corrections regularly, so you should not worry. Just keep all your documents ready.

Forms & Portals

This part is boring but important. Remember these three names that repeat everywhere:

• Form 26QB: Here you pay the TDS
• Form 16B:  The certificate the seller receives
• TRACES portal: Here the certificate is generated

Nobody prints manuals for this, so here is a field checklist you can keep beside you while filling 26QB.

Fields you must enter correctly include the following:

• Buyer and seller PAN
• Assessment year (check carefully)
• Type of property
• Full address with PIN
• Consideration value (sale deed)
• Stamp duty valuation
• Date of payment
• TDS amount
• Bank details

Once paid, save the challan PDF, and also save the acknowledgement number. TRACES will ask for it.

Special cases & exemptions

A few cases come up often in property deals, especially when families sell inherited land. Let’s explain these special cases and exemptions one by one. 

Agricultural land

Pure agricultural land in rural areas is outside 194-IA.

Urban agricultural plots marked for development are still a grey area and so to avoid confusion, check the revenue record minutely.

Sale under ₹50 lakh

If both sale value and stamp duty value are below ₹50 lakh, there will be no TDS.

Joint development agreements

If the landowner and builder are in a JDA, Section 194-IC may apply simultaneously. That is a different structure altogether. It is better not to self-interpret JDAs.

Seller is non-resident

If the seller is NRI, 194-IA does not apply. Instead, TDS under 195 applies and the buyer may need a TAN. The rates are completely different and depend on capital gain.

Penalties & Interest

Section 194-IA is friendly until you miss the date. Let’s mention here all the penalties and interest you need to pay in case you miss the deadline. 

Interest

• If you deduct TDS late, interest is calculated @ 1% per month
• If you deposit TDS late, interest is calculated @ 1.5% per month

Remember that even one day delay makes you pay for a full month. So if you deduct but deposit after 40 days, that can cost two full months interest.

Penalty

There is a daily penalty for not filing the statement and there can be another penalty for failure to deduct. Most buyers settle these with interest and move on.

How to fix mistakes

• Correct PAN
• Change challan fields
• Revise form
• Ask TRACES for correction

Common mistakes you should avoid

After watching dozens of buyers struggle with Form 26QB, these are these recurring mistakes that often happen:

• Calculating tax on sale deed only, ignoring stamp duty value
• Typing wrong PAN numbers
• Missing the 30-day deadline
• Confusion when bank disburses instead of buyer
• Not deducting TDS on advance payment
• Not issuing Form 16B

FAQs — Simple Answers

What is Section 194-IA?

It is the rule that says buyers must deduct 1% TDS when buying a non-agricultural property worth ₹50 lakh or more.

When is TDS required on property purchase?

At the time of payment or credit to the seller, whichever is earlier.

How to pay TDS on property purchase?

Go to the government portal, fill Form 26QB, pay online, then download Form 16B from TRACES.

What if the seller has no PAN?

Then law forces 20% TDS under Section 206AA.

Do I need TAN to deduct TDS?

No. Buyers do not need TAN for 194-IA.

Can the seller use the TDS as credit?

Yes. The amount appears in Form 26AS and can adjust against capital gains.

Who is responsible for TDS, buyer or seller?

Always the buyer.

Is agricultural land covered?

No, rural agricultural land is exempted from TDS deductions.

How long does Form 16B take?

Usually it takes 3–7 days, sometimes even longer.

How to correct a mistake in Form 26QB?

Submit a correction request through TRACES.

Ending Notes

Buying a property feels like a big emotional moment, you step into a home you dreamed about, or you close a deal that took months to negotiate. The paperwork around TDS on purchase of property looks small, but it has a real impact on tax compliance for both sides.

If you remember one thing, remember this:

Take the higher of sale price or stamp duty value, deduct 1%, pay through Form 26QB within 30 days, and issue Form 16B.

That is the entire system in one clean line. Everything else in this guide is just helping you avoid surprises: multiple buyers, missing PAN, timing of deduction, penalties, and what banks usually do day to day.

If you follow this step-by-step process once, you will never worry about Section 194-IA again. And when the seller files returns and sees the TDS credit sitting neatly in Form 26AS, you will both be glad you spent ten extra minutes doing it properly.

For any further information or queries, write to us by filling the contact form in the website, or contact here at 9019000400, directly to our 24x7 available marketing team at your service.