What is TDS on property purchase?
Also called: TDS on sale of property, 194-IA TDS, 1% TDS on property, Form 26QB
When you buy property worth ₹50 lakh or more from a resident seller, you must deduct 1% as TDS from the payment and deposit it with the government. The rule was Section 194-IA; since 1 April 2026 it sits in the TDS table under Section 393 of the Income-tax Act, 2025.
The buyer is responsible, not the seller or the builder. You work out 1% of the higher of the price and the stamp duty value, cut it from what you pay the seller, and deposit it online using the challan-cum-statement for property TDS, quoting both PANs. You don't need a TAN. Deposit it within 30 days from the end of the month in which you made the payment, then download the TDS certificate from the TRACES portal and give it to the seller, who claims it against their tax.
The ₹50 lakh threshold looks at the whole deal, not your share of it. If two siblings jointly buy a ₹70 lakh flat, each paying ₹35 lakh, TDS still applies, and each of them deducts 1% on their own payment. For an under-construction flat, you deduct 1% from every instalment paid to the builder, including charges like parking and club membership that form part of the price.
If the seller hasn't given you a PAN, the rate jumps to 20%. And the 1% rule applies only to resident sellers. Buying from an NRI brings a different TDS provision entirely, on the capital gain at the applicable rates plus surcharge and cess, and you'll need a TAN.
Missing it is costly. Interest runs on late deduction and late deposit, a late fee accrues daily for the statement, and the buyer can be treated as an assessee in default for the unpaid tax.
A buyer pays ₹82 lakh for a resale flat in Pune whose stamp duty value is ₹85 lakh. She deducts 1% of ₹85 lakh, i.e. ₹85,000, pays the seller ₹81.15 lakh and deposits ₹85,000 with the tax department within the deadline.
Buyers of NRI-owned flats deduct 1% as they would for a resident. The correct TDS is much higher, and the buyer is liable for the shortfall plus interest.
Questions people ask about TDS on property purchase
Is TDS deducted on stamp duty and registration charges?
No. Those are paid to the state, not to the seller. TDS applies to the consideration paid to the seller or builder, including parking and similar charges that are part of the price.
Does the bank deduct TDS from the loan disbursement?
No. The bank pays the full amount released. You must deduct the TDS from your own share or arrange with the seller to pay it separately.