Section 194-IA: 1% TDS on Purchase of Immovable Property
A complete homebuyer's guide to deducting tax on property sales, filing Challan 26QB, and issuing Form 16B to the seller.
Buying a home, plot, or commercial office in India entails mandatory tax obligations. Under Section 194-IA, any buyer (transferee) acquiring immovable property from a resident seller for a value of ₹50 Lakh or more must deduct 1% TDS from the payment.
A common misconception is that the builder or seller is responsible for this deduction. Under Indian direct tax law, the legal obligation to deduct and deposit TDS rests entirely with the buyer.
What's in this article
Threshold & Rate: The ₹50 Lakh Rule
TDS applies if the total sale consideration or the stamp duty value (whichever is higher) is ₹50,00,000 or greater. If you buy a flat for ₹48 Lakh but its state government circle rate / stamp duty valuation is ₹52 Lakh, Section 194-IA applies on the higher amount (₹52 Lakh).
The 1% deduction must be calculated on the total consideration including all mandatory ancillary charges: car parking fees, club membership, electricity/water advance meters, and maintenance deposits.
If the property consideration is ₹49,99,999, not a single rupee of TDS is deductible.
How to Pay: No TAN Required (Form 26QB)
Unlike standard business TDS where the deductor must obtain a 10-digit Tax Deduction Account Number (TAN), property buyers do NOT need a TAN.
The transaction is reported through Form 26QB (a challan-cum-statement) directly on the Income Tax e-filing portal (incometax.gov.in) using only the buyer's and seller's PANs.
Payment must be completed within 30 days from the end of the month in which the deduction was made. For instance, if you pay the builder an installment on 15th July, Form 26QB must be filed by 30th August.
Issuing Form 16B to the Seller
After depositing the TDS through Form 26QB, the buyer must log in to the TRACES portal (tdscpc.gov.in) after 4–5 business days and download Form 16B (TDS certificate for property).
The buyer is legally required to hand over Form 16B to the seller so they can claim credit in their annual tax filing.
Key takeaways
- 01Buyer must deduct 1% TDS if property consideration or stamp duty value is >= ₹50 Lakhs.
- 02No TAN is needed; deduction is remitted using PAN via Form 26QB within 30 days of month-end.
- 03TDS is computed on the higher of actual sale price or stamp duty value.
- 04Buyer must issue Form 16B from the TRACES portal to the seller.
Run withholding tax calculations for your invoice:
Open TDS CalculatorReference
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Written & Verified By
Tax Research & Computational Lead
Specializing in direct taxation under the Indian Income Tax Act 1961, withholding compliance, and corporate accounting. All rates and formulas are cross-verified against official Union Budget Finance Acts and CBDT notifications.