🏠 TDS on Property Sale in India – Complete Guide for Buyers & Sellers

When you're buying or selling a property in India, Tax Deducted at Source (TDS) under Section 194-IA of the Income Tax Act is a crucial part of the transaction. Even a small mistake in this process can lead to tax notices, penalties, or loss of refund.

This blog answers the most frequently asked questions related to TDS on property transactions—from payment, filing Form 26QB, getting TDS certificates to claiming refunds. We’ve also added examples for better clarity.

📌 What is TDS under Section 194-IA?

Section 194-IA of the Income Tax Act mandates that the buyer of any immovable property (other than agricultural land) must deduct TDS at 1% of the sale consideration or the stamp duty value, whichever is higher, if this amount is Rs. 50 lakhs or more. Key points regarding TDS under Section 194-IA:

• Applicability: Applies to every buyer (individuals, HUFs, corporates, etc.) purchasing residential, commercial, or plot/land (other than agricultural land) for Rs. 50 lakh or more from a resident seller.

• Threshold: TDS is only required if the sale consideration or stamp duty value (whichever is higher) is Rs. 50 lakh or above.

• TDS Rate: 1% of the consideration. If the seller does not provide a valid PAN, the TDS rate increases to 20%.

• Point of Deduction: TDS must be deducted when either the amount is credited to the seller’s account or when actual payment is made—whichever is earlier.

• Form and Payment:

  • The buyer needs to deposit the deducted TDS using Form 26QB (an online TDS challan-cum-return) within 30 days from the end of the month in which deduction was made.

  • Form 16B (TDS certificate) must be issued to the seller within 15 days from the due date of deposit.

  • TAN (Tax Deduction Account Number) is not required—only the PAN of the buyer and seller is needed.

• Joint Sellers/Buyers: If there are multiple sellers or buyers, the Rs. 50 lakh limit applies to the total transaction value, not to each share individually.

• Excluded Transactions: Sale of agricultural land is not covered under Section 194-IA.

• Additional Charges: TDS applies on the total sale price, including ancillary charges like parking, maintenance, and club fees if included in the agreement.

  
  

Non-compliance with these requirements may attract penalties and interest

Example:

• Property sale price: ₹75,00,000

• Buyer must deduct 1% TDS = ₹75,000

• Pay ₹74,25,000 to seller and deposit ₹75,000 to the government.

🔍 Who is responsible to deduct and pay the TDS?

👉 The buyer of the property is legally responsible to:

• Deduct 1% TDS at the time of payment.

• Deposit TDS with the Government using Form 26QB.

Even if there are two buyers or two sellers, each buyer must file separate Form 26QB per share of consideration.

🧾 What is Form 26QB and when to file?

Form 26QB is a challan-cum-statement that must be filed by the buyer when deducting and depositing TDS on the purchase of immovable property (other than agricultural land) valued at ₹50 lakh or above under Section 194-IA of the Income Tax Act. This form is used to report and pay the 1% TDS deducted from the sale consideration to the government.

• Key details about Form 26QB:

  • It must be filed within 30 days from the end of the month in which the TDS was deducted.

  • Requires information such as the PAN of both buyer and seller, property details, and transaction value.

  • Filing is typically done online through the income tax portal; payment can also be made electronically.

  • It acts as both the TDS payment challan (for depositing the money) and the return statement (for reporting the transaction).

  • No TAN (Tax Deduction Account Number) is required—only PANs.

  Failure to file Form 26QB or deposit TDS on time can attract penalties and interest as per Income Tax Act provisions

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Example:

• Sale Date: 25th July 2025

• TDS Deducted on: 25th July

• Last date to file Form 26QB: 30th August 2025

🧩 Can multiple buyers/sellers file one 26QB?

❌ No. Each buyer-seller combination requires a separate Form 26QB.

Example:

• 1 Property sold by Mr. A & Mrs. A (2 sellers) to Mr. B & Mr. C (2 buyers)

• 4 Forms 26QB need to be filed (2 sellers × 2 buyers)

📄 What is Form 16B? How to get it?

Form 16B is a TDS certificate issued by the buyer to the seller of an immovable property as proof that TDS was deducted and deposited with the government under Section 194-IA of the Income Tax Act when the property sale value is ₹50 lakh or more.

Key facts about Form 16B:

• Purpose: Confirms the buyer has deducted 1% TDS from the sale consideration and deposited it with the Income Tax Department.

• Recipient: Must be given to the seller by the buyer; it enables the seller to claim credit for the TDS while filing tax returns.

• Due date: The buyer must issue Form 16B within 15 days from the due date of filing Form 26QB (the challan-cum-statement for TDS payment on property purchase).

• Download: The buyer can download Form 16B from the TRACES portal after filing Form 26QB and confirming the TDS amount was successfully deposited.

• Penalty for delay: Failure to issue Form 16B can result in a penalty (up to ₹100/day or ₹500/day, depending on the stage and source).

• Applicability: Required only where the transaction involves a resident seller and a property value or stamp duty value of ₹50 lakh or more, excluding agricultural land.

Form 16B, along with Form 26QB, ensures that the TDS required for high-value property transactions is properly accounted for and helps sellers demonstrate compliance during tax filings

• Login to TRACES portal

• Download Form 16B using PAN of seller

This is required by the seller to claim credit of TDS while filing their income tax return.

💸 What happens if TDS is not deducted or paid?

👉 The buyer may face:

• Interest @1% per month for late deduction

• Interest @1.5% per month for late payment

• Penalty of ₹200/day for late filing of Form 26QB

• Prosecution in extreme cases

Always consult a legal/tax expert if unsure.

📥 Can the seller claim TDS refund?

Yes. The seller can claim TDS deducted in their ITR if:

• The full tax liability is less than the amount deducted.

• They have reported the income from sale in their return.

The refund gets credited to the seller’s bank account after ITR processing.

🧮 How to calculate TDS if sale value includes GST?

👉 TDS should be deducted only on the property value, excluding GST.

Example:

• Sale Value: ₹60,00,000

• GST: ₹3,60,000

• TDS = 1% of ₹60,00,000 = ₹60,000

💰 What if I paid TDS but entered wrong PAN or amount?

In such cases:

• Corrective action can be taken by filing a correction request through the TRACES portal.

• If correction is not allowed, consult your jurisdictional Assessing Officer.

📆 What is the due date for issuing Form 16B to the seller?

• Within 15 days from the date of filing Form 26QB.

🤝 Is TDS applicable on home loan disbursal?

Yes, the buyer (you) must deduct TDS even if the amount is paid by the bank (loan disbursal) to the seller.

The buyer should ensure Form 26QB is filed for that payment.

📚 Summary Checklist

Step	Action	Who	Deadline
1	Deduct 1% TDS	Buyer	At time of payment
2	File Form 26QB	Buyer	Within 30 days
3	Generate Form 16B	Buyer	Within 15 days
4	Claim TDS in ITR	Seller	Before ITR due date

✋ Common Mistakes to Avoid

• Not deducting TDS at time of payment

• Filing incorrect PAN or amount

• Missing deadline for 26QB

• Not issuing Form 16B

• TDS paid on GST-included amount

📝 Pro Tip

It’s always advisable to consult a legal expert or tax consultant before or during the property transaction to ensure compliance. This avoids penalties, ensures timely TDS filing, and smoothens refund claims for sellers.

Best Regards,

Sairam Law Associates

Your Trusted Legal Partner in Bengaluru

📞 9611195911 | 9900984444

📩 adv@sairamlawassociates.in

🌐 https://sairamlawassociates.in Disclaimer:

The information provided in this blog is intended for general informational purposes only and does not constitute legal, financial, or tax advice. While we strive to ensure accuracy and relevance, tax laws and regulations are subject to change and may vary based on individual circumstances. Readers are advised to consult with a qualified tax consultant, chartered accountant, or legal professional before making any decisions based on the content of this blog. Sairam Law Associates and Eco Space Realtors shall not be held liable for any consequences arising from reliance on the information provided herein.