Introduction<\/p>\n
When a buyer purchases an immovable property other than agricultural land from a resident seller, TDS may be required under Section 194-IA of the Income-tax Act, 1961.<\/p>\n
The basic rule is simple:<\/p>\n
Buyer pays \u20b950 lakh or more \u2192 TDS at 1% generally applies.<\/p>\n
However, for FY 2026-27, there is an important legislative transition. From 1 April 2026, TDS provisions have moved into the Income-tax Act, 2025. The Income Tax Department confirms that TDS rates and monetary thresholds have broadly remained unchanged, while the new Act consolidates the provisions into Section 393.<\/p>\n
So, for a 2026-27 transaction, the substantive 1% \/ \u20b950 lakh rule continues, but the applicable statutory reference and reporting mechanism need to be updated.<\/p>\n
\ud83c\udfe0 What is Section 194-IA?<\/p>\n
Section 194-IA applies when a buyer purchases an immovable property, other than agricultural land, from a resident seller and the consideration meets the prescribed threshold.<\/p>\n
It can apply to:<\/p>\n
Residential flats
\n
Houses
\n
Commercial properties
\n
Land other than agricultural land
\n
Certain other immovable properties<\/p>\n
The buyer is responsible for deducting the tax.<\/p>\n
\ud83d\udcb0 When Does the 1% TDS Apply?<\/p>\n
The threshold is:<\/p>\n
\u20b950 lakh or more<\/p>\n
If the consideration for the transfer is \u20b950 lakh or more, the buyer generally has to deduct TDS.<\/p>\n
Example<\/p>\n
Property purchase price:<\/p>\n
\u20b975,00,000<\/p>\n
TDS:<\/p>\n
1% = \u20b975,000<\/p>\n
The buyer pays the seller:<\/p>\n
\u20b974,25,000<\/p>\n
and deposits:<\/p>\n
\u20b975,000<\/p>\n
as TDS with the Government.<\/p>\n
\u26a0\ufe0f Important: Check the Consideration Correctly<\/p>\n
For property transactions, the threshold should not be considered merely by looking at the amount of each individual instalment.<\/p>\n
The transaction should be examined based on the consideration for the transfer and the applicable statutory provisions.<\/p>\n
For example:<\/p>\n
Property Value\t194-IA TDS
\n
\u20b940 lakh\tGenerally \u274c
\n
\u20b949.99 lakh\tGenerally \u274c
\n
\u20b950 lakh\t\u2705 1%
\n
\u20b960 lakh\t\u2705 1%
\n
\u20b91 crore\t\u2705 1%
\n
\u20b92 crore\t\u2705 1%<\/p>\n
\ud83d\udc65 Joint Buyers and Sellers<\/p>\n
This is an important practical issue.<\/p>\n
If there are:<\/p>\n
Multiple buyers, or
\n
Multiple sellers,<\/p>\n
the transaction needs to be reported with the relevant ownership\/share details.<\/p>\n
The Income Tax Department’s current ITR documentation specifically requires property details, including the name of buyer(s), PAN\/Aadhaar, percentage share and amount, where Section 194-IA applies.<\/p>\n
Example<\/p>\n
Property value = \u20b980 lakh<\/p>\n
Two buyers:<\/p>\n
Buyer A \u2014 50%
\n
Buyer B \u2014 50%<\/p>\n
Each buyer’s share = \u20b940 lakh.<\/p>\n
The transaction should not be analysed purely by looking at each individual’s \u20b940 lakh share without considering the statutory treatment applicable to the property transaction.<\/p>\n
For joint transactions, it is therefore advisable to structure and report the transaction carefully rather than assuming that the \u20b950 lakh threshold can simply be divided among buyers.<\/p>\n
\ud83d\udcc9 What is the TDS Rate?<\/p>\n
1%<\/p>\n
The buyer deducts:<\/p>\n
1% of the applicable consideration<\/p>\n
The TDS is deducted from the amount payable to the seller.<\/p>\n
\ud83e\uddee Example \u2014 \u20b960 Lakh Property<\/p>\n
Suppose:<\/p>\n
Property consideration = \u20b960,00,000<\/p>\n
TDS @ 1%:<\/p>\n
\u20b960,000<\/p>\n
Amount payable to seller:<\/p>\n
\u20b959,40,000<\/p>\n
TDS deposited with Government:<\/p>\n
\u20b960,000<\/p>\n
\ud83e\uddee Example \u2014 \u20b91 Crore Property<\/p>\n
Property value:<\/p>\n
\u20b91,00,00,000<\/p>\n
TDS @ 1%:<\/p>\n
\u20b91,00,000<\/p>\n
Seller receives:<\/p>\n
\u20b999,00,000<\/p>\n
Buyer deposits:<\/p>\n
\u20b91,00,000<\/p>\n
\ud83c\udfe6 Who Has to Deduct TDS?<\/p>\n
The responsibility generally falls on the buyer.<\/p>\n
Importantly, Section 194-IA is designed so that an individual buyer can have a TDS obligation even if the buyer is not otherwise required to have a TAN for regular TDS purposes.<\/p>\n
Therefore:<\/p>\n
You do not need to be a company or business to have a property-purchase TDS obligation.<\/p>\n
An individual purchasing a property can also be required to deduct TDS.<\/p>\n
\ud83c\udd94 Is TAN Required?<\/p>\n
For Section 194-IA transactions, the buyer generally does not need to obtain a TAN merely for this deduction.<\/p>\n
Instead, the prescribed challan-cum-statement mechanism is used.<\/p>\n
Historically this was:<\/p>\n
Form 26QB<\/p>\n
For transactions falling under the new Income-tax Act, 2025 from 1 April 2026, the Income Tax Department has introduced the new challan-cum-TDS statement mechanism, with Form 141 covering transactions that previously used Forms 26QB, 26QC, 26QD and 26QE.<\/p>\n
\ud83d\udcc5 When Should TDS Be Deducted?<\/p>\n
TDS is generally deducted at the time of:<\/p>\n
Credit or payment, whichever is earlier.<\/p>\n
This means the buyer should not wait until the final registration\/payment if the statutory deduction event has already occurred.<\/p>\n
For instalment-based property purchases, TDS compliance should therefore be considered at each relevant payment\/credit stage.<\/p>\n
\ud83e\uddfe Example \u2014 Instalment-Based Purchase<\/p>\n
Property value:<\/p>\n
\u20b980 lakh<\/p>\n
Payment schedule:<\/p>\n
\u20b920 lakh \u2014 booking
\n
\u20b920 lakh \u2014 agreement stage
\n
\u20b920 lakh \u2014 construction stage
\n
\u20b920 lakh \u2014 registration<\/p>\n
The buyer should not simply wait until registration and then deduct the entire TDS without considering when the statutory credit\/payment events occurred.<\/p>\n
The agreement and payment schedule should be reviewed so that TDS is deducted correctly at the relevant stages.<\/p>\n
\ud83c\udfdb\ufe0f Payment of TDS<\/p>\n
Section 194-IA follows a special challan-cum-statement mechanism.<\/p>\n
Under the old system, the buyer used Form 26QB.<\/p>\n
For transactions governed by the new Act from 1 April 2026, the Income Tax Department states that Form 141 is used for the corresponding challan-cum-TDS statement.<\/p>\n
\u23f0 Due Date for Deposit<\/p>\n
Unlike normal monthly TDS payments, Section 194-IA has a specific timeline.<\/p>\n
The Income Tax Department confirms that the TDS under the property-purchase provision is generally to be deposited within 30 days from the end of the month in which the tax is deducted.<\/p>\n
Example<\/p>\n
TDS deducted:<\/p>\n
15 August 2026<\/p>\n
End of month:<\/p>\n
31 August 2026<\/p>\n
Due date:<\/p>\n
30 September 2026<\/p>\n
The applicable 2026 Rules should be checked for the exact filing\/payment process.<\/p>\n
\ud83d\udcc4 TDS Certificate \u2014 Form 16B<\/p>\n
After depositing TDS and completing the prescribed reporting process, the buyer should obtain the TDS certificate for the seller.<\/p>\n
Under the traditional Section 194-IA mechanism, this is:<\/p>\n
Form 16B<\/p>\n
It serves as evidence of TDS deducted and deposited against the seller’s PAN.<\/p>\n
The seller can use the TDS credit while computing their tax liability.<\/p>\n
\ud83c\udd94 PAN of Buyer and Seller<\/p>\n
PAN details are extremely important.<\/p>\n
The buyer should obtain:<\/p>\n
Buyer’s PAN
\n
Seller’s PAN<\/p>\n
and ensure that the details are correctly entered.<\/p>\n
The Income Tax Department’s current forms specifically require PAN\/Aadhaar details where tax has been deducted under Section 194-IA.<\/p>\n
Incorrect PAN information can create problems in:<\/p>\n
TDS credit
\n
Seller’s tax return
\n
TDS processing
\n
Property transaction reporting<\/p>\n
\ud83c\udf3e Does 194-IA Apply to Agricultural Land?<\/p>\n
Generally, no.<\/p>\n
Section 194-IA specifically relates to immovable property other than agricultural land.<\/p>\n
Therefore, the classification of land is important.<\/p>\n
A buyer should not automatically assume that every land transaction above \u20b950 lakh attracts Section 194-IA.<\/p>\n
\ud83c\udfd7\ufe0f Property Under Construction<\/p>\n
Section 194-IA can also become relevant when purchasing an under-construction property if the transaction falls within the statutory scope.<\/p>\n
For example:<\/p>\n
Flat under construction = \u20b970 lakh<\/p>\n
TDS can apply even though the buyer has not yet received the completed apartment.<\/p>\n
The payment schedule should therefore be reviewed from the beginning.<\/p>\n
\ud83c\udfe2 Commercial Property<\/p>\n
The provision is not restricted to residential property.<\/p>\n
It can also apply to qualifying purchases of:<\/p>\n
Shops
\n
Offices
\n
Commercial buildings
\n
Other non-agricultural immovable property
\n
Example<\/p>\n
Office purchase price:<\/p>\n
\u20b990 lakh<\/p>\n
TDS @ 1%:<\/p>\n
\u20b990,000<\/p>\n
\ud83d\udcb8 Does GST Form Part of the TDS Base?<\/p>\n
For under-construction property transactions where GST is separately charged, the treatment of the GST component should be determined according to the applicable TDS provisions and CBDT guidance.<\/p>\n
As a practical matter, the buyer should ensure that the agreement\/invoice clearly separates:<\/p>\n
Property consideration + GST<\/p>\n
and the TDS calculation is made consistently with the applicable law.<\/p>\n
This is an area where builders and buyers should avoid making assumptions solely from the gross invoice value.<\/p>\n
\ud83c\udff7\ufe0f Stamp Duty Value vs Actual Consideration<\/p>\n
Property transactions can involve situations where:<\/p>\n
Actual consideration is \u20b960 lakh; and
\n
Stamp-duty value is \u20b970 lakh.<\/p>\n
The buyer should examine the applicable Section 194-IA provisions and rules governing the consideration for TDS purposes rather than simply applying 1% to whichever number appears higher.<\/p>\n
This is particularly important because property tax provisions contain separate concepts relating to stamp-duty value and capital-gains taxation.<\/p>\n
\u274c Common Mistakes in Property TDS<\/p>\n
1. Assuming TDS Applies Only to Companies<\/p>\n
Wrong.<\/p>\n
Individual buyers can also have the obligation.<\/p>\n
2. Waiting Until Registration<\/p>\n
TDS should be considered at the relevant credit\/payment event.<\/p>\n
3. Deducting Only at Final Payment<\/p>\n
Instalment-based transactions require careful monitoring.<\/p>\n
4. Forgetting Joint Buyers<\/p>\n
Joint ownership needs proper reporting and allocation.<\/p>\n
5. Entering Wrong PAN<\/p>\n
This can prevent the seller from receiving proper TDS credit.<\/p>\n
6. Missing the 30-Day Timeline<\/p>\n
Property-purchase TDS has a special deposit\/reporting timeline.<\/p>\n
7. Using Old Section References for 2026-27 Transactions<\/p>\n
For transactions from 1 April 2026, the new Income-tax Act framework applies. The Income Tax Department has specifically warned that using old section numbers for post-1 April 2026 transactions can cause system-level validation issues.<\/p>\n
\ud83c\udd95 Section 194-IA in FY 2026-27<\/p>\n
This is particularly important for a 2026 article.<\/p>\n
The Income-tax Act, 2025 has reorganised TDS provisions.<\/p>\n
From 1 April 2026, the corresponding TDS rules are contained within Section 393 of the new Act rather than continuing to use Section 194-IA as the operative section reference for new transactions.<\/p>\n
However, the Income Tax Department confirms that:<\/p>\n
TDS rates remain broadly unchanged;
\n
Monetary thresholds remain broadly unchanged; and
\n
The property-purchase TDS mechanism continues under the new framework.<\/p>\n
Therefore, the popular search phrase “TDS on property purchase under Section 194-IA” remains useful for explaining the rule, but professionals handling transactions after 1 April 2026 should use the new Act’s applicable Section 393 table reference when filing.<\/p>\n
\ud83d\udcca Quick Reference<\/p>\n
Particular\tRule
\n
Property covered\tImmovable property other than agricultural land
\n
Seller\tGenerally resident seller
\n
Threshold\t\u20b950 lakh or more
\n
TDS Rate\t1%
\n
Deductor\tBuyer
\n
TAN\tGenerally not required solely for this provision
\n
Old filing mechanism\tForm 26QB
\n
FY 2026-27 new mechanism\tForm 141
\n
Deduction timing\tCredit\/payment, whichever earlier
\n
Deposit\/reporting\tGenerally within 30 days from end of month of deduction
\n
TDS certificate\tForm 16B under old mechanism
\n
PAN\tBuyer & seller details important
\n
New Act reference\tSection 393 framework from 1 April 2026<\/p>\n
The Income Tax Department confirms that the rates and thresholds were retained during the transition to the Income-tax Act, 2025.<\/p>\n
\ud83c\udfc1 Conclusion<\/p>\n
TDS on property purchases is an important compliance responsibility for buyers. Where a qualifying immovable property transaction reaches the \u20b950 lakh threshold, the buyer generally has to deduct TDS at 1% from the applicable consideration.<\/p>\n
The buyer\u2014not necessarily the seller, builder or broker\u2014is responsible for ensuring that the TDS is correctly deducted, reported and deposited.<\/p>\n
For FY 2026-27, there is an important technical update: the Income-tax Act, 2025 has replaced the old section-number framework for transactions occurring from 1 April 2026. The Income Tax Department confirms that the rates and monetary thresholds remain broadly unchanged, but the relevant provision is now contained within the new Act’s Section 393 framework.<\/p>\n
Buyers should therefore pay particular attention to:<\/p>\n
The \u20b950 lakh threshold
\n
1% TDS rate
\n
Resident status of the seller
\n
Agricultural-land exclusion
\n
Joint buyer\/seller arrangements
\n
Instalment payments
\n
Correct PAN details
\n
30-day payment\/reporting timeline
\n
Form 141 for post-1 April 2026 transactions
\n
TDS certificate and seller’s TDS credit<\/p>\n
Proper compliance at the time of purchase can prevent interest, late fees and difficulties in obtaining TDS credit later.<\/p>\n
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Learn the 1% TDS on property purchases above \u20b950 lakh, including Section 194-IA, PAN, Form 26QB, Form 141, deadlines, and 2026\u201327 compliance.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[5],"tags":[797,798,796,799],"class_list":["post-1625","post","type-post","status-publish","format-standard","hentry","category-income-tax","tag-1-tds-on-property-purchase","tag-property-tds-above-50-lakh","tag-section-194-ia-tds","tag-tds-on-sale-of-property"],"_links":{"self":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/1625","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/comments?post=1625"}],"version-history":[{"count":0,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/1625\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/media?parent=1625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/categories?post=1625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/tags?post=1625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}