The rule for resident sellers
If you buy immovable property (other than rural agricultural land) for ₹50 lakh or more, you must deduct 1% TDS from the payment and deposit it with the government. This was section 194-IA; from 1 April 2026 it is in section 393(1) of the Income-tax Act, 2025, with the same rate and threshold.
- TDS is 1% of the sale price or the stamp duty value, whichever is higher.
- The ₹50 lakh test applies to the total price of the property, even if there are several buyers or sellers.
- “Price” includes charges like parking, club membership and maintenance paid to the seller.
- If the seller has not given a PAN, TDS is 20%.
How to deposit it
- Deduct TDS when you pay, including on each instalment or advance.
- Pay it online through Form 26QB on the income tax portal within 30 days from the end of the month you deducted it. You do not need a TAN.
- Download Form 16B from TRACES about 15 days later and give it to the seller.
Late deduction attracts 1% interest a month; late deposit 1.5% a month, plus a late fee of ₹200 a day.
If the seller is an NRI
The 1% rule does not apply. The buyer deducts TDS on the capital gain at the rates for non-residents (section 195 earlier, now section 393(2)): 12.5% plus surcharge and cess for long-term property (held over 24 months), or 30% plus surcharge and cess for short-term. Unless the seller gets a lower-deduction certificate from the tax department, TDS is on the full sale value. The buyer needs a TAN and files the quarterly TDS return for payments to non-residents (Form 27Q under the old numbering).
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Questions people ask
Is TDS applicable on property below ₹50 lakh?
No TDS is needed when the price is below ₹50 lakh for a resident seller. For NRI sellers there is no threshold.
Does the 1% include GST paid to a builder?
TDS is on the price for the property. Most practitioners exclude GST that is shown separately on the invoice, but practice varies, so check with your builder or CA.
Who is responsible if TDS is not deducted?
The buyer. You can be treated as “assessee in default” and pay the TDS, interest and penalties yourself.