TDS On Property Purchase

Buying a property involves more than paying the seller and completing registration. In certain cases, the buyer must also deduct Tax Deducted at Source, commonly called TDS, and deposit it with the government.

Whether you purchase a flat in Greater Noida, a commercial shop or a plot elsewhere in India, understanding these rules can help you avoid interest, late fees and filing mistakes.

This guide explains the rules applicable as of 9 September 2026, including the updated forms and the different treatment of resident and non-resident sellers.

What Is TDS on Property Purchase?

TDS on property purchase means that the buyer deducts a specified amount from the payment due to the seller and deposits it with the Income Tax Department on the seller’s behalf.

For example, suppose you buy a property from a resident seller for ₹60 lakh, and its stamp duty value does not exceed that amount. At the standard rate of 1%, you deduct ₹60,000 and pay the seller ₹59,40,000.

The seller can claim credit for the deposited TDS while calculating their income-tax liability. Therefore, TDS is an advance collection of tax, rather than an additional charge over the agreed purchase price.

When Does TDS Apply?

For purchases from a resident seller, TDS applies when either the sale consideration or the stamp duty value reaches ₹50 lakh.

Stamp duty value means the value adopted or assessed by the government for charging stamp duty.

Consequently, you avoid this TDS requirement only when both values are below ₹50 lakh. A transaction of exactly ₹50 lakh also attracts TDS.

The provision generally covers flats, houses, commercial buildings and plots. However, qualifying rural agricultural land falls outside its scope. Urban agricultural land does not receive the same exclusion. Income Tax Department: Property TDS guidance

Which Section and Forms Apply?

For current transactions, the resident-property TDS provision appears in Section 393(1), Table Serial No. 3(i), of the Income-tax Act, 2025. Earlier, Section 194-IA of the Income-tax Act, 1961 covered this requirement.

The applicable forms depend on when the payment or credit triggered the deduction obligation.

Therefore, buyers should select the form applicable to the transaction period, rather than choosing a form merely because they are filing it today. Income Tax Department: TDS transition guidance, Form 132 guidance

How Much TDS Should the Buyer Deduct?

For a resident seller, the standard rate is 1% of the sale consideration or stamp duty value, whichever is higher.

TDS applies to the full applicable amount. You should not calculate it only on the portion exceeding ₹50 lakh.

For jointly purchased or jointly owned property, the threshold considers the aggregate transaction value. Dividing the amount among buyers or sellers does not create a separate ₹50 lakh exemption for each person. Income Tax Department: Section 393

What Happens If the Seller Does Not Provide PAN?

If a resident seller fails to furnish a valid PAN, the higher deduction provisions generally require TDS at 20%.

This is a higher TDS rate, rather than a separate “missing PAN penalty.” Buyers should verify the seller’s PAN before releasing payment. Income Tax Department: Section 397

Which Additional Charges Form Part of the Property Value?

The consideration can include charges incidental to the property transfer, such as:

• Car parking charges.
• Club membership fees.
• Electricity and water facility charges.
• Maintenance advances.
• Other similar charges connected with the transfer.

Therefore, buyers should review the complete agreement and payment schedule instead of considering only the basic advertised price. Income Tax Department: TDS on immovable property

When Should You Deduct TDS?

Deduct TDS when you credit the amount to the seller’s account or make payment, whichever happens earlier. Do not assume that the obligation starts only on the registration date.

If you pay through instalments, deduct TDS as each relevant payment or credit occurs.

For example, suppose a qualifying property costs ₹80 lakh and you pay an instalment of ₹10 lakh. At the standard resident rate, you deduct ₹10,000 from that instalment.

Additionally, reconcile the total consideration and stamp duty value when making the final payment so that the overall deduction is correct. The current Form 141 workflow specifically accommodates first, subsequent and final instalments. Income Tax Department: Form 141 filing manual

How to Deposit TDS on Property Purchase

For a current purchase from a resident seller, follow these steps:

1. Log in to the Income Tax e-Filing Portal using the buyer’s PAN.
2. Open e-Pay Tax and select the Income-tax Act, 2025.
3. Choose New Payment and Form 141.
4. Select Schedule B for transfer of immovable property.
5. Enter the property, buyer, seller and payment details.
6. Review the deduction and complete payment.
7. Save the acknowledgement and challan.

Deposit the deducted tax with the challan-cum-statement within 30 days from the end of the month of deduction. For example, a September deduction has a payment deadline of 30 October. Income Tax Department: Form 141 FAQs

Issue the TDS Certificate

After processing, obtain Form 132 through TRACES and provide it to the seller.

You must issue this certificate within 15 days from the due date for furnishing Form 141. For transactions governed by the earlier system, the corresponding property TDS certificate is Form 16B. Income Tax Department: Form 132 FAQs

TDS on Property Purchased by Husband and Wife

When a husband and wife purchase a property together, each buyer should account for the TDS attributable to their respective share.

For example, assume they purchase a ₹90 lakh flat in equal shares, and its stamp duty value is not higher.

Although each share is below ₹50 lakh, the overall transaction crosses the threshold.

Each buyer must file separately under their PAN. However, under the current Form 141 system, one buyer can report multiple resident sellers of the same deductee category in a single form for the same deduction month. Therefore, the earlier instruction to always file one form for every buyer-seller combination should not be applied automatically to Form 141. Income Tax Department: Form 141 FAQs

What Changes When the Seller Is an NRI?

First, establish the seller’s residential status under income-tax law. Citizenship or an overseas address alone does not settle the question.

For a non-resident seller, the ordinary 1% resident-property rule does not apply. The ₹50 lakh threshold also does not apply.

For an individual non-resident seller, the broad rates are:

Applicable surcharge and health and education cess increase these rates. Thus, stating that every NRI property sale attracts 20% TDS is incorrect.

The taxable portion and any lower-deduction certificate or assessing officer’s determination also require attention. Buyers should not deduct tax only on a gain figure informally supplied by the seller without establishing the correct legal basis. Income Tax Department: Non-resident property TDS rates

Does the Buyer Need TAN for an NRI Purchase?

As of 9 September 2026, the usual non-resident purchase procedure requires TAN.

From 1 October 2026, the law provides a TAN exemption for resident individual and HUF buyers making qualifying property payments to non-residents. This exemption does not extend automatically to every type of buyer, and it does not reduce the applicable TDS rate. Income Tax Department: Section 397 amendment

Under the current quarterly reporting framework, Form 144 replaces the earlier Form 27Q. Buyers should follow the filing procedure applicable to their payment date. Income Tax Department: Updated form mapping

Interest and Fees for Non-Compliance

Missing a TDS obligation can make the transaction more expensive.

Interest applies to the relevant tax amount, not the entire property price. For delayed deposit, interest generally runs from the deduction date to the actual payment date. Additional penalties may apply depending on the default and applicable provisions. Income Tax Department: Interest guidance, Interest and fees

Conclusion

TDS on property purchase becomes easier to manage when buyers check the seller’s residential status, compare the agreement value with the stamp duty value and plan deductions before releasing payments.

For resident purchases, apply the ₹50 lakh threshold correctly, deduct the appropriate tax and use the forms relevant to the transaction period. Joint purchases, instalment payments and NRI sales need additional attention. Completing these steps on time helps buyers avoid unnecessary charges and allows sellers to receive the correct tax credit.