When you buy property in India worth Rs 50 lakh or more, the law requires you (the buyer) to deduct 1% of the total sale value as Tax Deducted at Source (TDS) and deposit it with the Income Tax Department. This is governed by Section 194-IA of the Income Tax Act.
This is not optional. If you skip this step, you will face interest charges, late fees, and potentially heavy fines. The good news is that the entire process can be completed online in about 20 minutes.
When Does TDS Apply on Property Purchases?
| Scenario | TDS Applicable? | TDS Rate |
|---|---|---|
| Property sale value of Rs 50 lakh or more | Yes | 1% of total value |
| Property sale value below Rs 50 lakh | No | Not applicable |
| Agricultural land (rural) | No | Exempt under Section 194-IA |
| Purchase from NRI seller | Different rules apply | 20-30% under Section 195 (not 194-IA) |
IMPORTANT
On the full amount, not just the excess. If you buy a property worth Rs 80 lakh, the TDS is 1% of Rs 80 lakh (Rs 80,000), not 1% of the Rs 30 lakh above the threshold. This is a very common mistake.
Step-by-Step Process to Pay TDS Online
Step 1: Log in to the Income Tax Portal
Go to the official Income Tax e-Filing portal. If you don't have a login ID, register using your PAN number and generate a password.
Step 2: Navigate to e-Pay Tax
Go to the e-File section in the top menu and select e-Pay Tax from the dropdown. Click on New Payment.
Step 3: Select Form 26QB
From the payment tiles, select 26QB (TDS on Sale of Property) and click Proceed.
Step 4: Fill in buyer details
- Select Resident for your residential status.
- Fill in your full name, PAN number, complete address, mobile number, and email ID.
- If there are multiple buyers (e.g., you and your spouse), select Yes for the multi-buyer question.
Step 5: Fill in seller details
- Fill in the seller's full name, PAN number, complete address, mobile number, and email ID.
- If you are buying from a builder or a company, the PAN will be the company's PAN, and these details should be available on your sale agreement or demand letter.
- If there are multiple sellers, select Yes and provide details for each seller.
Step 6: Add property and payment details
Enter the following:
- Complete address of the property being purchased
- Type of property: Plot/Land, Residential, Commercial, etc.
- Agreement/Booking date: The date of the sale agreement
- Date of payment: The date on which you are making the current payment to the seller
- Payment type: Lump sum or installment
- Total value of the property as per the agreement
- Amount paid in previous installments (if applicable)
- Amount being paid in this installment
- TDS amount: The portal usually calculates this automatically at 1%
Step 7: Verify and pay
- Review all details carefully. Once submitted, corrections to Form 26QB are very difficult and require contacting the Assessing Officer.
- Choose your preferred payment method (Net Banking, Debit Card, or UPI).
- Complete the transaction on the payment gateway.
Step 8: Save your challan receipt
Once you pay, the portal will generate a TDS receipt (Challan). Download and save this PDF immediately. You will need the BSR code and challan serial number from this receipt in the next step.
Step 9: Issue Form 16B to the Seller
This is a step that most buyers forget. Within 15 days of filing Form 26QB, you must download the TDS certificate and give it to the seller.
- Go to the TRACES portal and log in (or register if first time).
- Navigate to Downloads > Form 16B (for Buyer).
- Enter the Acknowledgement Number from your Form 26QB filing.
- Download the generated Form 16B PDF.
- Hand it over to the seller. The seller needs this certificate to claim the TDS credit when filing their own Income Tax Return.
WARNING
Failure to issue Form 16B within 15 days attracts a penalty of Rs 100 per day of default under Section 272A(2)(g).
How to Pay TDS If There Are Multiple Buyers
Joint property purchases are very common (spouses buying together, siblings co-owning, etc.). Each buyer must file a separate Form 26QB for their proportionate share.
- Calculate the total TDS amount on the property (1% of total sale value).
- Split the TDS based on the agreed ownership proportion (e.g., 50:50, 60:40).
- Each buyer fills out and submits their own Form 26QB on the portal.
- Each buyer pays their respective share of TDS.
- Each buyer downloads their own Form 16B from TRACES.
- Hand over copies of both Form 16Bs to the seller.
What Happens If You Delay or Skip TDS Payment?
| Penalty Type | Rate | Details |
|---|---|---|
| Interest for late deduction | 1% per month | Charged from the date of deduction until the date of actual payment |
| Interest for late deposit | 1.5% per month | If TDS was deducted but not deposited with the government |
| Late filing fee | Rs 200 per day | For each day of delay in filing Form 26QB, up to the TDS amount |
| Penalty under Section 271H | Rs 10,000 to Rs 1,00,000 | Can be avoided if TDS + interest + late fee are paid within one year |
Common Mistakes
- Calculating TDS only on the excess above Rs 50 lakh: TDS is on the full property value, not just the portion above the threshold.
- Using the wrong seller PAN: If you enter the seller's PAN incorrectly, the TDS credit will not appear in the seller's Form 26AS, leading to disputes.
- Forgetting about stamp duty value: If the stamp duty value is higher than the actual sale price (common in undervalued transactions), TDS must be calculated on the stamp duty value.
- Not filing for each installment: If you pay the seller in multiple installments, you must file a separate Form 26QB for each installment payment.
Troubleshooting
The seller says the TDS is not reflecting in their Form 26AS: Ask the seller to check their Form 26AS after 7-10 days. It takes time for TRACES to process and credit the TDS. If it still does not appear after 30 days, verify that you entered the correct seller PAN in Form 26QB.
I entered wrong details in Form 26QB. Can I correct it? Minor corrections (like a typo in address) can be done by filing a correction request on the TRACES portal. Major errors (wrong PAN, wrong amount) may require you to contact the jurisdictional Assessing Officer with a written application and supporting documents.
The payment gateway timed out but money was deducted: Wait 48-72 hours. Government payment gateways usually auto-reconcile within this period. Check your Form 26QB status on the portal. If the payment does not reflect, contact the CPC-TDS helpline with your bank statement.
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Related Guides
Need more help?
For more information, check out our Tax & Finance guides or try our TDS Calculator. See also the Tax Season hub and the Property Buy hub for related guides.