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TDS on Property (Section 194-IA)
When you buy property worth ₹50 lakh or more, you (the buyer) must deduct 1% TDS from the seller's payment, deposit it via Form 26QB, and issue Form 16B. Skip this and you're personally liable.
TDS on the HIGHER of sale & stamp duty (post Oct 2024).
Buyer's checklist
- Deduct 1% from each instalment (or lump-sum) paid to the seller — not at registration alone.
- Deposit the deducted amount via Form 26QB on TIN-NSDL within 30 days from end of the deduction month.
- Issue Form 16B to the seller within 15 days of 26QB filing — download from TRACES portal.
- Multiple buyers/sellers? File a separate 26QB for each buyer-seller pair.
Stamp duty value rule (post Oct 2024)
From 1 October 2024, TDS is computed on the higher of sale consideration and stamp duty value. Earlier the rule was "each buyer's share < ₹50L" — that loophole is closed. Aggregate consideration is what matters.
Common mistakes
- Filing one 26QB for two sellers — wrong. One per pair.
- Computing TDS on agreement value but stamp duty was higher — pay on the higher.
- Forgetting Form 16B — seller can't claim credit in their ITR without it.
- Buying NRI's property — 194-IA does NOT apply; section 195 does, at higher rates.
FAQ
Do I need a TAN to deduct 1% TDS on property?
No — section 194-IA was specifically designed for this. Buyers deposit TDS using their PAN via Form 26QB on TIN-NSDL. No TAN needed.
What if the property is being sold by a non-resident Indian?
Section 194-IA does NOT apply. Instead, section 195 kicks in — TDS rates are much higher (typically 20-30% on the entire sale consideration, not just gain). The buyer needs a TAN and must file Form 27Q.
Three buyers, two sellers — how many 26QB filings?
Six. One Form 26QB per buyer-seller pair (3 × 2). Each filing is the buyer's share of the seller's share, at 1%. This is one of the most common 194-IA mistakes.