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1% TDS on Sale of Property u/s 194IA in

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TDS on Sale of Property is levied @ 1% on transaction of all properties where the total transaction
value is more than Rs. 50 Lakhs. The manner of levy of TDS on Property has been explained in CA Karan Batra, the founder of this
detail in this article. The topics covered are as under:- website is All India Rank 22 in CA
Exams and is regularly featured in both
TV and Print media as a leading tax
expert.
1. Rate of TDS on Sale of Property

2. Amount on which TDS is to be deducted He is the author of 2 books and has

vast experience of representing cases
3. TDS Deducted to be deposited with the Govt before the Tax Dept.
4. Procedure for Deposit of TDS
Book an Appointment
5. TDS on Amount paid in Installments
(https://www.charteredclub.com/tax-
6. TDS in case of more than 1 buyer or 1 seller consultation-with-ca-karan-batra/)

7. Penalty for Non-Deduction/ Non-Deposit of TDS

8. Other Relevant Points regarding TDS on Property

9. e-Book on Capital Gains Tax on Sale of Property

Trending

Rate of TDS on Sale of Property

TDS on Sale of property is required to be deducted @1% if the property value is more than Rs. 50
Lakhs. This TDS is required to be deducted for all transactions after 1st June 2013 if the property
transaction value is more than Rs. 50 Lakhs. This is applicable on sale of all properties except on
sale of Agricultural Land.

It is also important to note here that 1% TDS is applicable only if the seller is Resident in India. If (https://www.charteredclub.com/tds-property-
the seller is not-resident in India i.e. he is an NRI, then the rate of TDS will change. purchase-nri/)

TDS on Sale of Property by NRI in

2021 [Complete Guide]
(https://www.charteredclub.com/tds-
property-purchase-nri/)

The rate of TDS in case of sale of property by Non-Resident would be 20% + Surcharge + Cess.
TDS on Sale of Property by NRI would be levied even if the Transaction Value is less than Rs. 50
Lakhs.

The manner of applicability on sale of property by NRI has been explained in detail here – TDS on
Sale of property by NRI (https://www.charteredclub.com/tds-property-purchase-nri/) (https://www.charteredclub.com/tax-on-fo/)
ITR Filing & Tax Audit for Income
The manner of levy of TDS on Sale of Property by Resident Indian has been explained below in from F&O Trading
detail.
(https://www.charteredclub.com/tax-
  on-fo/)
Amount on which Club
Chartered the TDS is to be deducted 

TDS @ 1% is to be deducted on all Property Transactions which are above Rs. 50 Lakhs. This
(https://www.cha HOMEirrespective
TDS is to be deducted on all types of Property Transactions (HTTPS://WWW.CHARTEREDCLUB.COM/)
of whether the property in
consideration is a flat or a building or a vacant plot. TDS is to be deducted irrespective of whether

rteredclub.com)
it is a Residential Property or Commercial or Industrial ARTICLES
of property transactions except Agricultural Land.
Property. TDS is to be deducted on all types
(HTTPS://WWW.CHARTEREDCLUB.COM/BLOG/)

(https://www.charteredclub.com/how-to-save-
E-BOOKS
This TDS is to be deducted at a flat rate of 1% irrespective (HTTPS://WWW.CHARTEREDCLUB.COM/EBOOKS/)
of whether any Capital Gains or Capital taxes-by-forming-huf/)
Loss is arising on the sale of property (https://www.charteredclub.com/capital-gain-tax/). Even if the
Save Tax by forming HUF: Benefits
seller intends to claim any Capital Gain SERVICES
Exemptions on Sale of Property
(HTTPS://WWW.CHARTEREDCLUB.COM/SERVICES/)
& Drawbacks
(https://www.charteredclub.com/section-54/), in such cases as well the TDS would be required to
be deducted @ 1%. (https://www.charteredclub.com/how
-to-save-taxes-by-forming-huf/)
TDS is to be deducted on the total amount paid to the Seller excluding GST. This can be explained
with the help of an example:-

Amazon Global Selling is an e-commerce

exports program to sell internationally

from India
Amazon Global Selling

Transaction Value for Purchase of Property Rs. 80,00,000

GST on above Property (if property is under-construction) Rs. 9,60,000_
Total Amt to be paid Rs. 89,60,000
 

In the above mentioned case, TDS would be deducted on the Transaction Value of Property i.e.
Rs. 80 Lakhs and not on the GST levied on Sale of Property (https://housing.com/news/gst-real-
estate-will-impact-home-buyers-industry/). Therefore, the TDS to be deducted would be 1% of Rs.
80 Lakhs i.e. 80,000. (PS: The computation of GST on sale of property may vary depending on Amazon Global Selling is an e-

commerce exports program to

whether the developer is claiming Input Tax Credit of GST (https://taxguru.in/goods-and-service- sell internationally from India
tax/input-tax-credit-gst-real-estate-sector.html) or not)

This TDS is required to be deducted in all cases irrespective of the Capital Gains arising to the
Seller. In case, the Seller is of the opinion that excess TDS has been deducted, he can claim
refund of the excess TDS Deducted while filing the income tax return (https://cleartax.in/income-
tax-efiling). 

It is to be noted that the buyer/seller cannot apply for lower deduction of TDS
(https://www.charteredclub.com/income-tax-form-13-for-applying-for-nillower-deduction-of-tds/) in
the above mentioned case and the TDS would be deducted @ 1% of the Total Property
Transaction Value.

In case of Home Loan, the TDS would be deducted when the payment is made to the Seller and
not when the EMI is paid to the Bank.

Recommended Read:

TDS on Property purchased on Home Loan (https://www.charteredclub.com/tds-on-home-

loan/)
Tax benefits of Home Loan under Section 24, 80C, 80EE (https://www.charteredclub.com/tax-

benefit-on-home-loan/)
Tax deducted on Property to be deposited with Govt
Chartered Club 

As per the Income Tax Act, any TDS deducted shall be deposited with the govt on or before the
(https://www.cha HOME (HTTPS://WWW.CHARTEREDCLUB.COM/)
specified due date of deposit of TDS (https://www.charteredclub.com/tds-payment/). Moreover, any
person deducting TDS shall also apply for a TAN No. (https://www.charteredclub.com/tan-

rteredclub.com)
number/)  under Section
ARTICLES 203A
(HTTPS://WWW.CHARTEREDCLUB.COM/BLOG/)
(http://www.incometaxindia.gov.in/_layouts/15/dit/Pages/viewer.aspx?
grp=Act&cname=CMSID&cval=102120000000058721&searchFilter=
E-BOOKS (HTTPS://WWW.CHARTEREDCLUB.COM/EBOOKS/)
[{%22CrawledPropertyKey%22:1,%22Value%22:%22Act%22,%22SearchOperand%22:2},
{%22CrawledPropertyKey%22:0,%22Value%22:%22Income-
tax%20Act,%201961%22,%22SearchOperand%22:2}, SERVICES (HTTPS://WWW.CHARTEREDCLUB.COM/SERVICES/)
{%22CrawledPropertyKey%22:29,%22Value%22:%222016%22,%22SearchOperand%22:2}]&k=&I
sDlg=0). This TAN No. is mandatory required to be quoted at the time of deducting any TDS and
also at the time of filing returns and deposit of TDS with the Govt.

The insertion of this new section 194IA for deduction of TDS on Property would have caused
unnecessary hardship to the buyer of the property as he would have to apply for a TAN No. before
purchasing any property. So as to remove any such hardship, the govt has introduced a new sub-
section(3) to Section 194IA which states that a person deducting TDS on Property is not
mandatory required to possess a  TAN No.

As per Notification No. 30/2016 dated 29th April 2016, the TDS deducted by the buyer at the time
of making the payment to the seller has to be deposited within a period of 30 days from the end of
the month in which the deduction has been made. For eg: If the TDS has been deducted in the
month of April, it should be deposited with the govt before 30th of May. The same applies to all
other months as well.

All details regarding the transaction and TDS on Property are required to be furnished in  Form
26QB and this Form 26QB is required to be submitted at the time of payment. Details in this form
cannot be furnished manually and can only be furnished online through the following link

https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp (https://onlineservices.tin.egov-
nsdl.com/etaxnew/tdsnontds.jsp)

This Form 26QB can only be submitted online through the above mentioned link. However, the
payment of TDS can be done online as well as physically through Bank. After the submission of the
Form 26QB – the payer would be given the option to either deposit the TDS online or take a print -
out of the furnished Form 26QB and deposit the TDS in the Bank.

After depositing the TDS, the buyer of the property would also be required to issue Form 16B to
the Seller of the property in respect of the TDS deducted and deposited with the govt. Form 16B
can be downloaded from the website of the centralised processing cell of TDS (CPC-TDS) i.e.
www.tdscpc.gov.in (http://www.tdscpc.gov.in)  after 15 days from the end of month in which the
payment has been made.

Recommended Read: How to Download Form 16B online for TDS on Property?

(https://www.charteredclub.com/Form-16B/)

Procedure for Deposit of TDS on Property with Govt.

The Buyer of Property is required to deduct TDS on Property from the Purchase price of the
property and deposit this TDS with the Income Tax Department. Form 26QB is required to be
furnished mentioning all details which include:-
Chartered Club
1. PAN No. of the Buyer

2. Address of the Buyer



(https://www.cha
3. PAN No. of the Seller HOME (HTTPS://WWW.CHARTEREDCLUB.COM/)

4. Residential Status (https://www.charteredclub.com/residential-status/) of the Seller

rteredclub.com)
5. Address of the Seller ARTICLES (HTTPS://WWW.CHARTEREDCLUB.COM/BLOG/)

6. Address of the Property transferred

7. Date of Payment E-BOOKS (HTTPS://WWW.CHARTEREDCLUB.COM/EBOOKS/)

8. Amount Paid
9. Date of Agreement SERVICES (HTTPS://WWW.CHARTEREDCLUB.COM/SERVICES/)
10. Total Transaction Value

Once all the details are furnished, the form will ask for the preference for deposit of tds on property
with the income tax department. You can either pay the TDS on Property online through net
banking and if this option is chosen, this Form 26QB will automatically direct you to the e-payment
gateway.

Alternatively, the buyer also has the option of depositing the TDS Deducted on Property offline
through Banks as well. If the buyer intends to deposit the TDS on Property offline through Banks,
he would be required to select this option in Form 26QB, then take a print out of this Form 26QB
and submit the same along with the payment to the authorised bank branches. The list of banks
wherein TDS on Property can be deposited is mentioned in this link (https://onlineservices.tin.egov-
nsdl.com/etaxnew/Authorizedbanks.html).

It should be noted that there is no option for furnishing details in Form 26QB manually and all
these details are required to be furnished in the online Form 26QB and the buyer can then take a
print out of the same and submit this Form 26QB along with the payment to the Bank. 

It is also important to note here that this Form 26QB can only be used if the seller is a Resident
Indian. If the seller is an NRI, then this Form 26QB cannot be used and Form 27Q
(https://www.indiafilings.com/learn/form-27q-nri-tds-returns/) would be required to be filed in this
case by the buyer.

TDS on Amount paid in Installments

As per Section 194IA, TDS is to be deducted at the time of payment. The date of transfer is not
relevant as TDS is not required to be deducted at the time of transfer but is required to be
deducted at the time of payment.

Therefore, irrespective of the date of transfer, the TDS is required to be deducted at the time of
payment. So even if advance payment is being made, TDS would be required to be deducted.
Moreover, in case the payment is being made in Installments to the Seller, the TDS would be
deducted at the time of paying each installment.

This TDS is required to be deducted when the installment payment is made to the developer (either
by the buyer or by the bank) and not when the EMI is paid to the Bank. If the bank has made the
payment to the builder, this payment has been made by the bank to the developer on behalf of the
buyer. Therefore, in such cases – it is the responsibility of the buyer to deduct the TDS and not the
responsibility of the bank.

More than 1 Buyer or 1 Seller

In case there is more than 1 buyer and the individual purchase price of each buyer is less than Rs.
50 Lakhs, but the aggregate value of the transaction exceeds Rs. 50 Lakhs, Section 194IA would
be applicable and the TDS on Property would be required to be deducted and deposited with the
govt before the due date.

Similarly, if there is more than 1 seller and the individual sale price of each seller is less than Rs.
50 Lakhs, but the aggregate value of the transaction exceeds Rs. 50 Lakhs, Section 194-IA would
be applicable and TDS would be required to be deducted by the buyer at the time of making the
payment to each seller.
Chartered Club 

Penalty for Non-Deduction/ Deposit of TDS on Property

(https://www.cha HOME (HTTPS://WWW.CHARTEREDCLUB.COM/)
Interest on Late Deposit of TDS on Property – In case the TDS has not been deducted, the buyer

rteredclub.com)
would be required to pay 1% interest per month on the amount not deducted. In case, the TDS has
ARTICLES (HTTPS://WWW.CHARTEREDCLUB.COM/BLOG/)
been deducted but has not been paid, Interest @ 1.5% per month would be applicable in such a
case.
E-BOOKS (HTTPS://WWW.CHARTEREDCLUB.COM/EBOOKS/)
Penalty for Late Deposit of TDS on Property – The Income Tax Officer may also levy a penalty of
upto Rs. 1 Lakhs for Late Deposit of TDS on Property.
SERVICES (HTTPS://WWW.CHARTEREDCLUB.COM/SERVICES/)

Penalty for Late Filing of Form 26QB: In case of late filing of TDS Return, a penalty of Rs. 200 per
day would be levied. However, the Penalty should not exceed the amount of TDS for which this
Form has not been filed.

Other Relevant Points regarding TDS on Sale of Property

1. In case of more than 1 buyer/ 1 seller, Form 26QB has to be filled in separately for each
buyer-seller combination. Eg: In case of 1 buyer and 2 sellers – 2 forms have to be submitted,
and in case of 2 buyers and 2 sellers – 4 forms have to be submitted for their respective
property share.

2. The PAN Card of the Seller as well as the Buyer should be mandatory furnished in the Form
26QB for furnishing information regarding the tds on property and the sale transaction. If the
Seller does not have a PAN Card, then TDS would be deducted @ 20% of the Total

Transaction Value.
3. The above provisions are applicable for TDS on Purchase of Property only. These provisions
won’t be applicable on payment made as Rent for Property. The provisions of Section 194I

are applicable for TDS on Rent (https://www.charteredclub.com/tds-rent/) and TDS @ 10% is

deducted in such a case.
4. It is important for both the buyer and the seller to file an Income Tax Return in the year of
purchase. Although, this is not mandatory but if return is not filed, it may lead to generation of

an auto-generated query by the income tax department

(https://www.incometaxindiaefiling.gov.in/home).
5. It is always advisable to mention the details of the TDS Deducted in the Sale Agreement as

well as the Sale Deed (https://www.99acres.com/articles/difference-between-agreement-of-

sale-and-sale-deed.html).
6. In case of any mistake incurred in filing the Form 26QB, the same can be also rectified online.

Refer: Procedure for Online Correction of Form 26QB (https://www.charteredclub.com/revise-

form-26qb/).

The above article mainly talks about TDS Deduction for purchase of property from Resident Indian
only. Here is a short video explaining the manner in which TDS would be deducted on purchase of
property.   In the following video, the author talks on NDTV on How TDS would be deducted for
purchase of property from both Resident as well as Non Resident Indian (NRI).
Chartered Club
TDS on Property - Karan Batra (Chartered Club) on NDTV 

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rteredclub.com) ARTICLES (HTTPS://WWW.CHARTEREDCLUB.COM/BLOG/)

E-BOOKS (HTTPS://WWW.CHARTEREDCLUB.COM/EBOOKS/)

SERVICES (HTTPS://WWW.CHARTEREDCLUB.COM/SERVICES/)

 e-Book on Capital Gains Tax on Sale of Property

On the sale of any Property, Capital Gains Tax is required to be paid. However, there are several
exemptions which can also be claimed from the Capital Gains Tax which reduces the tax liability.

The manner of computation of Capital Gains Tax and the Capital Gains Exemptions have been
explained in this e-book in simple words with 40+ examples which can be purchased through this
link (https://www.instamojo.com/charteredclub/capital-gains-on-sale-of-real-estate-explain/).

The key topics covered in this e-book are:

1. Computation of Capital Gains

2. Tax on sale of Inherited Property

3. Tax on sale of Under-Construction Property

4. Sale of Property below Circle Rate/ Stamp Valuation Rate

5. Capital Gains Exemptions on sale of Property

6. TDS on sale of Property

7. More than 40 comprehensive examples

The total no. of e-books sold till date are 10,000+ and the same can be purchased for Rs. 147
through this link – e-Book on Capital Gains Tax on Sale of Property
(https://www.instamojo.com/charteredclub/capital-gains-on-sale-of-real-estate-explain/).

Classified under head: Capital Gains (https://www.charteredclub.com/tag/capital-gains/) ,

TDS on Property (https://www.charteredclub.com/tag/tds-on-property/)

ABOUT THE AUTHOR

Karan Batra (https://www.charteredclub.com/blog/)

CA Karan Batra, the founder of this website is All India Rank 22 in CA Exams and is regularly
featured in both TV and Print media as a leading tax expert. He is the author of 2 books and
has vast experience of representing cases before the Tax Dept.

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