TDS on Property Purchase (Section 194-IA) 2026: A Buyer's Guide

UrbanYardz Editorial · Tax · 2026-06-19

TDS on property purchase under Section 194-IA in 2026: rate, the Rs 50 lakh threshold, Form 26QB, due dates, joint buyers and NRI sellers — explained.

If you are buying a flat, plot or commercial unit in India this year, TDS on property purchase is one obligation you cannot skip. Under Section 194-IA of the Income-tax Act, the *buyer* — not the seller — must deduct tax at source on high-value deals and deposit it with the government. Get the steps wrong and you, the buyer, face the interest and penalties. This 2026 guide explains the rate, the Rs 50 lakh threshold, Form 26QB, due dates, and the special cases (joint buyers, NRI sellers, under-construction homes) in plain Indian English.

What Section 194-IA actually requires

Section 194-IA places the deduction duty on the *transferee* (buyer) of any immovable property other than agricultural land. In short:

You buy immovable property from a resident seller, and
The total consideration (or stamp-duty value, whichever is higher) is Rs 50 lakh or more.

When both conditions are met, you deduct TDS on property purchase and pay the seller the balance.

The headline rate is 1% of the consideration. This has been the long-standing rate, but treat it as *current-as-of-2026 — confirm the live rate on the Income-tax e-filing portal*, because the Finance Act can change it in any Budget. If the seller does not give you a valid PAN, the rate jumps to 20% under Section 206AA, so always collect the seller's PAN first.

> Important 2024 change carried into 2026: TDS is now calculated on the higher of the sale consideration or the stamp-duty (circle-rate) value. Earlier many buyers deducted only on the agreement value; that is no longer enough.

The Rs 50 lakh threshold — and the joint-buyer trap

A common and costly misunderstanding is how the Rs 50 lakh limit applies when there are multiple buyers or sellers.

After the amendment effective 1 October 2024, the threshold is tested on the aggregate consideration for the property, not on each person's share. So:

Even though an individual buyer's Rs 40 lakh share is below Rs 50 lakh, the property crosses the threshold, so every co-buyer must deduct and deposit TDS on their respective portion. The same logic applies when there are multiple sellers. This is precisely the kind of detail your CA will flag, so confirm your share split before paying.

How to deduct and deposit: Form 26QB step by step

The mechanism is built around Form 26QB — a combined challan-cum-statement filed online. You do not need a TAN; your PAN is enough.

1. Collect the seller's PAN and verify it is valid and active. 2. Deduct 1% at the time of payment or credit, whichever is earlier (including each instalment for under-construction property). 3. File Form 26QB on the Income-tax e-filing portal / TIN-NSDL within the due date and pay the TDS online. 4. Download Form 16B (the TDS certificate) from TRACES, usually available a few days after the challan clears, and hand it to the seller.

If you are paying in instalments — common for under-construction homes — deduct 1% on each instalment and file a separate Form 26QB for each payment.

Before you even reach this stage, it helps to know the realistic price band for your area so you can budget for stamp duty, registration and this 1% outflow. You can compare live listings and shortlist verified options on UrbanYardz's property search to ground your numbers in the current market.

Due dates, interest and penalties

Missing the Form 26QB deadline is where buyers get hurt. As of 2026 (verify on the portal, as timelines can be tightened):

Filing & payment due date: within 30 days from the end of the month in which the deduction was made.
Interest for non-deduction: around 1% per month from when tax was deductible to when it is deducted.
Interest for late deposit: around 1.5% per month from deduction to deposit.
Late-filing fee (Section 234E): Rs 200 per day of delay, capped at the TDS amount.
Penalty (Section 271H): can range broadly and is at the assessing officer's discretion.

Because the buyer carries this liability, never let the seller "handle it" informally. Deduct, deposit, and keep the Form 16B on record.

NRI sellers: Section 194-IA does NOT apply

This trips up many buyers. Section 194-IA only covers resident sellers. If your seller is a non-resident (NRI), TDS is governed by Section 195, and the rate is far higher — it applies to the seller's capital gains (long-term gains are taxed at a concessional rate plus surcharge and cess; short-term gains at slab rates).

Practical consequences:

You generally need a TAN to deduct under Section 195 (unlike 194-IA).
The NRI seller can apply for a lower/nil-deduction certificate under Section 197 to reduce the deduction to the actual gains rather than the gross price.
Always verify the seller's residential status in writing and get a CA's advice before releasing funds. Over-deducting or under-deducting both create problems.

The exact NRI rates and surcharge slabs change with each Budget, so treat any figure as *current-as-of-2026 and confirm with your CA*.

Practical checklist for buyers

Confirm the total price vs Rs 50 lakh (use the higher of agreement value or circle rate).
Establish whether the seller is resident or NRI — this decides 194-IA vs 195.
Collect and verify the PAN of every seller; collect PANs of every co-buyer.
Deduct 1% (resident seller) at payment/credit, including per instalment.
File Form 26QB within 30 days of the month-end and pay online.
Download and share Form 16B from TRACES.
Keep all challans and certificates for your records and the seller's.

Looking at home loans alongside this? Remember the 1% TDS is separate from stamp duty, registration and GST (GST applies to under-construction property, not ready-to-move resale). Factor every line item in before you sign. Browsing budget-appropriate homes on UrbanYardz early helps you avoid a last-minute cash crunch at registration.

Frequently Asked Questions

What is the TDS rate on property purchase in 2026?

Under Section 194-IA, the buyer deducts 1% of the sale consideration (or the stamp-duty value, whichever is higher) when buying immovable property from a resident seller for Rs 50 lakh or more. Confirm the current rate on the Income-tax e-filing portal, as the Finance Act can revise it.

Who deposits the TDS — buyer or seller?

The buyer is legally responsible for deducting and depositing the TDS using Form 26QB. The seller only receives credit for it against their tax liability.

Does the Rs 50 lakh threshold apply per buyer or per property?

From the 2024 amendment, the threshold is tested on the total consideration for the property. If the property crosses Rs 50 lakh, every buyer must deduct TDS on their respective share, even if an individual share is below Rs 50 lakh.

What if the seller is an NRI?

Section 194-IA does not apply. TDS is deducted under Section 195 at much higher rates on capital gains, so you must verify residency and may need a lower-deduction certificate. Consult a CA before paying.

Is a TAN required to deduct TDS under 194-IA?

No. The buyer uses their PAN to file Form 26QB; no TAN is needed. This is a deliberate simplification for one-off property buyers.

What happens if I forget to deduct or deposit the TDS?

Expect interest (1%/1.5% per month), a late-filing fee under Section 234E (Rs 200/day), and possible penalties. Deduct on time and file Form 26QB within 30 days of the month-end.

Ready to buy? Get your numbers right before you negotiate. Explore verified listings, compare price bands, and shortlist your next home on UrbanYardz property search — then loop in your CA to handle the Form 26QB the right way.