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TDS ON PROPERTY PURCHASE IN INDIA – LIMIT, RATE & RULES EXPLAINED (2026 GUIDE)

ActiveTaxPro May 06, 2026

TDS ON PROPERTY PURCHASE IN INDIA – LIMIT, RATE & RULES EXPLAINED (2026 GUIDE)

By ActiveTaxPro Advisory

Buying a property in India? Then you must know about TDS on property purchase under the Income Tax Act. Many buyers are confused about when TDS is applicable, how much TDS is deducted, and who is responsible for depositing it.

In this detailed guide, we explain everything about TDS on property purchase in India, including the latest rules, threshold limit, TDS rate, payment process, and penalties.

What is TDS on Property Purchase?

TDS (Tax Deducted at Source) on property purchase is applicable under:

Section 194IA of the Income Tax Act

As per this section, the buyer must deduct TDS while making payment to the seller if the property value exceeds the prescribed limit.

When is TDS Applicable on Property Purchase?

TDS is required when:

Property Value ≥ 50, 00,000

If the total sale consideration of the property is 50 lakh or more, the buyer must deduct TDS before making payment to the seller.

TDS Rate on Property Purchase

The applicable TDS rate is:

TDS Rate=1%×Sale Consideration

Example:

If a property is purchased for 75 lakh:

1%×75,00,000=75,

So, the buyer will deduct 75,000 as TDS and pay the remaining amount to the seller.

Important Conditions for TDS Deduction

1. Applicable on Residential & Commercial Property

TDS applies to:

  • Residential flats
  • Houses
  • Shops
  • Commercial buildings
  • Plots (in certain cases)

2. Buyer is Responsible for Deducting TDS

The buyer must:

  • Deduct TDS
  • Deposit it with the government
  • File Form 26QB
  • Issue Form 16B to the seller

3. PAN is Mandatory

If the seller does not provide PAN, TDS may be deducted at a higher rate.

How to Deposit TDS on Property Purchase?

The buyer must:

1.    Deduct TDS at the time of payment

2.    File Form 26QB

3.    Deposit TDS online within 30 days

4.    Download and issue Form 16B

Documents Required

  • Buyer PAN Card
  • Seller PAN Card
  • Property Agreement
  • Address Details
  • Payment Details

Penalty for Non-Compliance

Failure to deduct or deposit TDS may result in:

  • Interest penalty
  • Late filing fees
  • Income Tax notice
  • Additional penalties

Therefore, proper compliance is very important.

Is TDS Applicable Below 50 Lakh?

No. If the property value is below 50 lakh, TDS under Section 194IA is generally not applicable.

However, if:

  • Multiple buyers/sellers are involved, or
  • Property value structure is split artificially,

then tax authorities may examine the transaction carefully.

Can TDS be Claimed as Refund?

The seller can claim the deducted TDS amount while filing the Income Tax Return (ITR).

The deducted amount reflects in:

  • Form 26AS
  • AIS/TIS
  • Income Tax Portal

Conclusion

TDS on property purchase is an important compliance under the Income Tax Act. If the property value is 50 lakh or more, the buyer must deduct 1% TDS before making payment to the seller.

Proper filing of Form 26QB and timely TDS payment can help avoid penalties and legal issues.

For professional assistance in:

  • Property TDS Filing
  • Form 26QB Filing
  • Form 16B Download
  • Income Tax Compliance
Contact ActiveTaxPro Advisory today.

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