If you buy immovable property (other than rural agricultural land) from a resident seller and the price or the stamp duty value is ₹50 lakh or more, you must deduct TDS at 1% and deposit it with the government. From 1 April 2026 this rule sits in section 393(1) of the Income-tax Act, 2025 (the familiar section 194-IA of the 1961 Act), and the payment form has changed from Form 26QB to Form 141. You do not need a TAN; your PAN is enough.
Key takeaways
- 1% TDS applies when the consideration or stamp duty value is ₹50 lakh or more; rural agricultural land is excluded.
- Old section 194-IA is now section 393(1) (Table, serial 3) of the Income-tax Act, 2025, effective 1 April 2026.
- Deposit within 30 days from the end of the month of deduction using Form 141 (Schedule B); give the seller Form 132.
- If the seller is an NRI, different, higher TDS applies under old section 195, now section 393(2).
- Budget 2026 announced that resident buyers from NRIs will use a PAN-based challan instead of a TAN.
What changed on 1 April 2026
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026 and renumbered almost every section. The substance of property TDS for resident sellers is unchanged, but the references and forms are new:
| Item | Up to 31 March 2026 (1961 Act) | From 1 April 2026 (2025 Act) |
|---|---|---|
| Provision (resident seller) | Section 194-IA | Section 393(1), Table serial 3 |
| Provision (NRI seller) | Section 195 | Section 393(2) |
| Challan-cum-statement | Form 26QB | Form 141, Schedule B |
| TDS certificate to seller | Form 16B | Form 132 |
| Rate | 1% | 1% |
| Threshold | ₹50 lakh | ₹50 lakh |
Which law applies depends on timing. The tax department’s transition FAQs say the 1961 Act applies where the triggering event (credit or payment, whichever is earlier) happened before 1 April 2026. For an instalment paid after that date, use the new form.
When you must deduct TDS
- You are buying land (other than rural agricultural land), a building, a flat or part of a building.
- The seller is resident in India.
- The consideration or the stamp duty value is ₹50 lakh or more. The test is on the whole property: since 1 October 2024, splitting the price among several buyers or sellers does not take you below the threshold.
What counts as consideration
The department’s guidance includes charges incidental to the transfer, such as club membership, car parking, electricity or water facility fees and maintenance or advance fees. TDS is 1% of the higher of total consideration and stamp duty value.
Rural agricultural land
Farm land that is not a capital asset is excluded. Around Coimbatore this needs care: agricultural land within 8 km (aerial distance) of the Coimbatore Corporation limits is generally treated as urban, because the city’s population exceeds 10 lakh. A farm plot in Kinathukadavu or near Karamadai may or may not be rural depending on distances to the nearest municipality, so ask your chartered accountant.
How to deduct and pay: step by step
- Collect the seller’s PAN and check it is active. Without a valid PAN, TDS is 20%.
- Deduct 1% from each payment, including advances and instalments to builders, not just the final amount.
- Log in to the income tax e-filing portal with your own PAN and file Form 141, Schedule B, with property, party-wise share and payment details, and pay the tax.
- Do this within 30 days from the end of the month in which you deducted.
- Download and give Form 132 to the seller within 15 days of the Form 141 due date.
- Carry the payment acknowledgement to the Sub-Registrar Office on registration day.
Joint buyers each deduct on their share of the payment, and the form now asks for each buyer’s and seller’s share of consideration.
Worked example
You buy a villa in Saravanampatti for ₹90 lakh and pay ₹10 lakh advance in May 2026 and ₹80 lakh in July 2026. You deduct ₹10,000 from the advance and deposit it by 30 June, and ₹80,000 from the balance, deposited by 30 August. The seller receives ₹89.1 lakh and claims the ₹90,000 as a credit.
Buying from an NRI seller
When the seller is a non-resident, the 1% rule does not apply. The buyer must deduct tax on the capital gain portion at the applicable rate (long-term gains at 12.5% plus surcharge and cess), often on the full price unless the seller gets a lower deduction certificate (old section 197, now section 395). Until now the buyer needed a TAN for this. The Union Budget 2026-27 announced that TAN will be replaced with a resident buyer’s PAN-based challan; reports indicate this applies from 1 October 2026. Our NRI guide on TDS when an NRI sells property covers this in detail.
What happens if you miss it
- Interest for not deducting and for late payment of deducted tax.
- A daily late fee for late filing of the statement, capped at the TDS amount.
- Possible penalty, and the seller cannot claim the credit, which sours the deal.
These consequences existed under the 1961 Act and similar provisions continue under the 2025 Act. Fix a missed deduction quickly with the help of a chartered accountant.
Frequently asked questions
Is TDS on property purchase still 1% in 2026?
Yes, for resident sellers where the price or stamp duty value is ₹50 lakh or more. The provision is now section 393(1) of the Income-tax Act, 2025.
Is Form 26QB still used?
For deductions from 1 April 2026, Form 141 (Schedule B) replaces Form 26QB. Form 26QB is still relevant for deductions made before that date.
Do I need a TAN to pay TDS on property?
Not when the seller is resident; you use your PAN. For NRI sellers a TAN was needed, but Budget 2026 announced a PAN-based challan instead.
Is TDS payable if the price is ₹49 lakh but the guideline value is ₹52 lakh?
Yes. TDS applies if either the consideration or the stamp duty value is ₹50 lakh or more, and is calculated on the higher figure.
Is TDS deducted on stamp duty and registration charges?
No. Those are paid to the state government and are not part of the consideration paid to the seller.
This article is general information as of September 2026, not legal, tax or financial advice. Rules and rates change; confirm with a qualified advocate, chartered accountant or the relevant department before you act.
References
- Income Tax Department: TDS on purchase of immovable property
- Income Tax e-filing portal: Form 141 user manual
- TaxGuru: TDS on property transfers from 1 April 2026 (Forms 141 and 132)
- CBDT: FAQs on transition to the Income-tax Act, 2025
- PIB: Highlights of Union Budget 2026-27
Buying above ₹50 lakh in Coimbatore?
Our team can walk you through the payment schedule, TDS and registration so every instalment is handled correctly.
