TDS on Purchase of Property – Section 194IA Compliance

Complete TDS Compliance for Buyers Purchasing Immovable Property Above ₹50 Lakh

Under Section 194IA of the Income Tax Act, 1961, every buyer of immovable property (other than agricultural land) must deduct TDS at 1% of the sale consideration — or the stamp duty value, whichever is higher (effective from Budget 2024) — when the consideration is ₹50 lakh or more. The buyer is responsible for deducting this TDS from the payment made to the seller and depositing it with the government through Form 26QB within 30 days from the end of the month in which TDS is deducted. After filing Form 26QB, the buyer must issue Form 16B to the seller.

TDS on property purchase is one of the most commonly missed compliance obligations — many buyers are unaware that they are responsible for deducting and depositing TDS, not the seller. Failure to comply attracts interest, penalty, and prosecution under the Income Tax Act. Our professionals provide complete Section 194IA compliance, connecting with our Form 26QB, TDS on Rent, TDS Return Filing, and Lower Tax Deduction Certificate services.

Our Services

TDS Computation — Section 194IA

Accurate computation of TDS under Section 194IA — applying the 1% rate to the higher of the actual sale consideration or the stamp duty value (post Budget 2024), and advising on the timing of deduction for instalment-based payments.

Form 26QB Filing

Online filing of Form 26QB (challan-cum-statement) on the income tax portal — entering buyer and seller PAN, property details, consideration amount, and TDS amount — and generating the payment challan.

TDS Challan Payment

Assistance with paying the TDS challan through net banking after Form 26QB filing — ensuring payment is made within 30 days from the end of the month of TDS deduction.

Form 16B Generation

Generation of Form 16B (property TDS certificate) from TRACES after Form 26QB is processed — and delivery of Form 16B to the seller within the prescribed 15-day period.

Multi-Instalment Property Purchases

Advisory and compliance for properties purchased through multiple instalments — managing TDS deduction and Form 26QB filing for each instalment payment throughout the construction period.

Buyer & Seller Advisory

Joint advisory for both buyer and seller — helping the buyer comply with TDS obligations and helping the seller claim the TDS credit in their Form 26AS and ITR.

Key Facts About Section 194IA

Applicable on: purchase of immovable property (not agricultural land) with consideration of ₹50 lakh or more
TDS rate: 1% of consideration (or stamp duty value, whichever is higher — post Budget 2024)
TDS must be deducted at the time of payment — not at registration date
Form 26QB must be filed within 30 days from the end of the month in which TDS is deducted
Form 16B must be issued to the seller within 15 days of filing Form 26QB
No TAN required for Section 194IA — buyer's PAN and seller's PAN are sufficient

Frequently Asked Questions

Who is responsible for deducting TDS on property purchase?

The buyer (purchaser) of the immovable property is responsible for deducting TDS under Section 194IA — not the seller. The buyer must deduct 1% of the sale consideration (or stamp duty value, whichever is higher) from the payment made to the seller. The deducted TDS must be deposited by the buyer via Form 26QB within 30 days from the end of the month in which the deduction was made. TAN is not required — the buyer's PAN and seller's PAN are sufficient for Form 26QB.

Is Section 194IA applicable to agricultural land?

No. Section 194IA specifically exempts agricultural land as defined in the Income Tax Act. Agricultural land situated in rural areas (outside the specified municipal limits and population thresholds) is not a capital asset under the Income Tax Act and is also exempt from Section 194IA TDS. However, agricultural land situated within the specified urban limits (as per the Section 2(14) definition) is a capital asset and TDS under Section 194IA applies if the consideration is ₹50 lakh or more.

What happens if TDS is deducted but Form 26QB is not filed?

If TDS is deducted from the property payment but Form 26QB is not filed, the TDS credit does not appear in the seller's Form 26AS — they cannot claim it in their ITR. Additionally, the buyer faces interest under Section 201(1A) for late deposit (1.5% per month from the date TDS was deductible to the date of actual deposit), penalty under Section 271C (equal to the TDS amount), and prosecution under Section 276B. Filing Form 26QB and making the TDS payment within 30 days from the end of the month avoids all these consequences.

How is TDS handled for property purchases in instalments?

For under-construction properties paid in instalments, TDS under Section 194IA must be deducted on each instalment payment — not only on the final payment. A separate Form 26QB must be filed for each instalment. The consideration for determining the ₹50 lakh threshold is the total agreed consideration — so if the total property price is ₹70 lakh, even the first instalment of ₹10 lakh must have TDS deducted and Form 26QB filed.

What is the stamp duty value rule introduced in Budget 2024?

Budget 2024 amended Section 194IA to provide that TDS under this section should be computed on the higher of: (a) the actual sale consideration; or (b) the stamp duty value of the property as adopted by the stamp duty authority for registration. Earlier, TDS was computed only on the actual sale price. This aligns Section 194IA with Section 50C (which deems stamp duty value as full consideration for capital gains computation when actual price is lower). Buyers must check the stamp duty value before computing the TDS amount.

Buying Property Above ₹50 Lakh? Comply with Section 194IA TDS.

Our professionals compute TDS, file Form 26QB, make the payment, and generate Form 16B for the seller — complete Section 194IA compliance.

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F.A.Q.

What is GSTR-9 and why is it required?

GSTR-9 is an annual GST return that summarizes all transactions reported during the financial year. It is required to ensure proper reconciliation and compliance with GST laws.

Who is required to file GSTR-9?

All regular GST-registered taxpayers are required to file GSTR-9, except composition dealers, casual taxable persons, and non-resident taxpayers.

What is the due date for filing GSTR-9?

The due date is generally 31st December following the end of the relevant financial year, unless extended by the government.

What details are included in GSTR-9?

It includes details of outward supplies, inward supplies, input tax credit claimed, taxes paid, and adjustments made during the year.

Is GSTR-9 mandatory for all taxpayers?

GSTR-9 is mandatory for most regular taxpayers, but certain small taxpayers may get exemptions based on turnover thresholds notified by the government.

What happens if GSTR-9 is not filed on time?

Late filing may result in penalties and late fees, along with potential compliance issues or notices from GST authorities.