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TDS on Property Purchase: 1% Rule, Limits, and Form 26QB
If you buy a home or land in India worth ₹50,00,000 or more, you must deduct 1% tax before you pay the seller. The Income Tax Act 2025 and Income-tax Rules 2026 put this duty on the buyer. You do not need a tax deduction account number (TAN). You file Form 26QB online using both PAN cards. You must pay within 30 days from the end of the month you make the payment. If you pay late, you face a fine of ₹200 per day under Section 234E plus interest.
Data verified: 23 October 2026, against the Income Tax Department e-filing portal and TRACES guidelines.
When does 1% TDS on property apply?
The 1% tax deduction applies whenever you buy immovable property in India with a deal value of ₹50,00,000 or above.
This rule covers:
- Residential flats and apartments
- Independent houses and villas
- Commercial offices and retail shops
- Plots of land (urban or non-farm land)
- Properties under construction
The only key exception is rural farm land. If you buy rural farm land, this rule does not apply, no matter the price.
The rule looks at two numbers: the agreed deal price and the stamp duty value. You must deduct 1% on whichever number is higher. If the sale price is ₹48,00,000 but the circle rate value is ₹52,00,000, the 1% tax applies.
Who must deduct the tax and deposit it?
The law places the entire duty of tax deduction on the buyer. The seller cannot do it for you.
Here is how the cash flow works:
- You agree on the property price with the seller.
- You subtract 1% from the payment amount.
- You pay 99% of the amount to the seller.
- You deposit the 1% tax with the government through Form 26QB.
- You download Form 16B from TRACES and hand it to the seller as proof.
You do not need to register for a TAN. You use your permanent account number (PAN) and the seller’s PAN. If the seller does not provide a PAN, the tax rate jumps to 20%. Always check the seller’s PAN card before you sign the sale deed.
The math: how to calculate 1% TDS on property
Let us look at three common cases to see the exact rupee math.
Case 1: Standard deal price above ₹50 lakh
You buy a ready flat for an agreed price of ₹60,00,000. The stamp duty value matches the sale price.
| Item | Calculation | Rupee Amount |
|---|---|---|
| Agreed Sale Price | Agreed deal value | ₹60,00,000 |
| Stamp Duty Value | Circle rate value | ₹60,00,000 |
| Tax Rate | 1% of higher value | 1.00% |
| TDS Amount | ₹60,00,000 × 1% | ₹60,000 |
| Net Paid to Seller | ₹60,00,000 − ₹60,000 | ₹59,40,000 |
| Tax Paid to Government | Paid via Form 26QB | ₹60,000 |
You cut ₹60,000 from the seller’s payout and deposit it online.
Case 2: Stamp duty value is higher than deal price
You buy a flat for ₹70,00,000. But the state government circle rate sets the stamp duty value at ₹76,00,000.
| Item | Calculation | Rupee Amount |
|---|---|---|
| Agreed Sale Price | Price paid to seller | ₹70,00,000 |
| Stamp Duty Value | Circle rate valuation | ₹76,00,000 |
| Higher Value for TDS | Whichever is higher | ₹76,00,000 |
| TDS Amount | ₹76,00,000 × 1% | ₹76,000 |
| Net Paid to Seller | ₹70,00,000 − ₹76,000 | ₹69,24,000 |
| Tax Paid to Government | Paid via Form 26QB | ₹76,000 |
Under the Income Tax Act 2025, you must compute the 1% tax on ₹76,00,000. You deduct ₹76,000 from your agreed ₹70,00,000 payment.
Case 3: Instalment payments for a home under construction
You buy a flat under construction for ₹80,00,000. You pay in four equal parts of ₹20,00,000 linked to builder milestones.
Because the total deal exceeds ₹50,00,000, you must deduct 1% from every instalment:
- Instalment 1 (Booking): Pay ₹19,80,000 to builder; deposit ₹20,000 tax.
- Instalment 2 (Plinth): Pay ₹19,80,000 to builder; deposit ₹20,000 tax.
- Instalment 3 (Structure): Pay ₹19,80,000 to builder; deposit ₹20,000 tax.
- Instalment 4 (Possession): Pay ₹19,80,000 to builder; deposit ₹20,000 tax.
You file a new Form 26QB for each instalment within 30 days after the end of that payment month.
Multiple buyers or multiple sellers: the ₹50 lakh threshold
Many families buy property jointly. A husband and wife may buy a flat together, or two brothers may sell ancestral property.
The ₹50,00,000 limit applies to the total property deal, not to each person’s share.
Example: Two buyers and one seller A husband and wife buy a flat for ₹70,00,000. Each pays ₹35,00,000. Even though each buyer pays under ₹50,00,000, the property value is ₹70,00,000. Both buyers must deduct 1% on their ₹35,00,000 share (₹35,000 each). Each buyer files a separate Form 26QB for ₹35,000.
If there are two buyers and two sellers, you must file four Form 26QB forms. Each form maps one buyer to one seller for their exact fraction of the money.
Step-by-step: how to pay TDS via Form 26QB
Filing Form 26QB is done online. Follow these five simple steps:
- Collect documents: Get the PAN of the buyer, PAN of the seller, complete property address, and payment dates.
- Log in to e-portal: Go to the Income Tax Department e-filing portal (
eportal.incometax.gov.in). - Select e-Pay Tax: Go to e-File > e-Pay Tax and click on New Payment.
- Choose 26QB (TDS on Property): Select the card marked 26QB (TDS on Sale of Property).
- Enter details and pay: Fill in the buyer and seller details, property value, and tax amount. Pay online through net banking, debit card, or UPI.
Save the challan receipt immediately. It contains the BSR code, challan serial number, and payment date. You will need these to track credit.
Deadlines and late fees: Form 26QB and Form 16B
You must follow strict statutory timelines under the Income-tax Rules 2026:
| Action Item | Legal Time Limit | Consequence of Missing Due Date |
|---|---|---|
| Deposit 1% Tax (Form 26QB) | Within 30 days from end of payment month | Late fee of ₹200 per day under Section 234E |
| Interest on Late Deduction | If you forget to deduct tax | 1.0% simple interest per month until deducted |
| Interest on Late Deposit | Deducted but not deposited | 1.5% simple interest per month until paid |
| Issue Form 16B Certificate | Within 15 days of filing Form 26QB | Seller cannot verify tax credit in Form 26AS |
The late fee of ₹200 per day under Section 234E runs every day until you pay. It can equal the total tax amount if you delay for several months.
After you deposit the tax, log in to the TRACES portal (tdscpc.gov.in) after four to five days. Download the Form 16B certificate and send it to your seller.
5 costly mistakes property buyers make
Avoid these common slip-ups when buying a home:
- Missing extra charges in deal value: The law requires you to include car parking, club membership fees, power backup charges, and advance maintenance fees in the property value. If the flat is ₹48,00,000 and parking is ₹3,00,000, the total is ₹51,00,000. The 1% tax applies to the full ₹51,00,000.
- Forgetting TDS on advance token money: You must deduct 1% on the very first token payment or booking advance, not just at final registry.
- Entering wrong seller PAN: If you type the wrong PAN, your seller will not get credit in their annual tax statement. Rectifying Form 26QB requires online approval from the seller.
- Delaying instalment filings: For builder-linked plans, each milestone payment is a separate tax event. Do not wait until the final registry date to pay tax on early instalments.
- Not issuing Form 16B: A bank payment slip is not enough for the seller. Only Form 16B from TRACES serves as legal proof of tax deduction.
Frequently asked questions
Does the buyer need a TAN to deduct 1% TDS on property?
No. The buyer does not need a tax deduction account number (TAN). The Income Tax Department allows buyers to deduct and deposit this tax using only their PAN and the seller’s PAN through Form 26QB.
What happens if the seller does not provide a PAN?
If the seller fails to give a valid PAN, the tax deduction rate jumps from 1% to 20%. You must deduct 20% from the sale amount and deposit it using Form 26QB.
Is TDS applicable if the property costs exactly ₹50,00,000?
Yes. The tax rule applies if the consideration or stamp duty value is ₹50,00,000 or more. A deal of exactly ₹50,00,000 attracts ₹50,000 in TDS.
How can the seller check if the buyer deposited the TDS?
The seller can log in to the Income Tax e-filing portal and check their Annual Information Statement (AIS) and Form 26AS. The deposited tax reflects under the Part F section for Form 26QB transactions within seven days.
Can an NRI seller sell property using Form 26QB?
No. Form 26QB applies only to resident sellers. If you buy property from a Non-Resident Indian (NRI), a different section applies. That requires a TAN and a higher tax deduction rate based on capital gains.
Sources
1 Income Tax Department — e-Pay Tax and Form 26QB Procedure (verified 23 October 2026).
2 Income Tax Department — Guidelines on Immovable Property Tax Deductions (verified 23 October 2026).
3 TRACES Portal — Form 16B Download Guidelines for Property Buyers (verified 23 October 2026).
References
[1] Income Tax Department — e-Pay Tax portal [2] Income Tax Department — Official Guidance [3] TRACES Portal — TDS Reconciliation Analysis and Correction Enabling SystemRelated reading
- Form 16B Certificate Walkthrough — step-by-step guide to download Form 16B from TRACES
- Form 26AS Tax Credit Statement — how property sellers verify TDS credit online
- TAN Requirements in India — why individual home buyers do not need a TAN
- Income Tax Compliance Hub — tax slabs, return forms, and annual filing rules
- Financial Calculators Hub — compute loan EMIs and tax liabilities