Old law and new law in one paragraph
Under the Income-tax Act, 1961, TDS on purchase of immovable property was under section 194-IA. The buyer filed Form 26QB online and gave the seller Form 16B downloaded from TRACES. The Income-tax Act, 2025 came into force on 1 April 2026. According to the Income Tax Department's FAQs, for deductions on or after 1 April 2026 the provision is section 393(1) of the 2025 Act and the form is Form 141, a single challan-cum-statement that replaces Forms 26QB, 26QC, 26QD and 26QE. Purchase from a resident seller is reported in Schedule B. If you made a deduction on or before 31 March 2026 and have not yet filed, Form 26QB under the 1961 Act still applies to that deduction.
Step 1: Check whether TDS applies
TDS applies if all of these are true:
- You are buying immovable property other than agricultural land: a flat, house, building, or plot.
- The seller is a resident of India. If the seller is a non-resident, different rules apply; see NRI selling property in Chennai.
- The consideration, or the stamp duty value if higher, is Rs 50 lakh or more. Under the earlier law, this was tested on the full value of the property, not on each buyer's share.
The stamp duty value is the guideline value fixed by the Tamil Nadu Registration Department, which you can check on tnreginet.gov.in.
Step 2: Work out the TDS amount
Under section 393(1) of the Income-tax Act, 2025 (Table, Sl. No. 3(i)), which replaced the earlier section 194-IA, TDS is 1 percent of the consideration or the stamp duty value, whichever is higher, where that amount is Rs 50 lakh or more.
If the seller's PAN is not available or is inoperative because it is not linked with Aadhaar, TDS is deducted at a higher rate. Ask the seller to confirm the PAN-Aadhaar link before you pay.
Example. You buy a flat for Rs 80 lakh and pay Rs 10 lakh on signing the agreement and Rs 70 lakh at registration. Assuming the 1 percent rate, you deduct Rs 10,000 from the first payment and Rs 70,000 from the second, and pay the seller Rs 9,90,000 and Rs 69,30,000. If there are two sellers with equal shares, each payment is split between them and TDS is deducted on each seller's share.
Step 3: Collect the details
- PAN, name, address, mobile and email of every buyer and every seller
- Full address of the property and its type
- Date of the agreement, total consideration and stamp duty value
- Date and amount of each payment, and whether it is an instalment or lump sum
- Share of each buyer and each seller as per the agreement
Step 4: File Form 141 and pay the TDS
- Log in to incometax.gov.in with the buyer's PAN. The Form 141 FAQs say the form can be filed only through the PAN login; a TAN is not needed for purchase from a resident seller.
- Go to the e-File menu and open Form 141. Choose Schedule B, purchase of immovable property from a resident seller.
- Enter buyer, seller, property and payment details. For more than one buyer or seller, follow the portal's instructions for each combination.
- Submit the form. A challan for the TDS is generated; pay it through net banking or the other modes offered.
- Download and keep the acknowledgement and the challan receipt.
The FAQs on Form 141 state that the deducted amount must be paid within 30 days from the end of the month in which the deduction is made, and the statement must be furnished within one month from the end of that month.
Step 5: Give the TDS certificate to the seller
After the statement is processed, the buyer registers on the TRACES portal (tdscpc.gov.in) with PAN, requests the TDS certificate for the seller and downloads it. Under the earlier law this certificate was Form 16B. Under the Income-tax Rules, 2026 it is Form 132, to be issued within 15 days from the due date for furnishing the Form 141 challan-cum-statement.
Step 6: Seller checks the credit
The seller should check that the TDS appears in their Form 26AS and AIS, and claim it in their income tax return for the year of sale, where they also report the capital gain. If the credit is missing, the usual causes are a wrong PAN, a wrong share split or a wrong year in the form, which the buyer can correct on TRACES.
Common mistakes to avoid
- Not deducting TDS on the advance or token amount.
- Calculating TDS on the sale deed value when the guideline value is higher.
- Filing one form for two sellers instead of one per seller.
- Entering the seller's PAN wrongly, which leaves the seller without credit.
- Missing the due date, which leads to interest, a late fee for each day of delay, and a notice from TRACES.
For help with the filing, see TDS on property purchase.
Frequently asked questions
Is TDS deducted from the advance paid at the time of agreement?
Yes. TDS applies to each payment, including the advance or token amount paid at the time of the sale agreement, once the total consideration is Rs 50 lakh or more. Deduct at the time of each payment or credit, whichever is earlier, and file the challan-cum-statement for each month in which you deduct.
What if the bank pays the loan amount directly to the seller?
The responsibility to deduct TDS stays with the buyer even when the home loan is disbursed directly to the seller or builder. Usually the buyer pays the TDS from their own funds and the bank disburses the balance, or the bank is asked to issue the cheque net of TDS.
Is TDS on property applicable to car parking or club membership charges?
Under the earlier section 194-IA, consideration for transfer of immovable property included charges such as club membership, car parking, electricity and water facility fees and similar charges that are incidental to the transfer. Include these amounts when working out whether the Rs 50 lakh threshold is crossed.
How do I correct a mistake in a property TDS form already filed?
Many errors such as PAN, amount or assessment year details can be corrected online through the TRACES portal by the buyer, using a correction request, depending on the type of error. If the challan itself is wrong, a challan correction request may be needed through the bank or assessing officer.