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TDS on sale of property

As per Section 194IA of the Income Tax Act, tax must be deducted at source by the buyer of a property from payments made to a seller who is resident in India. TDS must be deducted on sale of all types of property, except where the property sold is an agricultural land. TDS is applicable when receipts are of more than Rs 50 lakh. This TDS must be deducted @1 per cent by the buyer at the time of making the payment. Do note that no surcharge or cess is applicable on this 1 per cent TDS deducted.

TDS must be deposited within within 30 days from the end of the month in which it was deducted. 

A Form 26QB is required to be submitted by the buyer to the income tax department where PAN of both the buyer and seller must be compulsorily specified. This form can be prepared and submitted online and the TDS payment can also be made online. On successful payment a challan counterfoil is generated which will have the CIN and payments details and this proof of payment must be retained by the buyer. Since this payment is made on behalf of the seller and linked to the seller’s PAN, it is reflected on the seller’s Form 26AS under the head Part F, usually within 7 days. The buyer also has to provide a TDS certificate in Form 16B to the seller. This can be downloaded from the TRACES website.

axes-uphill-sphere-means-tax-hard-workIf the seller does not plan to invest capital gains and has to pay tax on them, a credit for the TDS deducted can be claimed by the seller. This TDS amount appears both in Form 16B issued by the buyer as well as in the seller’s Form 26AS. However, if the seller wants to claim capital gains exemption, either he can claim refund of TDS in the tax return by providing details of investment of capital gains. Or he can also obtain a certificate from the assessing officer specifying that no TDS must be deducted on payments made to him and present this certificate to the buyer.

TDS on Property – Critical Points

1. The responsibility to deduct TDS on Property Sale rests solely with the Buyer even if it is financed by Home Loan or property is purchased from the builder. In some cases, Bank can deduct TDS on property from disbursement and help in depositing TDS on buyers behalf but they are not obliged to do so. You have to give written request to Bank for the same.

2. TDS on Property Sale should be deposited with Govt by the Buyer within 30 days from the end of the month in which the TDS is deducted.

3. While depositing TDS on Property Sale, it is mandatory to Quote both Buyer and Seller’s PAN.

4. Non-deduction of TDS or Non Deposit of TDS may attract a heavy penalty.

5. TDS should be deducted at the time of payment to the seller. If the payment is in installments than TDS should be deducted with each installment. If the entire amount is paid in single installment than entire TDS amount should be deducted at the time of making complete payment.

6. TDS on Property Sale can be deposited with Govt by filing Form 26QB Challan.

7. All details related to property transaction should be furnished in form 26QB

8. You can deposit TDS online through following link

9. After depositing TDS on property sale with Govt, the buyer needs to issue TDS certificate to the Seller. TDS Certificate is referred as form 16B. It is available online after 10-14 days from the date of deposit of TDS. TDS certificate can be downloaded online from following link

Penalty for Delay in TDS Filing

1. Penalty u/s 201

(a) 1% interest for the delay of every month i.e. Late deduction of tax from the date the tax was deductible to the date the TDS is deducted.

(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS was deducted till the actual date of payment.

* Interest calculated will be simple interest. The fraction/part of the month is considered as full month.

2. Penalty u/s 234E

(a) Late fee penalty of Rs 200 per day for late filing of the statement of Tax Deducted at Source. Late fee penalty will be lower of TDS Amount or Delay in No of Days X Rs 200. For example, if TDS Amount is Rs 15,000 and delay are of 100 Days then the late fee is 100 X Rs 200 i.e. Rs 20,000. Lower of Rs 15,000 and Rs 20,000 is Rs 15,000 therefore max late fee penalty is Rs 15,000. In Short, max late fee penalty cannot exceed TDS Amount.

Image courtesy of Stuart Miles at

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

Recommended Read-

10 FAQs on Tax on Sale of Immovable Property by Non-residents

Tax Credits in 26AS of TDS on Sale of Immovable Property

All About TDS On Immovable Property Purchase (194IA)

Mandatory Filing of Form 26QB by Buyer of Immovable Property

TDS on sale of Immovable Property by Non-resident

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  1. SUDHIR SHETTY says:

    if we had paid the amount in installments against new property which is above 50lac and tds for all the installments was deducted in one single installment. So now while filling TDS what we need to do.. should we file a single challan or we need to file as per installments

  2. Sneha Dixit says:

    I Taxguru
    My father bought a house and paid full price in checks without deductions of TDS taxes ( which he was fully unaware) because nobody mentioned him nor seller or C.A. or even his lawyer and after one year suddenly tds showed up with full penalties and the seller is not ready to pay for it.

  3. Sneha Dixit says:

    I taxguru
    My father bought a house and paid full price in checks without deductions of TDS taxes ( which he was fully unaware) because nobody mentioned him nor seller or C.A. or even his lawyer and after one year suddenly tds showed up with full penalties and the seller is not ready to pay for it.

  4. Ranajee Mehta says:

    I have failed to deduct TDS @1% while making full payment to the seller of the flat who happens to be builder in the year 2016. I was not aware of this provision so full payment was made by me to the builder.

    Now Income Tax department has issued a show cause notice to me.

    What is the recourse available to me ?

    Can I claim refund from the builder after two years of my payment ?


    Request IT department to waive the penalty and pay from my pocket

    Please guide me

    1. S JEGADEESAN says:

      You may get the amount from the seller .Why should make payment from your pocket ? Further Income Tax Department never waiver the Interest & penalty

  5. Venkatesh says:

    There are two buyers who purchased property at X amount and 50% TDS is paid on one account of seller and 50% on another account of seller. What amount should be mentioned in Form 26QB (that would be filled 4 different times in this case) in Total Value of Consideration (Property Value). Should it be X or X/4 in each form?

  6. Vijayalakshmi Nandakumar says:

    I think there is a change in the due date for remittance of tax from 7th of the succeeding month to 31st of the succeeding month. Pls clarify.

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May 2024