CA Rachana Kanoi

1.  Person responsible for tax deduction :-

Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property (other than agricultural land in rural area) is liable to deduct tax at source u/s 194-IA.

2.  Time of deduction :-

At the time of payment or credit, whichever is earlier.

3.   Rate of TDS :-

TDS to be deducted @ 1% of the sum paid. However, TDS needs to be deducted @ 20%, if the deductee does not furnish PAN.

4.   Threshold Limit :-

No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than Rs. 50,00,000/-.

5.   Other points:-

  • Provisions of TAN as prescribed u/s 203A shall not apply in respect of tax deducted u/s 194-IA.
  • Immovable property means any land, building or part of building. Such property may be situated in India or outside India.
  • TDS provisions of section 194-IA shall apply only if the transferor is resident in India.
  • TDS provisions of section 194-IA shall not apply if a person acquires rural agricultural land in India.

6.   Online Payment of TDS through challan cum statement on Form 26QB through NSDL Website:-

Tax so deducted should be deposited to the Government Account through any of the authorized bank branches using the e-Tax payment option available at NSDL E-payment within a period of seven days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

Steps to Pay Tax Online

  • Log on to NSDL-TIN website ( or Alternatively person seeking payment of TDS on sale of Property can also use the following link –
  • Under TDS on sale of property, click on the option “Online form for furnishing TDS on property”.
  • Select Form for Payment of TDS on purchase of Property- Click on the option “TDS on sale of property’.
  • Select Financial Year from the drop down for which payment is to be done.
  • Select Tax applicable for which payment is to be done.
  • Mention PAN of Transferee/Buyer
  • Mention PAN of Transferor/Seller
  • Re-enter PAN of Transferee/Buyer
  • Re-enter PAN of Transferor/Seller
  • Provide Complete address of Transferee/Buyer
  • Provide Complete address of Transferor/Seller
  • Provide Complete address of Property transferred
  • Mention the date of Agreement/Booking of property
  • Mention the Total value of consideration (Property Value)
  • Mention if the above payment is done in Lump sum or in Installments
  • Please select the amount paid/credited (Enter the amount paid to the Transferor/Seller)
  • Please enter the TDS rate (Tax rate at which the TDS was deducted by the purchaser at the time of purchase of the property)
  • Please enter the TDS amount to be paid (amount deducted by the purchaser at the time of purchase of the property)
  • On proceed, confirmation page is displayed to verify the details entered
  • If all the above detail including the name displayed (as per ITD) is correct then, click on “SUBMIT” button
  • In case you have made a mistake in data entry, click on “EDIT” to correct the same.
  •  On confirmation, nine digit alpha numeric Acknowledgment number would be generated
  • To do the required TDS payment, please click on ‘Submit to the Bank’ button
  • On clicking on Submit to the Bank, deductor will have to login to the net-banking site with the user ID/ password provided by the bank for net-banking purpose.
  • On successful login, enter payment details at the bank site.
  • On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.

7.  Important Points to be Noted:-

a)      Threshold limit of Rs. 50 Lacs will be applicable to each & every property separately.

b)     Property can be either of residential or official purpose.

c)      Purchaser can be a dealer, user of the property or a salaried employee.

d)     TDS certificate must be issued to the deductee in Form 16B within 15 days from the due date of deposit of TDS.

e)      The deductee shall be entitled to avail credit for the entire amount of TDS deducted during the financial year in its Return of Income.

f)       TDS u/s 194-IA shall be deducted even if the transaction takes place before 1st June, 2013 and payment is made after 1st June, 2013.

g)     However, if credit to the account of the transferor has been given before 1st June, 2013 then provisions of section 194-IA will not apply, even if payment has been made after 1st June, 2013. (Payment or credit whichever is earlier)

h)     In case of under construction properties, TDS will be required to be deducted on installments paid on or after 1st June, 2013, if the aggregate purchase consideration is more than Rs. 50 Lacs. Thus, no TDS is required to be deducted in respect of installments paid before 1st June, 2013.

i)       In case any installment becomes due before 1st June, 2013 but paid after 1st June, 2013 and the transferee has not credited the same to the account of the transferor before 1st June, 2013, then provisions of section 194-IA shall apply and TDS will be deducted on the amount paid after 1st June, 2013.

j)        In case of installment system of payment, TDS is required to be deducted on all such installments individually which fall due after 1st June, 2013 but only on principal portion and not on the interest or penalty portion.

k)     In case the property is partly financed by bank then TDS will be required to be deducted by the transferee on the entire amount of consideration.

l)       The threshold limit of Rs. 50 Lacs is with reference to each property. If a property transaction involves more than one buyer and share of each buyer in the property is less than Rs. 50 Lacs but the value of the property in aggregate is more than Rs. 50 lacs then provisions of section 194-IA will be applicable. In such case, TDS will be deducted and deposited by each buyer in respect of their respective share in the property.

m)   Similarly, in case of a property transaction involving more than one seller, TDS will be deducted in respect of amount paid to each seller and their respective PAN will be quoted while making payment through Form 26QB.


1. CPC(TDS) releases Online Correction Facility for 26QB Statements

Mandatory Filing of Form 26QB by Buyer of Immovable Property


CPC-TDS enables online correction in form 26QB


Withholding tax Impact on Property transaction by Non-Residents Indian/Foreign Nationals


TDS on sale of Immovable Property- Beware CPC TDS issuing intimation for late deposit of TDS


TDS on sale of Immovable Property by Non-resident


TDS- Sec.194IA – Payment on transfer of certain immovable property


Transfer of Immovable Property & Income Tax – A Critical Analysis


Procedure for TDS Payment (FORM 26QB) and Generation of Form 16B


Tds On Purchase Of Immovable Property Effective 1st June,2013

More Under Income Tax

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Category : Income Tax (27630)
Type : Articles (17308)
Tags : Section 194IA (44) TDS (1039)

62 responses to “Note on Section 194-IA – TDS on Purchase of Immovable Property”

  1. S.V. BODELE says:

    we are four partners sold a property but the purchaser paid the advance amount more than the sharing ratio now the purchase says that he will deduct the 1% TDS to whom the amount is been paid i want to know whether tds of 1% under section 194IA can be deducted in the capital sharing ration

  2. Uttam says:

    Hello, I purchased a property in Jan 2011 value 55Lacs. I have paid 35Lacs before 1st June 2013 and the rest 20L thereafter till now. Since the sales agreement was made prior to June 2013, is this 1% TDS rule applicable in my case as the property is still not fully constructed and handed over to me?? If yes, do I have to pay TDS on 25Lacs paid after 1st June 2013 or the entire amount since Jan 2011 i.e. on 55Lacs?? Please explain, I have read many articles here but still confused, some say its applicable and some say not applicable.

    • Ashwani Bhatia says:

      Dear Mr Uttam, i also have the same query as yours, pls let me know what action was taken by you in the situation. I am not able to find any solution to it as of yet.

      • Uttam says:

        Yes, finally I ended up paying 1% TDS on the part paid in later half when the rule was applied after june13. Now another issue has cropped up, since i have paid service tax on cost, not High Court has ruled to not pay further and seek refund for what was already paid, too much confusion and this is India so what to say.

  3. P N Rao says:

    If the Bank has given the TDS amount deducted amount to the buyer, then the buyer has to remit the same to the Income Tax department immediately and should not wait till possession as he will be liable to interest and fees to IT depat. P N Rao

  4. Sandesh Mhadgut says:

    Dear Sir,

    We purchase a flat for Rs.55,00,000/- and paid whole amount to the seller without deducting TDS. Now we recd the notice for payment of TDS. We approched to the Seller but he denies to do the same.

    Another angle, seller purchase the property of
    the same amount. Can we get the concession for the payment of TDS on that.

    Please guide.



    • Birendra Kumar says:

      Dear Sir,

      We purchase a flat for Rs.55,00,000/- and paid whole amount to the seller without deducting TDS. Now we recd the notice for payment of TDS. We approched to the Seller but he denies to do the same.

      Another angle, seller purchase the property of
      the same amount. Can we get the concession for the payment of TDS on that.

      Please guide.

  5. VIDUSHI GUPTA says:

    I also have the same question please reply as soon as possible

  6. Anchal says:


    Could any one please inform me what are the changes in procedure to file TDS on property purchase applicable from 01 Jan 2016.

  7. Lourdunathan says:


    A buyer has purchased an under-construction flat amounting to 73 lacs and possession is due after 2 years. The bank has deducted the TDS on the property value while making the payment installment to the seller and has given the TDS amount to the buyer. Should the buyer pay the TDS on possession of the property or immediately?


  8. N N RAO says:

    Sir, I sold a residential flat(purchased in 2001) in Dec 2014 for 21.6L and purchased a residential site for construction of house for Rs 21.4L+1.2L stamp duty. under what section i get exemption of cap..gain tax and how to reflect the same in return form.i am a salaried single individual and tax deducted by employer on salary asTDS.

  9. Gautam Hazarika says:


    Can anyone help me in regards to my query. I have recently brought a flat in bangalore which basic cost is 45 Lakhs and including all other charges excluding registration it has come to 53 Lakhs. Builder is saying I don’t need to pay TDS since basic cost is 45 Lakhs.

    Can anyone explain me whatever builder is saying is correct or wrong.

    Gautam Hazarika

  10. prabhavathi says:

    hello sir,
    we are a builders we sell One Flat that is in 90,00,000/- and one buyer ,two sellers in that tds paid 1% of 90,00,000/- buyer has deducted this tds amount 90000/- after tds deductions he is given amount and my boss said form 26qb i filled in that transferee ,Transfrer ackonoledgement number but this tds amount is who will credited and who is the deductee

    pls clarify me

  11. Roshan CHhattani says:

    What Consideration include? Whether tds is deducted on agreement value or entire consideration received from customer

  12. VJ says:


    I bought property in Dec 2013, and was unaware of 1% TDS deduction. Although I kept on paying full amount to the Builder/Developer, who never informed me of any such deductions, till recent.

    As I will be paying now, do I have to pay only 1%TDS ( as I already paid the 1% TDS amount to builder) or have to pay penalty of 1% each month?


  13. Rajat Jain says:

    Tds is calculated on amount exclusive of service tax and not inclusive of service tax

  14. MANGAL SINGH says:

    A PAID AMOUNT TO RS 1500000/ LAC EACH PERSON(X,Y,Z,& W=600000 LAC)


  15. ARUN JAIN says:

    Hi, Please Clarify that whether TDS is applicable when full payments is made prior to 1st June, 2013 and Agreement is made in June, 2013. My query is whether TDS is applicable or not

  16. swapnil mondkar says:


    but some payments are made after June 2013
    how will tds provisions will get attract
    i am following cash basis system in books of account
    I have not booked property in my books as possession for the same have not received
    Is there any need for deducting TDS on balance payments made after June 2013 ???

  17. sarika says:

    Hi, i like to know tds liability in case both buyer & seller are indian resident. seller is owner of flat & later on made power of attorney in the name of his mother. buyer has made own contribution & registration in the name of holder of POA i.e. mother. Now balance amount will be payable by bank in the name of flat owner i.e. son. in such case buyer should make TDS payment in the name of son OR mother. Or TDS can be deposited in the ratio of payments made to both mother & son. after deposition of TDS whether any liability will arise in future against buyer?.

  18. Gautam Niyogi says:

    I have booked a flat jointly with my daughter and wife.

    Since the aggregate purchase price of the flat is more than INR 50.0 lakhs, Ihave deducted 1% value of the 1st instalment payment and submitted form 16B for the transaction to the builder along with the instalment. My form 26AS is showing the transaction under the respective head.

    My query is do I have show this transaction in my Income Tax Return form ITR – I. If yes, then under which section of the ITR-I form.

  19. Ajay says:

    I want know the following
    1.I am going to purchase a residential flat of Rs.70 lakhs which earlier buyer has bought in 35 Lakhs 4 years ago in a lumpsum one time payment.
    2. Original owner is just going to get the possession in this month and also paid 2% transfer amount and late charges of 60,0000. to the builder.
    3.Now in case of my purchase who is responsible to pay the 1% TDS as the bank as asked me to show 1% TDS payment evidence for loan requirement?

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