Summary: The Income-tax Act, 2025, effective from 1 April 2026, introduces significant procedural changes to tax deduction at source on purchases of immovable property from resident sellers. Although the existing 1 percent TDS obligation generally continues for transactions where the consideration or stamp duty value reaches Rs 50 lakh, the earlier Section 194-IA has been replaced by Section 393(1), Table, Sl. No. 3(i). The earlier Form 26QB has been replaced by Form 141, Schedule B, while Form 132 replaces Form 16B as the TDS certificate. The revised framework requires buyers to identify the applicable form based on the date of deduction, particularly where advance payments and final consideration fall on opposite sides of 31 March 2026. The article explains the statutory changes, filing and payment deadlines, TRACES correction procedures, and reporting requirements for joint buyers and joint sellers. It also examines the treatment of TDS deducted in different financial years, including the implications for sellers claiming credit against capital gains. Buyers must carefully verify the seller’s PAN, stamp duty value, payment dates, proportional ownership shares and statutory reporting deadlines. Delayed deduction, payment or filing can attract interest, late fees and possible penalties. Maintaining complete records of both the former and revised forms is essential for accurate tax compliance and avoiding disputes during property transactions in 2026.
Introduction
Buyers of a flat, house or plot worth Rs 50 lakh or more have deducted 1 percent TDS for years, filing Form 26QB and downloading Form 16B for the seller. From 1 April 2026, the Income-tax Act, 2025 replaced the Income-tax Act, 1961, and the familiar forms changed. The obligation itself is largely the same, but the section number, the form, the certificate and some practical steps are new. Many transactions signed in early 2026 also straddle the two laws, which raises questions buyers had not faced before.
This article explains what changed, what did not, and how to handle a purchase where some payments fall before 1 April 2026 and some after.
What stays the same
The basic rule has not changed. A resident buyer of immovable property other than agricultural land, buying from a resident seller, deducts TDS where the consideration or the stamp duty value, whichever is higher, is Rs 50 lakh or more. The rate remains 1 percent of that higher value. A higher rate applies where the seller’s PAN is not available or is inoperative because it is not linked with Aadhaar.
TDS is still deducted at the time of each payment or credit to the seller, whichever is earlier. That includes the token advance paid when the agreement is signed, each instalment to a builder, and the amount a bank disburses directly to the seller from the buyer’s home loan. The responsibility stays with the buyer even when the bank makes the payment.
The buyer still does not need a TAN for a purchase from a resident seller. The form is filed from the buyer’s own PAN login on the income tax e-filing portal.
What changed
| Item | Income-tax Act, 1961 | Income-tax Act, 2025 (deductions from 1 April 2026) |
|---|---|---|
| Provision | Section 194-IA | Section 393(1), Table, Sl. No. 3(i) |
| Challan-cum-statement | Form 26QB | Form 141, Schedule B |
| TDS certificate to seller | Form 16B | Form 132 |
| Interest on late deduction or payment | Section 201(1A) | Section 398(3)(a) |
| Late fee for late statement | Section 234E | Section 427 |
According to the Income Tax Department’s FAQs on Form 141, Form 141 is a single challan-cum-statement that replaces Forms 26QB, 26QC, 26QD and 26QE. Purchase from a resident seller is reported in Schedule B. From 1 October 2026, Form 141 also has a Schedule E for resident individual and HUF buyers purchasing from a non-resident seller, which earlier required a TAN and a quarterly return.
The due dates, as stated in the Form 141 FAQs, are:
- the TDS must be paid within 30 days from the end of the month in which it is deducted; and
- the statement must be furnished within one month from the end of that month.
The certificate in Form 132 is downloaded from the TRACES portal and is to be issued to the seller within 15 days from the due date for furnishing Form 141.
The transition question: which form for which payment?
The test is the date of deduction, not the date of the agreement or the date of registration.
- A deduction made on or before 31 March 2026 is governed by section 194-IA of the 1961 Act and is reported in Form 26QB, even if the buyer files it after 1 April 2026.
- A deduction made on or after 1 April 2026 is governed by section 393(1) of the 2025 Act and is reported in Form 141, Schedule B.
Example. A buyer signs an agreement in February 2026 for a flat of Rs 90 lakh and pays an advance of Rs 10 lakh on 20 February 2026. The balance of Rs 80 lakh is paid at registration on 15 May 2026.
- On the advance, TDS of Rs 10,000 was deducted on 20 February 2026. It is reported in Form 26QB, and the seller receives Form 16B.
- On the balance, TDS of Rs 80,000 is deducted on 15 May 2026. It is reported in Form 141, Schedule B, by 30 June 2026, and the seller receives Form 132.
Two practical points follow. First, the buyer will have two acknowledgements, under two different forms, for one property. Both should be kept with the sale documents. Second, the two deductions fall in different financial years. The seller’s capital gain arises in the year of transfer, so the seller should claim the full TDS credit in the return for the year in which the gain is offered. Under the earlier rules, the credit for TDS deducted in one year on income assessable in another year was governed by Rule 37BA. Check the corresponding provision under the Income-tax Rules, 2026 and keep the working for the seller’s return.
Corrections now happen only on TRACES
A common question is whether a mistake in Form 141 can be edited on the e-filing portal. According to the Form 141 FAQs, it cannot. Corrections are made only on TRACES, after the buyer registers there as a taxpayer using the PAN with which the form was filed. The challan details (BSR code, date, challan serial number and amount) are needed to locate the statement.
The mistakes we see most often are:
- a wrong seller PAN, which leaves the seller without credit;
- the full amount entered for one sellerwhen there are two sellers with equal shares;
- the wrong financial year, which shows the credit in the wrong year;
- TDS calculated on the sale deed valuewhen the guideline (stamp duty) value is higher.
Some fields, such as PAN, may need approval by the TDS assessing officer. If the TDS was paid twice for the same payment, the buyer can claim a refund on the portal (earlier through Form 26B), provided the credit has not already gone to the seller.
Joint buyers and joint sellers
Where there are two buyers, each buyer deducts TDS on their share of each payment. Where there are two sellers, each payment is split according to each seller’s share. A separate challan-cum-statement is usually filed for each buyer and seller combination, and the shares entered should match the sale agreement. Under the earlier law, the Rs 50 lakh threshold was tested on the total consideration for the property, not on each buyer’s share. Buyers who split a Rs 80 lakh purchase into two shares of Rs 40 lakh and skip TDS on that basis are exposed to a default.
Cost of delay
If the buyer deducts late, pays late or files late, the 2025 Act carries forward the earlier structure:
- Interest under section 398(3)(a):1 percent a month or part of a month where tax was not deducted, and 1.5 percent a month or part of a month where tax was deducted but not paid. Because part of a month counts as a full month, a delay of one day into a new month adds a full month of interest.
- Late fee under section 427:Rs 200 for every day the statement is late, limited to the amount of TDS in that statement.
On a Rs 75 lakh flat, TDS of Rs 75,000 deducted on 5 June and paid on 2 September attracts interest of Rs 75,000 x 1.5 percent x 4 months = Rs 4,500, in addition to any late fee. Penalties are separate and are not automatic; they are levied by order, and paying the tax, interest and fee promptly before any notice puts the buyer in a stronger position.
A short checklist for buyers in 2026
1. Check the stamp duty (guideline) value before the first payment. In Tamil Nadu, it can be checked on tnreginet.gov.in.
2. Confirm the seller’s PAN is operative (linked with Aadhaar).
3. Deduct on every payment, including the advance and any bank disbursal.
4. Note the date of each deduction: before 1 April 2026 means Form 26QB, from 1 April 2026 means Form 141, Schedule B.
5. Pay and file together, ideally on the day of payment to the seller.
6. Download the certificate from TRACES (Form 16B or Form 132) and give it to the seller.
7. Ask the seller to check Form 26AS and AIS before filing the return for the year of sale.
Conclusion
For most buyers, the change from Form 26QB to Form 141 is a change of form and section numbers rather than of substance. The two areas that need care in 2026 are transactions that straddle 31 March 2026, where the date of each deduction decides the form, and corrections, which now go only through TRACES.
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Sources: FAQs on Form 141, Income Tax Department (incometax.gov.in); FAQs and guidance notes on forms under the Income-tax Rules, 2026; TRACES (tdscpc.gov.in).
Disclaimer: This article is for general information only and is not professional advice. Section and form references under the Income-tax Act, 2025 are based on the Income Tax Department’s published FAQs as of November 2026; readers should verify the current position before acting.
About the author: CA S. A. Abdul Rahim is a Chartered Accountant in practice in Adyar, Chennai, since 1985.
