A buyer in Sarjapur wired the full 80 lakh to the seller, delighted to close fast. Three months later a notice arrived. As the buyer, he was the one legally required to deduct 1 percent tax at source and deposit it with the government, and by paying the seller in full he had missed it. He now faced a late fee that grew by 200 rupees a day. The 1 percent property TDS is one of the most misunderstood duties a home buyer carries, because it falls on the buyer, not the seller, and this guide sets out exactly how to get it right.

The short answer. If you buy a property from a resident seller for 50 lakh rupees or more, you must deduct 1 percent of the value as tax, deposit it using the challan cum statement historically called Form 26QB, and do so within 30 days from the end of the month in which you paid. You do not need a TAN, only your PAN. The trade off is admin for protection. A little paperwork now keeps both you and the seller clear with the tax department and avoids late fees that run at 200 rupees a day.

Who has to deduct the TDS and file the form?

The buyer deducts the tax and files the form, not the seller. Under Section 194-IA, when you buy immovable property, other than agricultural land, from a resident seller and the value is 50 lakh rupees or more, you must deduct 1 percent of the amount and pay it to the government. This surprises many first time buyers, who assume tax is always the seller's job, but here the law puts the duty squarely on the purchaser. If there are joint buyers or joint sellers, the deduction is handled proportionately, and each combination is reported through a separate filing, which is a detail many buyers miss when a couple buys together. The concept and why it exists are covered in our guide to Section 194-IA, while this article focuses on actually doing it. The cleanest way to handle the whole thing is to build the deduction into your payment plan from the start. Rather than paying the seller the full amount and trying to recover the 1 percent later, you simply pay the seller 99 percent and route the remaining 1 percent to the government on their behalf. Framed that way, the seller receives exactly what they expected, the government receives the tax, and you stay compliant, all without any awkward clawback conversation after the money has moved.

How much TDS is it and on what value?

It is 1 percent, and it is charged on the whole value, not just the part above 50 lakh. The tax is computed on the higher of the sale consideration or the stamp duty value of the property, according to this filing guide. So if you buy a flat for 90 lakh, the 1 percent applies to the full 90 lakh, giving 90,000 rupees, not to only the 40 lakh above the threshold. The 50 lakh figure is a trigger, not an exemption slab. A common and costly mistake is to deduct on the excess alone, so remember that once the threshold is crossed, the whole value is in scope.

Do I need a TAN to file?

No. Unlike most other tax deductions, you do not need a Tax Deduction Account Number for this. Your PAN is sufficient to file the challan cum statement and pay the tax, which is what makes this manageable for an ordinary buyer who is not a business. You file it online through the income tax portal, enter the property, buyer and seller details, and the system calculates the 1 percent for you. Keep the PAN of the seller handy, because you will need it, and a missing seller PAN has serious consequences that we cover further down.

What is the deadline to file and pay?

You must file and deposit the tax within 30 days from the end of the month in which the deduction was made. So if you paid the seller on 20 September, the form and payment are due by 30 October. Miss the deadline and a late filing fee of 200 rupees a day applies under Section 234E, capped at the amount of the TDS itself, and interest can apply on top for late deduction or late payment. Because the clock runs from the end of the month, buyers who pay in instalments should deduct and deposit on each payment rather than waiting for the end, and keep a simple log of dates and amounts so nothing slips. This is especially important for an under construction purchase, where the builder raises demands over many months and each payment carries its own deduction and its own deadline. Treat every demand letter as a trigger to deduct the 1 percent, deposit it, and file, rather than trying to reconcile a year of payments in one rushed sitting at the end.

What is Form 16B and when do I issue it?

Form 16B is the TDS certificate you give the seller, and you must issue it within 15 days of the due date for the challan cum statement. After you have deposited the tax, you download Form 16B from the TRACES portal and hand it to the seller as proof that the 1 percent was deducted and paid on their behalf. This matters to the seller because it lets them claim credit for the tax when they file their return, since the amount then reflects in their tax records. Skipping it leaves the seller unable to claim the credit and can push them to effectively pay tax twice, which sours a deal that had otherwise closed cleanly. Practically, it is worth agreeing with the seller in the sale agreement itself that you will deduct and deposit the tax and hand over Form 16B, so there is no confusion later about who does what. A short written line to this effect protects both sides, because the seller knows they will get their certificate and you have a record that the deduction was part of the agreed terms rather than a surprise reduction in what they received.

What if the seller is an NRI or has no PAN?

Both situations change the rules, so identify them early. If the seller is a non resident, Section 194-IA does not apply, and the tax is instead deducted under Section 195 at higher rates that depend on the seller's capital gains, and for that the buyer generally does need a TAN. Getting this wrong with an NRI seller is a frequent and expensive error, so take professional advice, and see our guide for buying from or as an NRI. Separately, if a resident seller cannot provide a PAN, the deduction jumps from 1 percent to 20 percent, which is a strong reason to insist on the seller's PAN before you part with money.

Use this seven step order to handle the property TDS as a Bengaluru buyer.

1. Confirm the property value is 50 lakh or more and the seller is a resident with a valid PAN.
2. Deduct 1 percent of the higher of the sale consideration or the stamp duty value.
3. Deduct on each payment if you are paying the seller in instalments.
4. File the challan cum statement online using your PAN, no TAN required.
5. Deposit the tax within 30 days from the end of the month of deduction.
6. Download Form 16B from TRACES and give it to the seller within the 15 day window.
7. For an NRI seller, take professional advice, since Section 195 and a TAN apply instead.

Who pays the 1 percent TDS on a property purchase?

The buyer deducts and pays it, not the seller. Under Section 194-IA, when you buy property worth 50 lakh rupees or more from a resident seller, you must deduct 1 percent of the value and deposit it with the government using your PAN. You then issue the seller a Form 16B certificate so they can claim credit for the tax that was deducted.

Is the 1 percent charged only on the amount above 50 lakh?

No. Once the value reaches 50 lakh rupees, the 1 percent applies to the entire value, not just the part above 50 lakh. The tax is computed on the higher of the sale consideration or the stamp duty value. So on a 90 lakh flat the TDS is 90,000 rupees. The 50 lakh figure is only a trigger for the rule, not an exemption slab.

Do I need a TAN to deposit property TDS?

No. For property TDS under Section 194-IA you use your PAN, not a TAN, to file the challan cum statement and deposit the tax online. This is what makes it manageable for an individual buyer. A TAN is generally needed only where the seller is a non resident and the deduction falls under Section 195 instead, so check the seller's residential status early.

What happens if I miss the property TDS deadline?

A late filing fee of 200 rupees a day applies under Section 234E, capped at the amount of the TDS, and interest can apply for late deduction or payment. A delay can also stop the seller from claiming credit. File within 30 days from the end of the month of deduction, and issue Form 16B within 15 days of the due date.

Tax forms and procedures can change, and the property TDS form has been renumbered under the new Income Tax Act, so confirm the current form and process on the official income tax portal at incometax.gov.in and consult a chartered accountant for your case, especially where the seller is an NRI. This guide is buyer education and not tax advice.

Last updated 2026-08-25. PropNewz Team.