In the summer of 2026 a Bengaluru buyer closing a 90 lakh flat near Hebbal was ready to transfer the full amount to the seller. His lawyer stopped him with a single question: had he set aside the tax he was required to deduct? He had not. Under the law, on a purchase of that size the buyer, not the seller, must deduct one percent and pay it to the government. Paying the seller the whole sum first would have left the buyer personally liable for the tax, with interest and penalty. A short pause and one online form kept him on the right side of the rule.

The short answer. When you buy a property from a resident seller for 50 lakh rupees or more, you must deduct one percent of the price as tax at source, deposit it using Form 26QB within thirty days of the end of the month of deduction, and give the seller a Form 16B certificate. The trade off is simple: the task is small and free to do yourself, but skipping it shifts a real tax liability, plus interest and penalty, onto you as the buyer.

What is this TDS and when does it apply?

This is a tax deducted at source on the purchase of property, and it applies when you buy from a resident seller for 50 lakh rupees or more. The rate is one percent, and it is calculated on the higher of the sale value or the stamp duty value of the property. The rule exists so that the tax authorities capture a record of large property transactions at the moment they happen. What surprises many first time buyers is that the obligation sits on the buyer, not the seller. You are the one who must deduct, deposit and certify, which means the responsibility to get it right is yours even though the money ultimately belongs to the seller.

The 50 lakh threshold is a cliff, not a slab. A purchase at or above it brings the whole transaction into the rule, while a purchase below it does not attract this particular deduction at all. Because so many Bengaluru homes now cross that mark, it is a rule most buyers in the city will meet at least once.

One point often trips buyers up on instalment purchases. The threshold looks at the total value of the property, not at each payment you make. So if a home costs 50 lakh or more but you pay it in stages to a builder, the one percent still applies, and you deduct it from each instalment rather than assuming that a single payment below the threshold escapes the rule. Reading the transaction as a whole, rather than payment by payment, is the way to stay compliant.

Who actually deducts and deposits the tax?

The buyer deducts the tax and deposits it, in the buyer's own name, using the buyer and seller PAN details. In practice you hold back one percent from what you would otherwise pay the seller and route that one percent to the government. A helpful feature of this particular deduction is that you do not need a separate tax deduction account number to do it, which is what makes it manageable for an individual buyer rather than only for businesses. You do, however, need the correct PAN for both sides, because the deposit is matched to those numbers. An incorrect or missing PAN is one of the most common ways this simple task goes wrong.

What are the deadlines and the paperwork?

The paperwork is one payment form and one certificate, and both have deadlines. You deposit the deducted tax using Form 26QB within thirty days from the end of the month in which the deduction was made, and you then issue Form 16B, the TDS certificate, to the seller within fifteen days of that payment. The table below sets out the obligations in order so nothing slips.

Missing these deadlines is where the cost creeps in. Late deposit attracts interest, and a late or missing Form 26QB can bring a fee for each day of delay, so the discipline of paying on time is what keeps a small task from becoming an expensive one.

How do you file Form 26QB step by step?

You file it online on the income tax e-filing portal, and the process is designed to be completed without a tax professional. Work through the following steps around the time you make the payment to the seller.

1. Keep the correct PAN of both the buyer and the seller ready before you begin.
2. Log in to the income tax e-filing portal and choose the e-Pay Tax option.
3. Select the form for TDS on the sale of property and enter the transaction details.
4. Confirm the amount, deduct one percent on the higher of price or stamp value, and pay online.
5. Save the challan and the acknowledgement generated after the payment clears.
6. Download Form 16B, the TDS certificate, once it is available on the portal.
7. Hand Form 16B to the seller within fifteen days as proof the tax was deducted and deposited.

Fit this into the wider set of costs and paperwork a purchase involves. The registration charges you pay are set out in our guide to Karnataka stamp duty and registration, and if the person selling to you lives abroad, the very different rules are covered in our guide to buying a property from an NRI seller.

What happens with a home loan or joint buyers?

The duty to deduct stays with the buyer even when a bank funds the purchase. If your lender disburses the price to the seller, you still have to ensure the one percent is deducted and deposited, so coordinate with the bank on how the payment is structured before disbursal. Where there are joint buyers or joint sellers, the deduction has to reflect each party's share, which usually means a separate Form 26QB for each buyer and seller combination rather than a single form. This is fiddly but not difficult, and getting it right at the time avoids the far greater bother of correcting a mismatched deposit later.

Think of the certificate as something the seller genuinely wants, not just a formality. The one percent you deduct is credited against the seller's own tax, so the Form 16B you hand over is what lets the seller claim that credit. Handled cleanly, the whole exercise protects both sides.

A little coordination up front removes most of the friction. Agree with the seller, in writing, that the sale price is inclusive of the one percent you will deduct, so there is no dispute at the counter about who bears it. Confirm both PAN numbers early, and if a bank is funding the purchase, tell the loan officer that the deduction has to be accounted for in the disbursal. These are small conversations, but having them before the money moves is what keeps the deduction from becoming a last minute scramble on registration day.

How does this apply to a specific purchase?

Run the rule against the actual deal in front of you. On a resident seller purchase of, say, a flat in a project such as Birla Thanisandra, if the price is 50 lakh or more you deduct one percent, deposit it through Form 26QB within the deadline, and issue Form 16B to the seller. The mechanics are the same whether the home is a resale flat or a builder purchase, though the exact payment schedule with a builder means you should confirm how and when the deduction applies to each instalment. The principle to carry into any purchase is that the one percent is not the seller's job to remember. It is yours, and doing it on time is a small price for staying clear of interest and penalty.

Frequently asked questions

When does 1 percent TDS apply on a property purchase?

One percent TDS applies when you buy a property from a resident seller for 50 lakh rupees or more. The deduction is made on the higher of the sale value or the stamp duty value, so a price at or above 50 lakh triggers the rule even if the two values differ. Below that threshold, no TDS is due.

Who has to deposit the TDS, the buyer or the seller?

The buyer deposits the TDS, not the seller. You deduct 1 percent from the amount payable to the seller and pay it to the government in your own name using the buyer and seller PAN details. No separate tax account number is needed for this, which makes it a duty an individual buyer can complete without a tax deduction account.

How do I file Form 26QB and issue Form 16B?

You file Form 26QB on the income tax e-filing portal by choosing e-Pay Tax, selecting the property TDS option, entering the buyer and seller details and the amount, and paying online. After the payment clears you download Form 16B, the TDS certificate, and hand it to the seller as proof that the tax was deducted and deposited.

Is the TDS still 1 percent if the seller is an NRI?

No. When the seller is a non resident, the deduction falls under a different section at higher rates rather than the flat 1 percent, and it generally requires the buyer to hold a tax deduction account number. Because the rules and paperwork differ sharply, a purchase from an NRI seller needs specific advice first.

The threshold, rate and filing steps described here reflect the current rules for tax deducted at source on a property purchase, as summarised in this guide to Form 26QB. Because form names and procedures are updated from time to time, always confirm the current form and deadlines on the official income tax portal before you file.

Last updated 2026-08-11. PropNewz Team.