TDS on a Hyderabad Property Purchase: Section 194-IA and Form 26QB for Buyers

In April, a Gachibowli buyer named Sneha agreed to pay one crore and ten lakh rupees for a three bedroom flat. Her banker asked a quiet question at the loan desk: had she deducted the one percent tax before releasing the seller's money. She had not. The seller had already been paid in full, and now Sneha had to chase him to recover the tax she was legally required to hold back. A single line on a checklist would have saved her weeks of awkward phone calls.

The short answer. When you buy a property in Hyderabad for fifty lakh rupees or more, you, the buyer, must deduct one percent as tax at source and deposit it with the government using Form 26QB, within thirty days from the end of the month in which you deduct it. The one percent is calculated on the higher of the sale price or the stamp duty value. The trade-off to understand is this: you do not need a TAN and the process is simple for a resident seller, but the moment the seller is a non-resident the rules change completely, the rate is far higher, and a different form and a TAN come into play. Get that distinction wrong and the cost falls on you, not the seller.

What is Section 194-IA, and when must a Hyderabad buyer deduct TDS?

Section 194-IA of the Income Tax Act makes the buyer responsible for deducting tax at source on the purchase of immovable property. It applies to a flat, a house or a plot, but not to agricultural land, and it is triggered when the sale consideration or the stamp duty value is fifty lakh rupees or more. The duty sits on you as the buyer, not on the seller, which surprises many first time purchasers who assume the seller handles all the tax. If the value is below fifty lakh, this section does not apply at all.

The threshold looks at the property, so a jointly bought flat priced above fifty lakh still attracts the deduction even when each co-owner's share looks smaller on paper. Treat the fifty lakh line as a property level test, not a per person one, and deduct whenever the total crosses it. You can read the exact provision on the Income Tax Department portal at incometax.gov.in.

How much TDS do you deduct, and on which value?

You deduct one percent, and you apply it to the higher of the sale consideration or the stamp duty value of the property. This higher-of rule was tightened so that a buyer cannot understate the deal by simply writing a low figure in the deed while the government's guideline value is much higher. If the two figures differ, always run the one percent on the larger number to stay on the right side of the law.

The stamp duty value here is the same government guideline value that already drives your registration cost, which is why our guide on how the market value floor sets your stamp duty is worth reading alongside this one. One important exception raises the rate sharply: if the seller cannot give you a valid PAN, the tax is deducted at twenty percent instead of one percent, so always collect the seller's PAN before you pay.

How do you pay it, using Form 26QB?

You pay it through Form 26QB, a combined challan and statement filed online on the Income Tax Department's tax payment facility. You do not need a TAN for this; your PAN and the seller's PAN are enough, which keeps the process light for an ordinary home buyer. Where there is more than one buyer or seller, a separate Form 26QB is filed for each buyer and seller combination, so a couple buying together files more than one.

The deadline is thirty days from the end of the month in which you make the deduction. Once the payment is processed, you download Form 16B, the TDS certificate, from the TRACES portal and give it to the seller as proof that the tax was deposited against their PAN. Keep the challan, the Form 26QB acknowledgement and the Form 16B in the same file as your sale deed, because your bank and, later, any buyer of yours will ask for them.

For a property bought in installments, such as an under construction flat paid in stages, the one percent is deducted on each payment rather than once at the end, and a Form 26QB is filed for each installment. Match every deduction to the payment that triggered it, so your certificates line up with the money that actually moved. This staged approach is common in Hyderabad's large gated projects, where payments follow a construction linked plan and stretch across many months.

What changes if the seller is an NRI?

Everything about the tax changes if the seller is a non-resident. Section 194-IA no longer applies, and the transaction falls under Section 195 instead. The tax is no longer a flat one percent on the price; it is based on the seller's capital gains, which for a long held property is generally taxed at a lower rate but with surcharge and cess added, and buyers often end up deducting a much larger share of the sale value than they expected. This is the single most expensive mistake a Hyderabad buyer can make on paperwork.

For an NRI seller you must obtain a TAN, deduct under Section 195, and report the tax on Form 27Q rather than Form 26QB. The cleaner path is to ask the seller to obtain a lower or nil deduction certificate from the Income Tax Department, which fixes the correct rate in advance, and to take a chartered accountant's help before any money moves. Confirming the seller's residential status in writing, early, protects you from a demand landing on your name months later.

What happens if you skip it or get it wrong?

Missing the deduction leaves you, the buyer, exposed, because the law treats you as the person in default. Interest runs on tax that was not deducted or not deposited on time, and a late filing fee can apply for a delayed Form 26QB, so the cost of forgetting is real money rather than a mere formality. Recovering the amount from a seller who has already been paid in full is difficult, which is exactly the trap Sneha fell into.

These transactions are also visible to the tax department, because sub-registrars report high value property registrations, and a mismatch between a registered sale above fifty lakh and a missing Form 26QB is easy to flag. It is far cheaper to deduct correctly on day one than to answer a notice a year later and pay interest on top.

The safe habit is to hold back the one percent from the final payment and deposit it yourself, rather than paying the seller in full and trusting them to remit it. That way the tax reaches the government against the seller's PAN, your Form 16B is clean, and nobody can later claim the deduction was never made.

How does TDS fit into your Hyderabad purchase timeline?

Slot the TDS step between agreeing the price and making the final payment, not after registration. Confirm the seller's PAN and residential status while drafting the agreement, calculate the one percent on the higher of price or stamp value, hold that amount back, and deposit it through Form 26QB around the time of the final payment. Do your title checks in parallel, including the encumbrance certificate for the property, so tax and title move together.

This sequence works whether you are buying a resale flat or a fresh apartment such as Prestige Golden Grove in Tellapur, as long as the price crosses fifty lakh. Follow the steps below and the tax stops being a scramble at the loan desk.

1. Confirm whether the sale value or stamp duty value reaches fifty lakh rupees.
2. Collect a valid PAN from every seller, and confirm each seller's residential status in writing.
3. For a resident seller, calculate one percent on the higher of price or stamp value.
4. Hold that amount back from the final payment rather than paying in full.
5. File Form 26QB and pay within thirty days from the end of the deduction month.
6. Download Form 16B from TRACES and hand it to the seller.
7. For any non-resident seller, get a TAN, use Section 195 and Form 27Q, and take professional help.

Frequently asked questions

When does the one percent TDS on a property purchase apply?

It applies when you buy immovable property, other than agricultural land, and the sale consideration or stamp duty value is fifty lakh rupees or more. You, the buyer, must deduct one percent and deposit it. The threshold looks at the property value, so it can catch a purchase even when your individual share seems smaller.

Do I need a TAN to deduct TDS on a property purchase?

No, not for a resident seller under Section 194-IA. Your PAN and the seller's PAN are enough, and you pay through Form 26QB. A TAN becomes necessary only when the seller is a non-resident, because that transaction falls under Section 195 and is reported on Form 27Q instead of Form 26QB.

What TDS applies when I buy a flat from an NRI seller?

Section 194-IA does not apply. The purchase falls under Section 195, the rate is based on the seller's capital gains rather than a flat one percent, and you file Form 27Q using a TAN. Ask the NRI seller for a lower or nil deduction certificate, and take professional help before you pay anything.

By when must I deposit the TDS using Form 26QB?

You deposit it within thirty days from the end of the month in which the deduction is made, using Form 26QB, which is a combined challan and statement. After paying, download Form 16B from the TRACES portal and hand it to the seller as proof. Late deposit attracts interest and a fee.

Last updated 2026-09-01. PropNewz Team.