TDS When You Buy a Hyderabad Home: the 1 Percent You Must Deduct

The moment a Hyderabad buyer signs a sale deed for a flat priced at 80 lakh, a quiet obligation lands on the buyer, not the seller. On that consideration the buyer is the one the Income Tax Department expects to hold back 1 percent, deposit it to the government, and hand the seller a certificate for it. Skip it, and the notice that arrives months later is addressed to the buyer. This is Section 194-IA, and in a city where flat tickets routinely cross the threshold, most first time buyers meet it only at the registration desk, too late to plan for it.

The short answer. If you buy a house, flat, or non agricultural plot in Hyderabad for 50 lakh or more, you must deduct 1 percent of the sale value (or the stamp duty value, whichever is higher) and deposit it using Form 26QB, quoting only your PAN and the seller's PAN, no TAN required. The trade off is cash flow at closing: that 1 percent is carved out of the money you pay the seller, so the seller receives 99 percent and you route the last 1 percent to the tax department, all in the same week as registration.

Who actually has to deduct the TDS, the buyer or the seller?

The buyer does, always. Section 194-IA places the duty to deduct and deposit on the person paying for the property, not on the person receiving the money. The official Income Tax Department guidance states that any person buying an immovable property, other than rural agricultural land, from a resident seller shall deduct tax at the rate of 1 percent from the sale consideration or the stamp duty value of the property, whichever is higher. In plain terms: your builder or the previous owner does not do this for you, and a clause in the agreement saying the seller will handle taxes does not move the legal duty off your shoulders. If two of you buy jointly, each co owner deducts and files for their share of the payment.

What is the 50 lakh threshold, and is it on the full price or the excess?

The threshold is 50 lakh, and the 1 percent applies to the whole value, not just the slice above 50 lakh. A common and expensive misreading is to treat 50 lakh like an exemption slab. It is not. If your Hyderabad flat is agreed at 80 lakh, you deduct 1 percent of the full 80 lakh, which is 80,000, not 1 percent of the 30 lakh above the line. Below 50 lakh, Section 194-IA does not apply at all and no TDS is due under this section. The value tested is the higher of the consideration written in your agreement and the stamp duty value, which in Telangana is the government market value used at registration, so a low quoted price will not shrink your TDS if the market value is higher.

Do you need a TAN, and how does Form 26QB work?

You do not need a TAN, which is the one piece of good news in this process. Ordinary tax deductors need a Tax Deduction Account Number, but for property under Section 194-IA the buyer files with only a PAN. The mechanism is Form 26QB, a combined challan and statement filed online through the income tax e filing portal. You enter both PANs, the property details, the consideration, the date of agreement and payment, and the tax works out to 1 percent. If you pay the seller in installments, a separate Form 26QB is filed for each payment. After the tax is deposited, you download Form 16B and give it to the seller as proof that their 1 percent has reached the government and sits against their PAN.

Timing matters as much as the amount. The widely followed rule is that the deducted tax must be paid and Form 26QB filed within thirty days from the end of the month in which the deduction was made, so a deduction made in the registration month carries into the following month. Treat the registration date itself as the trigger and set a reminder, because late deposit and late filing attract interest and a fee that the buyer, as the deductor, ends up carrying. For the exact current timelines and any penalty, check the Form 26QB flow on the official income tax e filing portal before you pay, rather than relying on the seller's assurances.

What happens if the seller does not share a PAN?

Without a valid seller PAN, the rate is not 1 percent, it climbs steeply. When a deductee fails to furnish a valid PAN, the law requires deduction at a much higher rate, widely applied at 20 percent for these property cases. For a buyer, that is a reason to insist on a correct, verified seller PAN before you part with any money, and to check that the name on the PAN matches the name on the title. A mismatched or invalid PAN does not just inconvenience the seller, it exposes you to a far larger deduction and to the hassle of correcting a filed statement.

How does the Hyderabad TDS compare with the stamp duty you also pay?

The 1 percent TDS is separate from, and paid alongside, Telangana stamp duty and registration. Buyers often blur the two because both are settled around registration, but they flow to different places for different reasons. The table below sets the property side costs against the TDS so you can budget the full week honestly.

Read the table carefully: the TDS is money you keep back from the seller, while stamp duty, transfer duty, and the registration fee are extra money you add on top of the price. On an 80 lakh flat the stamp duty side alone runs to roughly 4.8 lakh before you count the 80,000 of TDS, so the two together move real money in a single week. Our guide to stamp duty and registration charges in Hyderabad breaks down that roughly 6 percent property side load in full, and it is worth mapping both against your loan disbursement so nothing bounces at the sub registrar's office.

What is the buyer's step by step checklist for the 1 percent?

Treat the TDS as a fixed part of your registration week, not an afterthought. The seven steps below take you from agreement to the certificate that closes the loop.

1. Confirm the deal value is 50 lakh or more, because below that Section 194-IA does not apply and no 26QB is needed.
2. Collect and verify the seller's PAN, and check the name on it matches the person on the title deed.
3. Work out 1 percent of the higher of the agreement value and the Telangana market value used for stamp duty.
4. Deduct that 1 percent from the payment to the seller, so the seller receives the balance 99 percent.
5. File Form 26QB on the income tax e filing portal and pay the deducted amount online, one form per installment.
6. Download Form 16B once the payment reflects, and hand it to the seller as their credit certificate.
7. Keep the challan, Form 26QB acknowledgement, and Form 16B with your deed papers for future capital gains proof.

What if the seller is an NRI rather than a resident?

If the seller is a non resident, Section 194-IA does not apply and a different, heavier rule takes over. Section 194-IA covers a resident seller only. When you buy from an NRI, tax is deducted under Section 195, usually at capital gains rates that are far above 1 percent, and the buyer generally does need a TAN and files Form 27Q instead of Form 26QB. Getting this wrong is costly, so establish the seller's residential status in writing early. We cover that separately in our guide to buying a Hyderabad home from an NRI seller. For a resident seller on a mainstream project such as Brigade Barcelona in Kokapet, the plain 1 percent Form 26QB route is what applies.

Frequently asked questions

Is TDS on property calculated on the full price or only above 50 lakh?

It is calculated on the full consideration once the value reaches 50 lakh, not only on the amount above 50 lakh. For an 80 lakh Hyderabad flat you deduct 1 percent of the entire 80 lakh, which is 80,000. If the property value is below 50 lakh, Section 194-IA does not apply and no TDS is due.

Does the buyer or the seller deposit the 1 percent TDS?

The buyer deposits it. Section 194-IA places the duty to deduct 1 percent and pay it to the government on the buyer, using Form 26QB. The buyer holds back the 1 percent from the seller's money and deposits it online. A contract clause shifting the task to the seller does not remove the buyer's legal responsibility for the deduction.

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

No. Unlike most tax deductions, TDS on property under Section 194-IA does not require a TAN. The buyer files Form 26QB quoting only the buyer's PAN and the seller's PAN. This keeps the process accessible to ordinary individual buyers who would otherwise have to apply for a separate deduction account number before completing the purchase.

What is Form 16B and why does the seller want it?

Form 16B is the TDS certificate the buyer issues to the seller after depositing the 1 percent through Form 26QB. It proves the deducted tax reached the government and is credited against the seller's PAN, so the seller can claim it when filing. Without it, the seller cannot claim that credit, so buyers should download and share it promptly.

Last updated 2026-09-17. PropNewz Team.