Ravi had budgeted for everything on his Kollur flat in West Hyderabad. The 82 lakh price, the registration fee, the interiors, even the society corpus. What he had not budgeted for was a notice, eight months after registration, asking why he had never deducted tax on the purchase. The amount was small, 82,000 rupees of tax he was always meant to hold back from the seller, but the interest and the paperwork to fix it cost him three weekends and a chartered accountant fee. His mistake was simple. He assumed the builder would handle it. Nobody did.

The short answer. If you buy any property in Hyderabad other than agricultural land for 50 lakh rupees or more, you as the buyer must deduct 1 percent of the full sale price and deposit it with the government, now through the new Form 141 under Section 393. The trade off is real. The 1 percent is not an extra cost to you because you pay the seller 1 percent less and hand that slice to the tax department, but the compliance sits entirely on your shoulders, and skipping it invites interest and penalty later.

Do I really have to deduct tax when I buy a flat in Hyderabad?

Yes, if the consideration is 50 lakh rupees or more you are legally the one who must deduct the tax. This rule applies to almost every apartment, villa and plot transaction in the city because Hyderabad prices in areas like the Financial District, Kokapet, Tellapur and Kompally routinely cross that mark. The only common exception is agricultural land, which is left out of this provision. The duty falls on the buyer, not the seller and not the developer, which is exactly why so many first time buyers miss it. You are used to the builder guiding every step, so it feels wrong that this one is yours alone. It is yours alone.

The tax you deduct is not a new charge on top of your budget. It is a part of the money you already owe the seller. You simply pay the seller 99 percent and route the remaining 1 percent to the government against the seller PAN. The seller then claims credit for it when filing returns. Think of yourself as a collection agent for that 1 percent.

What changed in 2026, and is it still Form 26QB?

The biggest change is the form itself, so do not follow an old blog that tells you to file Form 26QB. Under the new Income tax Act, 2025, property TDS reporting moved to a single unified challan cum statement called Form 141, and property transfers sit in its Schedule B. Section 393 of the 2025 Act is the successor to the old Section 194-IA, and the substance of the rule, 1 percent on 50 lakh or more, carries over unchanged. The aim of the merger was to fold several separate statements, including the old property, rent and contractor forms, into one place so that reporting is cleaner and easier to match against a PAN. For a buyer that means one form to learn rather than several, but it also means guidance written before 2026 is now out of date on the mechanics, even where the core numbers are the same.

Timing decides which form you use. For any payment made to the seller on or before 31 March 2026, the old Form 26QB still applies. For any payment made on or after 1 April 2026, you must use Form 141. As a Hyderabad buyer transacting today in August 2026, you are firmly in Form 141 territory. Tax professionals have documented this transition from Form 26QB to Form 141 in detail, and the income tax portal now hosts the Form 141 help pages directly.

How much do I deduct, and on which amount?

You deduct a flat 1 percent, and you deduct it on the entire sale consideration once the 50 lakh threshold is met. This is the point that trips people up. If your flat costs 80 lakh, you do not deduct 1 percent of the 30 lakh above the threshold. You deduct 1 percent of the whole 80 lakh, which is 80,000 rupees. The threshold is only a gate that decides whether the rule switches on. Once it is on, the base is the full price, including anything that forms part of the consideration such as car parking or preferential location charges written into the agreement. A second point catches joint buyers. If two of you buy together, the 50 lakh test is applied to the total value of the property, not to each person share, so a 90 lakh flat split between a couple still attracts the 1 percent even though neither half crosses 50 lakh on its own. The table below sets out the common situations a Hyderabad buyer meets.

What is the step by step process for a buyer?

The process is mechanical once you know the order, so work through it as a checklist rather than from memory. Keep the seller PAN and your own PAN ready before you start, because the form is built around both.

1. Confirm the residency of the seller in writing, because an NRI seller changes everything about how tax is deducted.
2. Collect a valid PAN for every seller and every buyer named on the agreement.
3. At the time of paying the seller, hold back 1 percent of that payment as tax.
4. Log in to the income tax e filing portal and open Form 141, then complete Schedule B for the property transfer.
5. Deposit the deducted amount through the portal within the deadline and save the challan.
6. Download the TDS certificate generated for the seller and hand it over as proof.
7. Store the challan, the certificate and the agreement together, because you will need them at resale.

If you pay the seller in instalments, as is common in an under construction ASBL or Anvita project, you repeat the deduction on each instalment rather than once at the end. Each tranche carries its own 1 percent and its own 30 day clock, so a demand raised in September and paid in September is reported separately from an October demand. Many buyers find it easier to file immediately after each payment rather than waiting, because a single missed tranche is the most common reason a clean file later shows a mismatch. Keep a simple running sheet of date paid, amount, tax deducted and challan number, and reconcile it against the seller ledger before the final handover.

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

These two situations are the ones that quietly create the biggest liabilities, so slow down here. If the seller is a non resident, the 1 percent route under Section 393 does not apply at all. Tax on a payment to an NRI seller is governed by a separate, higher provision, there is no 50 lakh floor protecting a smaller deal, and the buyer usually needs a TAN rather than filing on PAN alone. Getting this wrong is expensive, so confirm the seller residency in the agreement and verify the correct process on the official income tax portal or with a professional before you release money.

The no PAN case is simpler but still costly. If a resident seller cannot furnish a valid PAN, tax is deductible at a rate much higher than 1 percent under the PAN related rule. The fix is easy, collect the seller PAN before you pay, and never accept a promise to share it later. For documentation discipline like this, our guide on the mother deed and link documents for Hyderabad buyers covers the wider paper trail you should assemble alongside the tax records.

What are the penalties if I skip the deduction?

Skipping the deduction does not make the liability disappear, it grows it. The department can treat you as an assessee in default, recover the tax from you, and add interest for the period of delay running month by month from the date you should have deducted. On top of the tax and interest, a separate penalty can apply for the failure itself. Because the amount is a percentage of the property price, even a routine Hyderabad flat can turn a forgotten 1 percent into a five figure interest bill by the time a notice arrives. This is also a common surprise for buyers of under construction homes who are already tracking GST, so read it together with our explainer on GST on an under construction flat in Hyderabad to see your full tax footprint on a single purchase. A project such as ASBL Loft in the Financial District can involve staged payments where each instalment needs its own deduction, so plan the cash flow early.

Common questions from Hyderabad buyers

Is TDS on property still filed on Form 26QB in 2026?

No. For any property payment made on or after 1 April 2026 the challan cum statement is filed on the new Form 141, Schedule B, under Section 393. Form 26QB continues to apply only to payments made on or before 31 March 2026, so most current Hyderabad deals now use Form 141.

Do I deduct 1 percent on the full price or only the amount above 50 lakh?

You deduct 1 percent on the entire sale consideration, not just the slice above 50 lakh. If a Hyderabad flat is priced at 80 lakh, the tax is 1 percent of 80 lakh, which is 80,000 rupees. The 50 lakh figure is only the threshold that decides whether any deduction applies at all.

Who deposits the TDS, the buyer or the builder?

The buyer is responsible for deducting the tax and depositing it with the government. The seller, the builder and the sub registrar carry no part of this duty. If the buyer forgets, the buyer faces the interest and penalty, so treat it as your own compliance and never assume the developer has handled it.

When is the property TDS due after I pay the seller?

The tax must be deposited using Form 141 within 30 days from the end of the month in which the deduction was made. If you paid the seller on 10 August, the month ends on 31 August, so your outer deadline is 30 September. Paying earlier is safer because late deposit attracts monthly interest.

Last updated 2026-08-08. PropNewz Team.