A buyer in Sarjapur paid his seller the full agreed 75 lakh, took the keys, and thought the money side was finished. A year later a tax notice arrived, not for the seller, but for him. He was the one who had failed to deduct and deposit 1 percent of the price as tax, a duty the law places squarely on the buyer, not the seller. The 75,000 rupees he thought he had saved by paying in full had turned into a demand with interest and penalty attached. The obligation had always been his. He simply had not known it.

The short answer. When you buy immovable property, other than agricultural land, for 50 lakh or more, you as the buyer must deduct 1 percent of the price as tax and deposit it with the government, calculated on the higher of the sale consideration or the stamp duty value. You report it through Form 26QB, now being renumbered as Form 141 under the new tax law, within 30 days from the end of the month of deduction. The trade off is simple. Deducting correctly costs you nothing extra, since it comes out of what you owe the seller, while forgetting it leaves you, the buyer, exposed to interest and penalty.

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

The buyer does, and this is the single most misunderstood part of the rule. Under the tax law, it is the purchaser of the property who must deduct the 1 percent and deposit it, not the seller. You do this by paying the seller 99 percent of the agreed amount and sending the remaining 1 percent to the government on the seller's behalf as tax. The seller then claims credit for that 1 percent against their own tax.

Because the obligation sits on the buyer, any failure to deduct becomes the buyer's problem, complete with interest for the delay and a possible penalty. This is why paying the seller the full amount in a rush, without carving out the TDS, is a mistake that can follow you long after possession. The seller has your money and you have the liability, and recovering that 1 percent from a seller who has already banked the full price is often difficult in practice.

When does the 1 percent apply, and on what value?

It applies when the property's value is 50 lakh or more, and it is charged on the higher of the sale consideration or the stamp duty value. The 50 lakh is a threshold, not an exemption slab, so once the price reaches 50 lakh the 1 percent applies to the whole amount, not merely to the portion above 50 lakh. A property at 49 lakh attracts no TDS under this section, while a property at 50 lakh attracts it on the full 50 lakh.

The reference to the higher of consideration or stamp duty value matters because it closes a gap. If the agreement value is below the government stamp duty value, the 1 percent is calculated on the stamp duty value instead, so a low stated price does not shrink the tax. For how that stamp duty value is set in Karnataka, our guide to Karnataka stamp duty and registration charges explains the base you are working from.

How do you actually pay it, and what form is used?

You pay it online and, helpfully, you do not need a TAN to do so. The buyer reports and deposits the TDS through Form 26QB, which is being renumbered as Form 141 under the Income Tax Act 2025, with the payment date deciding which form applies. Only the PAN details of the buyer and the seller are needed, so an ordinary individual buyer can complete this without registering for a tax deduction account number that businesses use.

After depositing, the buyer must issue Form 16B to the seller as proof that the 1 percent tax has been paid on their behalf. This certificate is what lets the seller claim the credit, so it is part of your obligation, not an optional courtesy. Keep the challan and the Form 16B safely, because they are your evidence that you met the duty. The official process runs through the income tax portal at incometax.gov.in.

What are the deadlines and what happens if you miss them?

The TDS must be deposited within 30 days from the end of the month in which the deduction is made, and missing that window carries a cost. Late deposit attracts interest, and a failure to deduct or deposit can attract a penalty as well, all of which land on the buyer. Because the timeline runs from the month end, it is easy to lose track amid the rush of registration and moving in, which is exactly when many buyers slip.

The cleanest approach is to treat the TDS as a step in the payment itself, deducting it at the moment you pay the seller rather than promising to sort it out later. If part of the price is being paid from a home loan, coordinate with the bank so the TDS is handled on the disbursed amount too.

How does this interact with a home loan and multiple sellers?

With a home loan, the TDS still applies on the property value, and the deduction should be accounted for across all payments that make up the price, whether from your funds or the bank's disbursement. Buyers sometimes assume the bank handles it, but the statutory duty remains the buyer's, so confirm how it is being deducted rather than assuming. Where there are joint buyers or joint sellers, the TDS is generally handled in proportion to each party's share, which means more than one Form 26QB may be needed.

These wrinkles are worth clarifying before you pay, not after, because unwinding an incorrect deduction later is far more painful than doing it right once. When your payment schedule involves an advance and staged payments, our guide on token advance and earnest money helps you map when each payment, and its TDS, falls due. A higher value purchase such as Prestige Somerville in Varthur will almost always cross the 50 lakh threshold, so the TDS step should be planned from the start.

For an under construction purchase paid in instalments, there is a further point worth knowing. The threshold is judged by the total value of the property, not by each instalment, so a flat priced at 60 lakh crosses the threshold even though no single payment does. In that situation the TDS is deducted proportionately from each instalment as it is paid, rather than in one lump at the end. Buyers who assume that small instalments escape the rule are mistaken, and the safer reading is that any property whose full price reaches 50 lakh brings the whole payment stream within the 1 percent obligation. Getting a chartered accountant to set this up once at the start of a staged purchase usually costs far less than correcting a year of missed deductions.

What should a buyer do to stay compliant?

Stay compliant by building the TDS into your payment plan from day one and keeping the paperwork. Confirm the property value against the 50 lakh threshold, deduct the 1 percent at the point of payment, deposit it on time through the correct form, issue Form 16B to the seller, and keep the challan. None of this is difficult, but all of it is the buyer's job, and a notice a year later, addressed to you rather than the seller, is a poor and expensive way to learn that.

Your seven step property TDS checklist

1. Confirm whether the property value reaches 50 lakh, the threshold for TDS under this section.
2. Calculate 1 percent on the higher of the sale price or the stamp duty value.
3. Deduct that 1 percent from your payment to the seller, do not pay it in full.
4. Deposit the TDS using Form 26QB, now Form 141, using PAN details, no TAN needed.
5. Do this within 30 days from the end of the month of deduction.
6. Issue Form 16B to the seller as proof of the tax paid on their behalf.
7. Keep the challan and Form 16B safely as your evidence of compliance.

Frequently asked questions

Who pays TDS on a property purchase, the buyer or seller? The buyer. Under the tax law, the purchaser must deduct 1 percent of the price and deposit it with the government, then issue Form 16B to the seller. The seller claims credit for it. Because the duty sits on the buyer, any failure to deduct becomes the buyer's liability, with interest and possible penalty.

When does 1 percent TDS apply on a property? It applies when you buy immovable property, other than agricultural land, valued at 50 lakh or more, calculated on the higher of the sale consideration or stamp duty value. The 50 lakh is a threshold, so once the value reaches it the 1 percent applies to the full amount, not just the portion above 50 lakh.

How do I pay the TDS on a property purchase? You deposit it online through Form 26QB, now being renumbered as Form 141, using only the PAN details of buyer and seller, with no TAN required. It must be deposited within 30 days from the end of the month of deduction, and you then issue Form 16B to the seller as proof of payment.

What if I forget to deduct property TDS? The liability stays with you as the buyer. Late or missed deposit can attract interest and a penalty, and you may have to pay the 1 percent out of your own pocket if you already paid the seller in full. This is why the TDS should be deducted at the moment of payment, not left for later.

Last updated 2026-08-27. PropNewz Team.