TDS on a Property Purchase: What a Bengaluru Buyer Must Deduct Under Section 194-IA

A Bengaluru buyer closing on a resale flat priced at seventy lakh was surprised when his lawyer told him he had a tax duty to perform, not the seller. Before paying the seller in full, he had to hold back one percent of the price, deposit it with the income tax department, and hand the seller a certificate proving he had done so. He had never bought a property worth this much before, and no one had mentioned it. The obligation is real, it sits on the buyer, and getting it wrong carries interest and penalties that are entirely avoidable.

The short answer. Under Section 194-IA of the Income Tax Act, if you buy an immovable property, other than rural agricultural land, from a resident seller for 50 lakh or more, you must deduct 1 percent as tax at source on the higher of the sale consideration or the stamp duty value, deposit it with the government, and give the seller a Form 16B certificate. You file this through the challan-cum-statement on the income tax portal, historically known as Form 26QB, within 30 days from the end of the month in which you deducted. The trade-off is simple: it is a small deduction from a payment you were making anyway, but the responsibility, and the penalty for missing it, falls on you as the buyer.

What is Section 194-IA and when does it apply?

Section 194-IA makes the buyer responsible for deducting tax at source when buying a property above a value threshold. It applies when you purchase an immovable property, other than rural agricultural land, from a resident seller, and the sale consideration or the stamp duty value is 50 lakh or more. The Income Tax Department sets out the rule on its own page on TDS from a sum paid to buy an immovable property, and the key point for a buyer is that the duty to deduct is yours, not the seller's. A convenient feature is that, unlike most TDS obligations, you do not need a TAN for this; your PAN and the seller's PAN are enough.

The threshold is a cliff, not a slab: if the value reaches 50 lakh, the 1 percent applies to the whole amount, not just the portion above 50 lakh. Given Bengaluru prices, a great many apartment and plot purchases cross this line, so for most buyers in the city this is not an edge case but a routine step in closing. Treat it as a standard part of your payment plan rather than an afterthought discovered at the registration table. It also helps to build the deduction into your cash flow from the start. Because you are paying the seller one percent less and routing that one percent to the government, the total you spend does not change, but the mechanics do: you need the seller's cooperation on the reduced payment, you need their PAN, and you need to file on time. Setting this out in the sale agreement, so the seller knows you will deduct and deposit the TDS, avoids an awkward conversation on closing day.

How much do you deduct, and on what value?

You deduct 1 percent, and you apply it to the higher of the sale consideration or the stamp duty value of the property. This higher-of rule matters because if the government's stamp duty value, the guidance value in Karnataka, is above your agreed price, the TDS is worked out on that higher figure, not on your negotiated number. In practice, on most straightforward resale deals the two are close and you deduct 1 percent of the price, but you should check the stamp duty value so you are not caught short.

A common and costly mistake is to deduct on the wrong base or to forget that the seller's PAN is essential. If the seller does not provide a valid PAN, the rate of deduction is much higher, so insist on the PAN up front. The guidance value that feeds the stamp duty value is the same number that drives your stamp duty, which we set out in our guide to Karnataka stamp duty and registration charges in Bengaluru, so it is worth confirming that figure once and using it consistently across both calculations.

How do you deposit the TDS and give the seller proof?

You deposit the deducted amount with the government through the challan-cum-statement on the income tax portal, long known as Form 26QB, and you must do it within 30 days from the end of the month in which the deduction was made. Because forms are periodically renumbered, confirm the current form on the official portal before you file, but the mechanics are the same: you report the buyer and seller PAN, the property details and the amount, and you pay the tax online. After the payment is processed, you download Form 16B, the TDS certificate, and hand it to the seller as proof that the tax on their sale has been deposited against their PAN.

Timing is where buyers slip. Deposit late and interest runs on the amount, and a late filing of the statement attracts a fee for each day of delay, so the cheapest course is to file promptly. Keep the challan and the Form 16B in your file; the seller will want the certificate, and you will want the record if any question ever arises about whether the deduction was made and paid. One practical tip is to file the statement soon after you deduct rather than waiting for the deadline, because the portal occasionally needs corrections, and giving yourself a buffer means a small error does not turn into a late filing. The seller, for their part, will use your Form 16B to claim credit for the tax against their own return, so handing it over promptly is also a courtesy that keeps the transaction clean on both sides.

What changes for joint buyers or an NRI seller?

Two situations change the mechanics, and both matter in Bengaluru. Where there are joint buyers, the obligation still applies and the filing has to reflect each buyer and seller correctly, so joint purchasers should get advice on how the statement is completed rather than assume one filing covers everyone. The bigger change is the residency of the seller. Section 194-IA applies to a resident seller; it does not apply where the seller is a non-resident. When you buy from an NRI seller, a different provision, Section 195, governs the deduction, usually at higher rates and with a TAN required, which is a materially different process. We covered that scenario in our guide to TDS when buying property from an NRI seller, and the single most important step there is to establish the seller's residency status before you plan the deduction. Confusing the two can leave you having deducted far too little, with the liability landing back on you as the buyer.

Section 194-IA at a glance

Here is the core of the rule in one view for a resident-seller purchase.

The table is your quick reference, but the two details that most often trip buyers are the higher-of value rule and the deposit deadline. Get those two right and the rest is administrative. Buyers who miss the obligation entirely are usually the ones who assumed the seller or the registration office would handle it. Neither does. The duty is created by the tax law and sits squarely on the person paying for the property, which is exactly why it belongs on your own closing checklist.

What is your TDS checklist for a Bengaluru purchase?

Run through this as you plan the payment for any purchase at or above 50 lakh.

1. Confirm whether the sale consideration or stamp duty value is 50 lakh or more.
2. Establish that the seller is a resident, since an NRI seller falls under a different section.
3. Collect the seller's valid PAN before you make any payment.
4. Deduct 1 percent on the higher of the consideration or the stamp duty value.
5. File the challan-cum-statement on the income tax portal within the deadline.
6. Deposit the deducted tax within 30 days from the end of the month of deduction.
7. Download Form 16B and hand it to the seller, keeping copies for your records.

Frequently asked questions

Who is responsible for deducting TDS on a property purchase?

The buyer is responsible, not the seller. Under Section 194-IA, when you buy an immovable property other than rural agricultural land from a resident seller for 50 lakh or more, you must deduct 1 percent as TDS, deposit it and give the seller a Form 16B certificate. You do not need a TAN, but you do need the seller's PAN.

Is the 1 percent charged only on the amount above 50 lakh?

No. The 50 lakh figure is a threshold, not an exemption slab. Once the sale consideration or the stamp duty value reaches 50 lakh or more, the 1 percent applies to the entire value, not merely the portion above 50 lakh. You deduct it on the higher of the consideration or the stamp duty value, so check both figures before you calculate the amount.

When do I have to deposit the TDS with the government?

You must deposit the deducted tax within 30 days from the end of the month in which the deduction was made, filing the challan-cum-statement on the income tax portal. Confirm the current form on the portal, as forms can be renumbered. Depositing late means interest runs on the amount and a per-day fee can apply to a late statement, so file promptly.

Does Section 194-IA apply if the seller is an NRI?

No. Section 194-IA applies only to a resident seller. When the seller is a non-resident, the deduction is governed by Section 195, typically at higher rates and requiring a TAN, which is a different process. So establish the seller's residency status before you plan the deduction, because treating an NRI sale as a 194-IA sale can leave you having deducted far too little.

Last updated 2026-09-29. PropNewz Team.