A Bengaluru buyer paid the full one crore for his new flat, celebrated the registration, and then received a tax notice months later for failing to deduct and deposit one percent of the price as TDS. He had never heard of it. The seller had the money, the flat was his, but the law made him, the buyer, responsible for withholding a slice of the payment and routing it to the tax department. That one percent, a full lakh of rupees on his one crore deal, had quietly been his own legal job all along.

The short answer. When you buy an immovable property in India for 50 lakh rupees or more, you as the buyer must deduct 1 percent of the value as TDS under Section 194-IA and deposit it with the income tax department using Form 26QB. Since 1 October 2024 the 1 percent is calculated on the higher of the sale consideration or the stamp duty value. You need only your PAN and the seller's, not a TAN, and you must file within 30 days from the end of the month of deduction, then give the seller Form 16B. The trade off to understand is that this is your legal duty, not the seller's, and missing it brings interest and penalties onto you.

TDS on property is one of the most overlooked obligations in an Indian home purchase, precisely because it falls on the buyer rather than the seller. This guide explains when it applies, how much you deduct and on what value, how to pay it, and the mistakes that turn a simple one percent into a tax headache.

When does TDS on property apply?

TDS under Section 194-IA applies whenever you buy an immovable property, other than agricultural land, for a consideration of 50 lakh rupees or more. The 50 lakh threshold is judged on the total transaction value, not on individual instalments, so a property crossing that figure attracts TDS even if you pay in parts. Below 50 lakh, this particular obligation does not arise, which is why it most often surprises buyers of mainstream Bengaluru flats that sit above the line.

Because the rule keys off the total value, splitting payments or structuring instalments does not avoid it. If the property's consideration is 50 lakh or more, the deduction applies to the payments you make, and the responsibility sits with you as the buyer. Understanding this early lets you plan the cash flow, since the one percent you withhold is money you route to the government rather than hand entirely to the seller.

How much do I deduct and on what value?

You deduct 1 percent of the property value, calculated on the higher of the sale consideration or the stamp duty value. This dual base is important and relatively recent: since 1 October 2024 the law requires the 1 percent to be applied to whichever is greater, the price in your agreement or the stamp duty value the state assigns, closing a gap that once let a lower declared price reduce the TDS. In Karnataka the stamp duty value tracks the guidance value, so the same benchmark that drives your stamp duty can drive your TDS base.

There is one sharp exception on the rate. If the seller does not furnish a valid PAN, the TDS rate jumps from 1 percent to 20 percent, a punishing difference that makes collecting the seller's correct PAN a priority. For how the underlying value is set, our guide to Bengaluru stamp duty and registration charges explains the guidance value that the stamp duty value follows.

How do I deposit the TDS and file Form 26QB?

You deposit the TDS and report it by filing Form 26QB on the income tax e-filing portal, using only your PAN and the seller's, with no TAN required. Form 26QB is a combined challan and statement, so filing it and paying the tax happen together. This buyer friendly design means an ordinary individual can meet the obligation online without registering for a separate tax deduction account, which is what a TAN would otherwise require.

The deadline matters. You must file Form 26QB and pay the tax within 30 days from the end of the month in which the deduction was made. After payment you download and issue Form 16B to the seller as proof that the TDS was deducted and deposited on their behalf. Keeping to the deadline and handing over Form 16B closes the loop cleanly and gives the seller the credit they are due.

Whose responsibility is the TDS, buyer or seller?

The responsibility is the buyer's, and that is the single most important thing to understand about this tax. Section 194-IA places the duty to deduct, deposit and report on the person paying for the property, which is you. The seller receives the price minus the 1 percent you have withheld and gets the credit for that tax through Form 16B, but the compliance burden, and the consequences of getting it wrong, rest with the buyer.

This is why so many buyers are caught out. They assume tax on a sale is the seller's problem, pay the full amount, and only later learn that the missing deduction was theirs to make. Because the obligation is yours, build it into the transaction from the start: agree with the seller that 1 percent will be withheld and deposited, collect their PAN, and treat the filing as part of closing the deal rather than an afterthought.

What are the consequences of getting it wrong?

Missing or mishandling the TDS exposes the buyer to interest and penalties, not the seller. If you fail to deduct, or deduct but fail to deposit on time, the department can levy interest for the delay and a fee for late filing of Form 26QB, and these land on you. Because the sums are a percentage of a large property value, even a short delay can add a meaningful amount to what you owe.

The fix is simply to treat the deduction as a fixed step in the purchase. Confirm the property crosses 50 lakh, collect the seller's PAN, deduct the correct 1 percent on the higher of consideration or stamp duty value, file Form 26QB within the deadline, and hand over Form 16B. For the wider tax picture around ownership, our guide to home loan tax benefits under Section 24 and 80C covers the deductions that work in your favour once you own the home.

What TDS mistakes do buyers make most?

The common mistakes are not knowing the obligation exists, deducting on the wrong value, and missing the seller's PAN. Each has a direct cost. Not deducting at all leaves the buyer exposed to interest and penalties. Deducting on only the agreement value when the stamp duty value is higher understates the tax since the October 2024 change. And an absent or invalid seller PAN can push the rate to 20 percent, a shock that dwarfs the intended 1 percent.

All three are avoidable with a little discipline. Treat TDS as a standard part of any purchase of 50 lakh or more, compute it on the higher of consideration or stamp duty value, secure the seller's PAN before you pay, and file Form 26QB on time. Handled this way, the one percent is a routine administrative step rather than the source of a tax notice arriving long after you thought the deal was done.

Section 194-IA TDS at a glance

A TDS checklist for Bengaluru buyers

1. Check whether the property's total consideration is 50 lakh rupees or more.
2. Collect the seller's valid PAN before you make any payment.
3. Compute 1 percent on the higher of the sale consideration or the stamp duty value.
4. Deduct that amount from the payment to the seller rather than paying it in full.
5. File Form 26QB and pay the tax on the income tax e-filing portal.
6. Meet the deadline of 30 days from the end of the month of deduction.
7. Download Form 16B and hand it to the seller as proof of the TDS.

Frequently asked questions

Who pays TDS on a property purchase, the buyer or the seller?

The buyer. Under Section 194-IA the buyer must deduct 1 percent of the value as TDS on a property of 50 lakh rupees or more, deposit it with the income tax department and report it through Form 26QB. The seller receives the price minus the withheld amount and gets credit for the tax through Form 16B.

What value is the 1 percent TDS calculated on?

Since 1 October 2024 the 1 percent is calculated on the higher of the sale consideration or the stamp duty value of the property. In Karnataka the stamp duty value follows the guidance value, so if the guidance value exceeds your agreed price, your TDS is computed on that higher figure rather than only on the price in the agreement.

How and when do I deposit TDS on property?

You file Form 26QB on the income tax e-filing portal, which combines the challan and statement, using only your PAN and the seller's, with no TAN needed. You must file and pay within 30 days from the end of the month in which the deduction was made, then download and issue Form 16B to the seller as proof of the deducted tax.

What happens if the seller does not give a PAN?

If the seller does not furnish a valid PAN, the TDS rate rises from 1 percent to 20 percent, a large increase on a property value. That makes collecting the seller's correct PAN before payment essential. Confirm the PAN early, since discovering the problem after paying can leave you deducting far more than the intended 1 percent.

Last updated 14 August 2026. PropNewz Team.