Most Bengaluru buyers assume the tax office is the seller's problem, until the day they discover it is legally theirs. Under Section 194-IA of the Income Tax Act, the person who must deduct tax at source on a property purchase is the buyer, not the seller. Miss it on a sixty lakh rupee flat and you, the buyer, can face interest and penalty for a tax you were supposed to hold back and never did. In 2026 this is one of the most commonly overlooked duties in an Indian home purchase.

The short answer. When you buy immovable property in Bengaluru for 50 lakh rupees or more, you must deduct 1 percent of the total consideration as TDS under Section 194-IA, deposit it with the government using Form 26QB, and give the seller a TDS certificate in Form 16B. The 1 percent applies to the whole value, not just the amount above 50 lakh. The trap buyers fall into is treating this as optional or the seller's job; the liability, and the penalty for missing it, sit squarely with the buyer.

Quick facts for July 2026: Section 194-IA requires a 1 percent TDS on property sold at 50 lakh rupees or above, other than agricultural land, filed through Form 26QB on the Income Tax Department portal. A different and heavier regime applies when the seller is a non-resident.

When does Section 194-IA TDS apply for a Bengaluru buyer?

It applies whenever you buy immovable property, other than agricultural land, for a consideration of 50 lakh rupees or more. Below that threshold there is no TDS under this section; at or above it, you must deduct 1 percent. Importantly, once the value crosses 50 lakh, the 1 percent is charged on the entire consideration, not merely the portion exceeding the threshold, so a sixty lakh flat attracts sixty thousand rupees of TDS, not six thousand.

The threshold is tested on the higher of the sale consideration and the stamp duty value, so you cannot sidestep it by writing a lower price when the guidance value is above 50 lakh. For most Bengaluru apartments and sites in established localities, prices sit comfortably above the threshold, which means 194-IA is the rule rather than the exception for a typical buyer in 2026.

How do you deduct and deposit the TDS?

You deduct 1 percent at the time of each payment to the seller and deposit it using Form 26QB, a combined challan-cum-statement, within 30 days from the end of the month in which the deduction was made. If you pay the seller in instalments, you deduct on each instalment and file a Form 26QB for each. After depositing, you download Form 16B and hand it to the seller as proof that the tax was paid on their behalf.

You do not need a separate tax deduction account number for this; your PAN and the seller's PAN are enough, which is what makes 194-IA manageable for an ordinary buyer. The seller's PAN is essential, though, and that requirement links directly to how you should handle the Kaveri registration process in Bengaluru, where seller identity and documents are verified in the same window.

What happens if the seller does not have a PAN?

If the seller cannot provide a valid PAN, you must deduct TDS at 20 percent instead of 1 percent, a twentyfold jump that exists specifically to enforce PAN compliance. This is not a penalty on you, but it is a strong reason to insist on the seller's PAN before you part with any money, because deducting only 1 percent from a seller without a valid PAN leaves you exposed to a demand for the shortfall.

Always collect and verify the seller's PAN at the agreement stage, not at registration. A mismatch between the PAN, the name on the title and the person receiving payment is a warning sign worth pausing on. The same diligence that protects your title also protects your tax position, so treat PAN verification as part of, not separate from, your due diligence.

How is TDS different when the seller is an NRI?

When the seller is a non-resident, Section 194-IA does not apply and the transaction falls under Section 195, which is both heavier and more complex. TDS on a purchase from an NRI seller is deducted on the capital gains or the sale value at rates well above 1 percent, typically in the range applicable to long-term or short-term capital gains plus surcharge and cess, and it requires a tax deduction account number rather than just a PAN. Getting this wrong is expensive, because the buyer remains liable for any under-deduction.

If you are buying from an NRI in Bengaluru, do not apply the familiar 1 percent rule. Take professional advice, obtain the correct certificates, and consider asking the seller for a lower or nil deduction certificate from the tax department if their actual gain is small. The 194-IA process described here is only for resident sellers; the NRI case is a different and stricter regime.

How do the common scenarios compare?

The rate and the paperwork shift with the value, the seller's status and the number of parties. The table below sets out the typical 2026 positions a Bengaluru buyer meets, so you can identify yours before you pay rather than after.

Identify your scenario early, because the difference between 1 percent and 20 percent, or between 194-IA and 195, is not a rounding error but potentially several lakh rupees and a compliance headache.

What are the penalties for getting TDS wrong?

Failing to deduct, or deducting and not depositing, attracts interest for every month of delay plus a late-filing fee, and the buyer carries this liability. Interest runs from the date the tax should have been deducted or deposited, and a separate fee applies for filing Form 26QB late. Because the sums are a percentage of a large property value, even a short delay can cost tens of thousands of rupees.

The fix is simple discipline: deduct at the moment of payment, file Form 26QB within the 30-day window, and issue Form 16B promptly. Keeping TDS in step with your payment schedule, alongside your other tax planning such as the deductions covered in our guide to home loan tax deductions under Sections 80C and 24B, keeps the whole purchase clean at assessment time.

A seven-point TDS checklist for Bengaluru buyers

1. Check whether the consideration or stamp duty value is 50 lakh rupees or more, which triggers 194-IA.
2. Collect and verify the seller's valid PAN before making any payment.
3. Deduct 1 percent on the full value, and on each instalment if you pay in parts.
4. File Form 26QB within 30 days from the end of the month of deduction.
5. Download Form 16B and hand it to the seller as proof of deposit.
6. If the seller is a non-resident, stop and apply Section 195 with professional help, not the 1 percent rule.
7. Keep every challan and certificate with your title papers for future reference and resale.

Run through these seven and TDS becomes a routine step rather than a liability lying in wait. The buyers who get hurt are almost always the ones who assumed the tax was the seller's responsibility, when the law puts it firmly on the person writing the cheque.

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

The buyer. Section 194-IA places the duty to deduct 1 percent TDS on the purchaser, who must deposit it with the government and issue the seller a certificate in Form 16B. The seller simply receives the net amount and claims credit for the tax deducted. Because the liability and any penalty for non-deduction sit with the buyer, this is a step you cannot leave to the other side.

Is TDS calculated on the amount above 50 lakh or the whole value?

On the whole value. Once the consideration reaches 50 lakh rupees or more, the 1 percent TDS applies to the entire amount, not just the portion above the threshold. So a sixty lakh rupee purchase attracts sixty thousand rupees of TDS, not six thousand. There is no basic exemption slice once the threshold is crossed, which surprises many first-time buyers.

How do I file TDS on property in Bengaluru?

You file Form 26QB, a combined challan-cum-statement, on the Income Tax Department portal within 30 days from the end of the month in which you deducted the tax. You need your PAN and the seller's PAN but not a separate TAN. After payment, download Form 16B and give it to the seller. File a separate Form 26QB for each instalment if you pay in parts.

Does 194-IA apply when buying from an NRI?

No. A purchase from a non-resident seller falls under Section 195, not 194-IA, and attracts a higher TDS linked to capital gains rather than a flat 1 percent, along with a requirement for a tax deduction account number. The buyer remains liable for correct deduction, so take professional advice and obtain the right certificates rather than applying the resident 1 percent rule.

Last updated 2026-07-01. PropNewz Team.