TDS on Property Purchase in Hyderabad: Section 194-IA Explained for Buyers

In September 2026 a software engineer in Kondapur sat at a registration office with a cheque for a Rs 95 lakh flat, proud that he had saved for three years, and discovered at the sub registrar window that he was supposed to have already deducted and deposited Rs 95,000 to the income tax department before paying his builder. He had not. The sale almost stalled. His mistake is one of the most common in Hyderabad today, because almost every new apartment in Kokapet, Gachibowli and Narsingi now sells above the price where this rule switches on.

The short answer. If the price or the government valuation of a property, whichever is higher, is 50 lakh or more, the buyer must deduct 1 percent as tax at source under Section 194-IA, deposit it using Form 26QB within 30 days from the end of the month of deduction, and give the seller a Form 16B certificate. The trade off is simple: it costs you nothing extra because it is adjusted against the seller price, but if you skip it the department can levy interest and a late fee that you, the buyer, must pay.

Who actually deducts the TDS, the buyer or the seller?

The buyer deducts it, which surprises most first time purchasers. Section 194-IA places the entire burden on the person paying for the property, not the person selling it. You withhold 1 percent from each payment you make to the seller, deposit that amount with the government, and pay the seller only the balance. The seller is not doing anything wrong by expecting the full price; it is your legal duty to carve out the 1 percent and route it to the exchequer on their behalf. Later the seller sees that payment reflected against their PAN and claims it as tax already paid.

This matters in a market like Hyderabad where buyers often pay builders in construction linked instalments. Every instalment that forms part of a 50 lakh plus deal attracts the 1 percent, so you are not deducting once at the end but at each payment stage. Many buyers wrongly assume the builder or their loan bank handles it. The bank disburses the loan, but the statutory duty to deduct and file stays with you. Treat it the way you treat your own registration paperwork, documented in our guide to the Telangana property registration process.

When does the 1 percent TDS kick in?

It applies the moment the consideration or the stamp duty value, whichever is higher, reaches 50 lakh. The rule covers any immovable property that is a building, part of a building, or land other than rural agricultural land, bought from a resident seller. Below 50 lakh on both the agreed price and the government value, Section 194-IA does not apply at all and you deduct nothing.

In Hyderabad the threshold is less of a filter than it sounds. A 50 lakh ceiling once excluded most mid segment homes, but current rates across the western corridor mean a modest two bedroom flat frequently crosses it on the stamp duty value alone, even before you count car parking and amenities. A single high rise unit at a project like Sri Tirumala Legacy in Puppalaguda sits well past the line. So assume the rule applies unless your numbers clearly say otherwise, and check the government valuation, not only the headline price your agent quotes.

One more point on timing catches people in a construction linked plan. Because you deduct on each payment, a buyer paying a builder across six or seven slabs over two years must run the Form 26QB process at each stage, not once at handover. If the total deal is above 50 lakh, every slab payment carries the 1 percent, and every one has its own 30 day clock. Set a reminder against your builder demand schedule so a milestone payment never slips past its filing window.

Is the 1 percent charged on the sale price or the stamp duty value?

It is charged on whichever is higher, the sale consideration or the stamp duty value. This is the detail that trips up buyers who negotiated a price below the official valuation. If you agreed 48 lakh but the Dharani or sub registrar valuation is 52 lakh, the rule treats 52 lakh as the base, the deal crosses the threshold, and your 1 percent is calculated on 52 lakh, not 48 lakh. The income tax department aligned the two figures precisely to stop under reporting.

So before you calculate anything, pull the official valuation of the exact survey number and flat, the same figure that drives your stamp duty. Our walkthrough on how to check Telangana land records on Dharani and read an encumbrance certificate shows where that number lives. Calculate 1 percent on the higher of the two, and keep a note of both figures in case the department ever asks how you arrived at the deducted amount.

How do you pay the TDS and file Form 26QB?

You pay it through Form 26QB, a combined challan and statement, within 30 days from the end of the month in which you deducted the tax. There is no separate return; the form is the return. Here is the sequence a Hyderabad buyer should follow, step by step.

1. Collect the seller PAN and your own PAN, and confirm both are valid, because every later step keys off these numbers.
2. Work out the higher of the agreed price and the stamp duty value, and calculate exactly 1 percent of that figure.
3. Log in to the income tax e filing portal and open Form 26QB under the e pay tax section.
4. Enter buyer, seller, property and payment details, matching the address and value to your sale deed precisely.
5. Pay the 1 percent online through net banking or at an authorised bank, and save the challan.
6. Do all of this within 30 days from the end of the month of deduction to avoid interest and a daily late fee.
7. After about 10 to 15 days, download Form 16B from the TRACES portal and hand it to the seller as proof.

Note the one feature that makes this manageable for ordinary buyers: you do not need a TAN, the registration number that businesses use to deduct tax. Section 194-IA lets you deposit using only your PAN, confirmed on the income tax department reference page for TDS on the purchase of immovable property and explained in plain terms by ClearTax.

What goes wrong when the seller has no PAN?

If the seller cannot give a valid PAN, your deduction jumps from 1 percent to 20 percent, a twentyfold increase that can lock up lakhs of rupees. The income tax framework treats a missing PAN as a case for higher withholding, and the duty to apply the higher rate falls on you. On a 95 lakh flat that is the difference between deducting Rs 95,000 and Rs 19 lakh, so a missing PAN is not a paperwork nuisance, it is a deal breaker you must resolve before paying. The table below sets out how the common situations differ.

Rural agricultural land sits outside Section 194-IA entirely, because it is not treated as a capital asset for this purpose. That exclusion is narrow, though, so do not assume a plot on the city fringe qualifies without checking its classification in the records.

What do Hyderabad buyers most often get wrong?

The biggest error is treating the TDS as the seller problem and discovering at the registration window, as our Kondapur buyer did, that nothing has been deposited. The second is calculating 1 percent on the negotiated price when the stamp duty value is higher, which leaves a shortfall the department later recovers with interest. The third is missing the 30 day window, which triggers interest for late deduction or late payment plus a late filing fee that accrues every day until Form 26QB is filed.

A fourth, subtler mistake is in joint deals. When a flat is bought by two spouses from two co owners, buyers sometimes file a single Form 26QB, when the correct approach ties the filing to each buyer and seller pair. When in doubt, keep one 26QB per buyer to seller relationship and match the amounts to the share each person holds. None of this is advice to buy or avoid any property; it is simply the compliance that rides along with any Hyderabad purchase above the threshold, and getting it right protects the credit the seller is counting on.

Frequently asked questions

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

Under Section 194-IA the buyer deducts and deposits the 1 percent TDS, not the seller. The buyer withholds it from the payment, pays it to the government using Form 26QB, and later hands the seller a Form 16B certificate. The seller then claims that credit while filing returns.

Does the 1 percent TDS apply if my flat costs exactly 50 lakh?

Yes. Section 194-IA is triggered when the consideration or the stamp duty value, whichever is higher, is 50 lakh or more, so a property valued at exactly 50 lakh crosses the line. Below 50 lakh on both figures, no TDS is deducted under this section.

What if the seller cannot give a PAN?

If the seller does not provide a valid PAN, you must deduct TDS at 20 percent instead of 1 percent, as the income tax rules treat a missing PAN as a higher withholding case. Always collect and verify the seller PAN before you release any payment to avoid this steep deduction.

Do I need a TAN to deduct TDS on my property?

No. Section 194-IA specifically removes the TAN requirement, so an ordinary home buyer can deposit the TDS using only a PAN through Form 26QB. You do not need to register as a regular tax deductor. After depositing, download Form 16B from the TRACES portal and give it to the seller.

Last updated 2026-10-04. PropNewz Team.