TDS, or Tax Deducted at Source, refers to the practice of deducting tax at the point where income is generated. The Central Board of Direct Taxes (CBDT), under the Income Tax Act of 1961, oversees its administration as part of the Indian Revenue Service. It serves as an indirect method of tax collection applied to income from various business dealings and financial instruments. For instance, TDS is applicable on earnings such as interest, commissions, incentives, fixed deposits, and dividends. It also extends to payments related to rental income, as well as the purchase or sale of property. When buying property, buyers must pay TDS on property purchase before transferring the funds to the seller. The rate of deduction typically varies between 1% and 30%, depending on the nature of income.
Today, the process of depositing TDS has become more convenient with the facility of TDS online payment through the official income tax portal. This allows taxpayers to pay and track their TDS obligations quickly and securely without visiting any physical office.
What is a TDS on property?
TDS, or tax deduction is a system where tax is deducted at the time of making certain payments, such as rent, interest, commission, and similar transactions. The responsibility for deducting TDS lies with the person making these specified payments. They must deduct the tax, remit the TDS payment online, and then pay the remaining amount to the recipient entitled to receive it.
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For a resident Indian seller
When you buy an immovable property (other than agricultural land) worth ₹50 lakh or more from a resident Indian seller, you must pay TDS on property purchase under Section 194-IA of the Income Tax Act. The applicable TDS rate is 1% of the sale consideration. Buyers are responsible for deducting this tax at the time of payment and depositing it with the government through TDS online payment. After payment, Form 26QB must be filed, and Form 16B (TDS certificate) should be provided to the seller as proof of deduction.
Properties covered under Section 194IA
Surprisingly, the responsibility of deducting TDS on a property purchase rests with the buyer, not the seller. As per Section 194IA of the Income Tax Act, the buyer must deduct 1% of the sale value if the property price exceeds ₹50 lakh. This rule applies to all types of properties, including land, residential, and commercial, except agricultural land. For NRI sellers, the process differs, as TDS and applicable capital gains are deducted directly by the government. Buyers can easily pay TDS online on property purchase through the government’s e-tax payment portal, ensuring compliance with tax rules.
How to pay TDS online on property in 2025?
The facility of property tax payment online involves a hassle-free process that allows you to pay the necessary amount directly from your bank account. However, to use the pay TDS on property purchase facility online, you must have the net banking feature activated. Additionally, your account should be linked with authorised banks listed on the official TIN-NSDL website.
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How to pay TDS online on property?
Follow the below steps to pay TDS on your property online.
Step 1: Fill form 26QB online
Before depositing the payment fill form 26QB, available on the TIN-NSDL website
The form is similar to the form available to pay Tax Deducted at Source from income tax on sale of land
Provide details such as PAN, addresses of buyer and seller, property address property, date of sale agreement, and property value
Step 2: Confirm the e-payment
Upon confirmation, the TDS amount will be deducted electronically from your bank
You can schedule the payment for a later date
Receive a 9-digit alpha-numeric acknowledgement number upon payment confirmation
Obtain a challan with a unique CIN and payment and bank details
Step 3: Download form 16B
As a seller, download form 16B from the official website of Centralised Processing Cell of TDS
The buyer must submit the certificate of TDS to you (seller) within 15 days from the due date of submission mentioned on the challan
Follow the above-mentioned steps, to pay TDS on property online. After receiving the certificate of Tax Deducted at Source, you, as a seller, will be eligible to claim credit for TDS on a property purchase above Rs. 50 lakh against tax liability after submission.
Key Points Regarding Pay TDS Online on Property in India:
Paying Tax Deducted at Source (TDS) on the purchase of immovable property in India is a mandatory online process for buyers under Section 194-IA of the Income Tax Act. Here are the key points about how to pay TDS on property purchase in India:
Applicability: TDS on property is applicable when the sale consideration exceeds a specified limit. As of my last knowledge update in January 2022, the applicable limit is Rs. 50 lakh.
TDS rate: The buyer is required to deduct TDS at the rate of 1% on the total sale consideration. If the seller does not provide a Permanent Account Number (PAN), the TDS rate increases to 20%.
Payment and Form 26QB: The buyer needs to deposit the TDS amount using Form 26QB through the online tax portal. This form captures details of the property transaction, buyer, and seller.
TDS certificate (Form 16B): After depositing the TDS, the buyer needs to download the TDS certificate, Form 16B, from the online tax portal. This certificate is proof of TDS deposition.
Seller's responsibility: The seller can claim credit for the TDS deducted while filing their Income Tax Return. They need to provide the buyer's TDS certificate (Form 16B) as evidence.
Filing of TDS return: The buyer is required to file a TDS return in Form 26QB within a specified period, providing details of the TDS deducted and deposited.
It is important to note that tax rules and regulations can change, so individuals involved in property transactions should verify the latest guidelines and requirements with the Income Tax Department or consult with a tax professional for accurate and up-to-date information.
As a seller, you can also claim TDS rebates on your residential property when you file your income tax returns. Moreover, if your property was acquired before 1 June 2013, you will not have to file Form 26QB while paying Tax Deducted at Source when selling it.
Steps to check the status of online TDS payments
Here are the steps to check the status of online TDS payments:
Visit the TIN NSDL website: Go to the official TIN (Tax Information Network) website of NSDL (National Securities Depository Limited), which handles online TDS-related services.
Click on “Status of Tax Payment”: On the homepage, find the option labeled "Status of Tax Payment" under the Services section. This will allow you to track the status of your TDS payment.
Enter the required details: You will need to input the Challan Identification Number (CIN), TAN (Tax Deduction Account Number), and the financial year to proceed.
View the payment status: Once you’ve entered the details, the system will display the status of your TDS payment. Ensure you confirm the payment has been successfully processed and recorded.
Download the Challan: You can also download the challan for your records after verifying the status.
Use Net Banking: If you’ve used net banking to pay TDS online, you can check the payment status directly through your bank’s website as well.
By following these steps, you can easily monitor the status of your online TDS payments.
Additional read: What is property tax?
Why do you need to pay TDS online on property in 2025?
Tax Deducted at Source (TDS) on property transactions in India is a mechanism implemented by the government to ensure that taxes are collected at the time of the property sale, thereby preventing tax evasion and promoting transparency in financial transactions. With the availability of tds online payment, buyers can easily comply with tax rules without visiting government offices. The facility of tds online payment also streamlines the process, making it quicker, more secure, and convenient for property buyers across the country.
Tax collection at source:
TDS ensures that a portion of the total sale consideration is collected as tax at the source itself, i.e., at the time of the property sale. This helps in the early collection of taxes.
Prevention of tax evasion:
TDS acts as a preventive measure against tax evasion. By deducting TDS at the time of the property transaction, the government can ensure that taxes are collected even if the seller fails to report the income or pay taxes later.
Transparency and accountability:
TDS promotes transparency in property transactions and ensures accountability. The details of the TDS transaction are recorded, and both the buyer and seller receive certificates (Form 26QB and Form 16B, respectively) as proof of the tax deduction.
Strengthening tax compliance:
TDS helps strengthen tax compliance by creating a direct link between property transactions and tax payments. It discourages individuals from avoiding or underreporting their taxable income.
Simplifies the tax collection process:
Collecting taxes at the time of the property sale simplifies the tax collection process for the government. It reduces the burden of tracking and collecting taxes from individual taxpayers after the transaction has taken place.
Documentation for property transactions:
TDS on property serves as an essential documentation process in property transactions. The TDS certificates issued to both the buyer and seller provide a record of the tax deducted and deposited.
Ease of verification:
TDS provides an easy mechanism for both the government and taxpayers to verify tax payments. The details are available on the online tax portal, making it accessible for verification purposes.
Ensures buyer's compliance:
TDS places a responsibility on the buyer to deduct and deposit taxes. This ensures that even if the seller is non-compliant, the buyer's action contributes to fulfilling the tax obligation.
It is important for both buyers and sellers involved in property transactions to understand the TDS provisions, adhere to the guidelines set by the Income Tax Department, and comply with the necessary documentation and reporting requirements.
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When is TDS on property deduction not necessary?
TDS on property deduction is not always mandatory, as certain exemptions apply under the Income Tax Act. One of the primary situations where TDS is not required is when the property’s sale value is below Rs. 50 lakh. As per Section 194IA, the buyer is only liable to deduct TDS at 1% if the property transaction exceeds this threshold. Additionally, TDS deduction is not applicable on the purchase of agricultural land, as it falls outside the ambit of this provision. Furthermore, if the seller is a resident and the transaction does not cross the specified limits, no TDS obligation arises for the buyer. It is also important to note that TDS rules differ for NRI sellers, where higher rates and capital gains taxation apply. Buyers should carefully assess these conditions to ensure compliance and avoid unnecessary deductions. Consulting the latest guidelines can help avoid errors in property transactions.
Advantage of paying TDS online on property
Convenient location and timing: Easily pay taxes from any location at any time using your net-banking account.
Instant fund transfer: Experience the swift transfer of funds directly from your account.
Direct submission to Income Tax Department: Information provided on the e-challan is directly sent to the Income Tax Department without intermediary data entry by banks.
Record keeping: Save and print copies of the challan and receipt for your records.
Prompt receipt: Upon authorisation of payment by your bank, promptly receive a clear and legible receipt/counterfoil.
Easy tracking: Access the transaction ID in your bank statement for easy tracking of e-payment transactions.
Verification of payment: Verification of payment: Verify if your payment has reached the Income Tax Department by checking online through the tax information network website.
City/State Wise Property Tax
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Frequently asked questions
To pay TDS through Form 26QB with an acknowledgment number follow the below steps:
- Visit TIN NSDL website
- Select "Challan 26QB" and provide details
- Verify and click "Proceed”
- Choose the bank
- Log in to your bank account
- Make the payment and save the receipt
The responsibility for depositing TDS on property transactions in India falls on the buyer. The buyer must deduct TDS at a specified rate (typically 1%) from the payment to the seller, complete Form 26QB, and deposit the TDS with the government using their TAN. An acknowledgment receipt is generated as proof of TDS deposit. Sellers should ensure correct TDS deduction and can claim the TDS amount when filing their income tax return. Rules and rates may change, so it is crucial to verify the latest regulations with tax authorities or consult a tax professional for up-to-date information.
When there are two buyers for a property, both buyers are jointly responsible for paying TDS (Tax Deducted at Source). You can follow the below steps to pay the TDS:
- Calculate the total TDS amount based on the property transaction value and applicable rate
- Collect PAN and other details from both buyers
- Divide the TDS amount according to a mutually agreed-upon proportion
- Fill out Form 26QB with details of both buyers and their PANs
- Make the TDS payment with the divided amount
- Retain the acknowledgment receipt for records
- File TDS returns with both buyers' information
- Inform the seller about the TDS deduction
The TDS on the property has to be paid using the Form 26QB within 30 days from the end of the month in which the TDS was deducted.
To claim TDS rebates on property in India:
- Obtain Form 16B (TDS certificate) from the property buyer
- Verify TDS details and ensure accuracy
- File your Income Tax Return (ITR) and claim TDS rebate
- Use the correct ITR form for your income level
- Attach Form 26QB and Form 16B with your ITR
- Check Form 26AS to verify TDS details
- Submit supporting documents if required
- Keep records of all property and TDS-related documents
The advantages of paying TDS (Tax Deducted at Source) online include convenience, time savings, accuracy, and accessibility. Online payment of TDS eliminates the need for physical visits to tax offices, reduces the possibility of errors, and allows for easy tracking of payment status and receipts.
Yes, TDS can be paid after the property registration, but it must be done within the stipulated time frame to avoid penalties. The payment should be made before completing the transaction.
TDS on property purchase must be deposited with the Government within 30 days from the end of the month in which the deduction is made, as per Section 194-IA.
If TDS is not deducted on property purchase, the buyer may face penalties and interest charges for late payment. The buyer is also responsible for rectifying the mistake and paying the TDS.
The late fee for TDS on property includes interest at 1.5% per month or part of the month from the due date. Additionally, a penalty may be levied for non-compliance.
