When you purchase a property in India, you must be aware of the TDS (Tax Deducted at Source) requirement. This is a tax that the buyer must deduct from the sale price before paying the seller. The purpose is to ensure that the seller’s capital gains are reported and taxed appropriately. TDS on property purchase applies when the property value is Rs. 50 lakh or more. This article offers a complete guide on how this works—from the current TDS rates, recent rule changes, and how to make online payments, to the step-by-step filing process and a list of documents you’ll need. We'll also answer common questions related to TDS on property to help make your transaction smooth and compliant.
TDS rules on property deals changed in 2025
As of June 2025, the government has made changes to how TDS on property is calculated. Now, 1% TDS is deducted from the entire transaction amount if the property value is Rs. 50 lakh or above. Importantly, the tax is to be calculated on the total value of the deal—not split amounts in joint ownership. Budget 2025 also raised the TDS threshold for rental income—from Rs. 2.4 lakh to Rs. 6 lakh annually (or Rs. 50,000 per month), offering relief to tenants and landlords alike.
How to file TDS on sale of property?
Filing TDS on property sales is a fairly simple process if you follow these key steps:
Step 1: Get Form 26QB
You’ll need Form 26QB, the official TDS return form for property transactions. It’s available on the Income Tax Department’s website.
Step 2: Provide transaction details
Complete the form with required information such as the names, PAN, and addresses of the buyer and seller, along with details of the property and the amount paid.
Step 3: Calculate TDS amount
TDS is 1% of the sale price. If the property is sold after three years from purchase, in some cases, the rate could be 2%.
Step 4: Pay the TDS using Challan 281
Deposit the deducted TDS using Challan 281. This can be done through net banking or other listed methods.
Step 5: Submit the form
After making the payment, you must submit the completed Form 26QB and payment proof online to the Income Tax Department to finish the process.
Documents required for TDS on property sale
Before you begin filing TDS on a property purchase, make sure you have the following documents ready:
Registered sale agreement: A copy of the signed and registered agreement is needed to compute the TDS correctly.
Property information: You’ll need basic details like the property’s location, size, and how old it is.
PAN cards: The Permanent Account Numbers (PAN) of both the buyer and the seller are mandatory when filing the TDS return.
Aadhaar numbers: Recent changes now require you to mention Aadhaar numbers along with PAN when submitting TDS forms.
Having these documents prepared in advance will make the entire process of filing and paying TDS on the property quick and hassle-free.
Steps to TDS on property online
Paying TDS for property transactions is now possible online, making the process faster and easier. Here’s how:
Go to the Income Tax Department’s website: Visit www.incometaxindia.gov.in and click on the ‘e-payment’ section.
Select the correct challan: Choose Challan 281, which is specifically for TDS on property deals. Enter the PAN, TAN (if applicable), and the relevant assessment year.
Enter TDS amount: Input the TDS amount payable (typically 1% of the property value) and pick your payment method (internet banking, debit card, etc.).
Make the payment: After confirming all details, complete the payment process. Save the receipt or acknowledgement copy as proof for future reference.
What is TDS on property?
TDS on property is a tax collected when a buyer pays the seller for a property. The buyer must deduct 1% of the sale amount as TDS and deposit it with the government. No surcharge or education cess is added. If the seller does not give their PAN, the TDS rate becomes 20%. This rule helps reduce tax evasion by collecting tax during the transaction. It also ensures regular tax income for the government and spreads the tax payment evenly across the year.
TDS rates on property purchase
When buying property in India, Tax Deducted at Source (TDS) is a crucial factor. According to Section 194IA of the Income Tax Act, a buyer must deduct 1% TDS on property transactions exceeding INR 50 lakh. This rule applies to all properties, excluding agricultural land. The deducted amount must be deposited with the government, and the buyer must furnish a TDS certificate to the seller. Proper TDS compliance is essential to avoid penalties. Ensure timely TDS deduction and payment for a smooth property transaction process.
Rules and regulation to claim TDS on purchase of property
As per the Income Tax Act, 1961, TDS is applicable when an individual or entity buys immovable property exceeding a specified threshold value. Let’s understand the key points regarding TDS rules on property purchase:
- Threshold limit: Currently, the threshold limit for TDS on property purchase is Rs. 50 lakh. If the property's value exceeds this amount, the buyer is required to deduct TDS at a rate of 1% of the total consideration amount.
Planning to purchase property valued over Rs. 50 lakh? Finance your dream home with a Bajaj Housing Finance Home Loan with interest rates starting from just 7.99% p.a. Check your eligibility now. You may already be eligible, find out by entering your mobile number and OTP. - Applicability: TDS on property purchase applies to residential and commercial properties. It includes all types of immovable property transactions, such as flats, apartments, houses, land, and commercial buildings.
- Buyer's responsibility: The buyer of the property is responsible for deducting TDS at the specified rate. The deducted amount must be remitted to the government on behalf of the seller as advance tax.
- TAN requirement: The buyer needs to obtain a TAN (Tax Deduction and Collection Account Number) if not already obtained. TAN is mandatory for deducting TDS on property purchase.
- Form 26QB: To comply with TDS rules, the buyer must fill and submit Form 26QB online through the NSDL website or TIN-FCs (Tax Information Network Facilitation Centers). This form requires details of the property, seller, buyer, and TDS payment.
- TDS payment: After filling out Form 26QB, the buyer needs to make the TDS payment through online modes like net banking or credit/debit cards. The TDS amount deducted must be deposited with the government within the specified due dates.
- TDS certificate: Once the TDS is successfully paid, the buyer is required to download the TDS certificate in Form 16B from the TRACES website. This certificate serves as proof of TDS deduction and must be issued to the seller.
- Home loan and TDS: If the property purchase is financed through a home loan, TDS is deducted on the entire consideration amount, including the loan component. The TDS deduction applies to the total consideration amount and not just the cash paid.
Need a home loan to fund your property purchase? Bajaj Finserv offers home loans up to Rs. 15 crore with flexible repayment options of up to 32 years. Check your loan offers today. You may already be eligible, find out by entering your mobile number and OTP. - Exemptions: TDS on property purchase is not required to be deducted if the property value is less than Rs. 50 lakh or if the property is being acquired for agricultural purposes.
What is Section 194IA of the Income Tax Act?
Section 194IA of the Income Tax Act outlines TDS requirements for property transactions. Key points include:
- TDS on sale of property: When a property’s sale value exceeds ₹50 lakh, the buyer must deduct 1% TDS from the transaction amount.
- Applicability: This rule applies to all properties except agricultural land.
- TDS deposit: The deducted amount must be deposited with the government within 30 days using Form 26QB.
- PAN requirement: Both buyer and seller PAN details are essential to process TDS deduction.
- Penalty: Non-compliance attracts interest and penalties under the Income Tax Act.
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What is TDS on purchase of property?
TDS (Tax Deducted at Source) on the purchase of property is a mechanism by which the government collects tax at the time of property transaction. When purchasing property, if the transaction exceeds a certain threshold, the buyer is required to deduct TDS before making the payment to the seller. The current rate for TDS on property purchase is usually 1% of the property value for properties valued above a specified limit. This TDS amount is then deposited with the government by the buyer. Failure to deduct or deposit TDS can lead to penalties and legal repercussions for the buyer. It's essential for both buyers and sellers to understand and comply with TDS regulations to ensure a smooth property transaction.
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How to claim TDS on sale of property?
To claim TDS on the sale of a property, the seller must verify that the buyer has deducted and deposited the TDS with the government using Form 26QB. The seller should then check Form 26AS to ensure the TDS amount reflects accurately. At the time of filing their income tax return, the seller can include the TDS under the "TDS claimed" section. The TDS amount can either reduce the tax liability or be refunded if excess tax was paid, ensuring compliance with the Income Tax Act for property transactions.
