TDS Rules on Property Purchase – 2025 Changes and Seller's Claim Process

TDS rules on property purchase saw genuine, practically significant changes in 2025 — particularly around how joint ownership transactions are calculated, a detail that previously created confusion for co-buyers assuming their individual share fell below the threshold. Understanding these updated rules, the complete online payment process, and how sellers subsequently claim their deducted TDS ensures both sides of a property transaction stay compliant.

This page covers:

• What changed in TDS property rules as of June 2025
• The joint-ownership calculation clarification
• Complete step-by-step filing process using Form 26QB
• Documents required for TDS filing
• How to pay TDS online — Challan 281 process
• How sellers claim their deducted TDS
• Rules and regulations to remember

When you purchase a property in India, you must be aware of the TDS (Tax Deducted at Source) requirement, governed by Section 194-IA of the Income Tax Act. This is a tax that the buyer must deduct from the sale price before paying the seller, ensuring the seller's capital gains are reported and taxed appropriately.

TDS on property purchase is a 1% tax deduction applicable when buying immovable property (land, building, or both) valued at Rs. 50 lakh or more. No surcharge or education cess is added. If the seller doesn't provide their PAN, the TDS rate becomes 20%.

As of June 2025, the government made significant changes to how TDS on property is calculated:

• Joint ownership clarification: 1% TDS is deducted from the entire transaction amount if the property value is Rs. 50 lakh or above. Importantly, the tax is calculated on the total value of the deal — not split amounts in joint ownership. This is a meaningful clarification: previously, some buyers in joint purchases assumed that if their individual contribution fell below Rs. 50 lakh, TDS wouldn't apply — this is now explicitly not the case, since the total transaction value is what matters.
• Rental TDS threshold increase: 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 meaningful relief to tenants and landlords alike, since fewer rental arrangements now trigger mandatory TDS deduction.

1. Get Form 26QB: The official TDS return form for property transactions, available on the Income Tax Department's website
2. Provide transaction details: Complete the form with required information — names, PAN, and addresses of buyer and seller, along with property details and amount paid
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%
4. Pay the TDS using Challan 281: Deposit the deducted TDS through net banking or other listed methods
5. Submit the form: After payment, submit the completed Form 26QB and payment proof online to the Income Tax Department

Before filing TDS on a property purchase, ensure you have:

• Registered sale agreement: A copy of the signed and registered agreement, needed to compute TDS correctly
• Property information: Basic details — location, size, and age of the property
• PAN cards: Mandatory for both buyer and seller when filing the TDS return
• Aadhaar numbers: Recent changes now require Aadhaar numbers alongside PAN when submitting TDS forms

• Go to the Income Tax Department’s website: Visit the official portal and click on the 'e-payment' section
• Select the correct challan: Choose Challan 281, specifically for TDS on property deals. Enter the PAN, TAN (if applicable), and relevant assessment year
• Enter TDS amount: Input the TDS amount payable (typically 1% of the property value) and select your payment method (internet banking, debit card, etc.)
• Make the payment: Confirm all details and complete the payment process, saving the receipt or acknowledgement copy as proof for future reference

Under the Income Tax Act, 1961, TDS is applicable when buying immovable property exceeding a specified threshold value:

1. Threshold limit: Rs. 50 lakh — if the property's value exceeds this amount, the buyer must deduct TDS at 1% of the total consideration
2. Applicability: Applies to residential and commercial properties — flats, apartments, houses, land, and commercial buildings, excluding agricultural land
3. Buyer's responsibility: The buyer deducts TDS and remits it to the government on behalf of the seller as advance tax
4. TAN requirement: The buyer needs a TAN (Tax Deduction and Collection Account Number) if not already obtained
5. Form 26QB: Must be filled and submitted online through the NSDL website or TIN-FCs, containing details of the property, seller, buyer, and TDS payment
6. TDS certificate: Once TDS is paid, the buyer must download the TDS certificate in Form 16B from the TRACES website and issue it to the seller
7. Home loan and TDS: If the purchase is financed through a home loan, TDS is deducted on the entire consideration amount, including the loan component — not just the cash portion paid directly

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 full compliance with the Income Tax Act for property transactions. This step is genuinely important for sellers — failing to verify the TDS credit in Form 26AS before filing could mean missing out on a legitimate credit against your final tax liability.

Planning to purchase property valued over Rs. 50 lakh? Understanding your TDS obligation upfront helps you budget accurately alongside your home loan repayment. Bajaj Finance offers home loans up to Rs. 15 Crore* with interest rates starting from 7.25% p.a.* and approval in 48 Hours*. Check eligibility today.