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Property · TDS and Buying

TDS on Property Purchase: Section 393(1) (old 194IA), Form 141 (old Form 26QB)

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  1. Facts

    When you buy any property valued above ₹50L, you must deduct 1% TDS from the payment to the seller and deposit it with the government. This is not optional. The buyer is responsible, not the seller. Non-compliance: buyer becomes assessee in default with 1.5%/month interest and penalty equal to TDS. Most property buyers discover this obligation only after receiving a notice.

  2. Provisions and law

    • Sec 393(1) (old 194IA(1))
    • Sec 393(1) (old 194IA(2))
    • Rule 26QB

  3. Analysis

    How Sec 393(1) Table Sl. No. 3(i), Income-tax Act 2025 (old Sec 194IA) works step by step: Buyer pays token money ₹5L (Day 1). TDS: 1% of ₹5L = ₹5,000. Pay ₹4,95,000 to seller. Deposit ₹5,000 TDS to government. File Form 141 (old Form 26QB) within 30 days. Next milestone payment ₹20L (Day 60). TDS: ₹20,000. Same process. At registration: balance payment ₹25L. TDS: ₹25,000. Same process. Total TDS for ₹50L property: ₹50,000 (1%). Each payment requires separate Form 141 (old Form 26QB). What is included in "consideration": Base property price. Parking charges (if mentioned in agreement). Maintenance deposit (if part of agreement consideration). Club/amenity charges in agreement. All components mentioned in agreement = total consideration. If total consideration (all components) ≥ ₹50L: TDS applies on the full amount. If total consideration < ₹50L: no TDS even if individual apartment price seems high.

  4. Conclusion

    1. Check: is total property consideration (all components) ≥ ₹50L? If yes: Sec 393(1) Table Sl. No. 3(i) (old Sec 194IA) applies
    2. Collect seller's PAN, mandatory for Form 141 (old Form 26QB). Without seller PAN: TDS rate = 20%.
    3. Deduct 1% TDS from each payment to seller (token, milestones, registry payment)
    4. Pay net amount (99%) to seller, deposit 1% TDS online at incometax.gov.in or TIN-NSDL
    5. File Form 141 (old Form 26QB): within 30 days from end of month of payment. Not 30 days from deal date.
    6. Download acknowledgement of Form 141 (old Form 26QB) from TRACES

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TDS on property purchase, Sec 194IA and Form 26QB (now Sec 393(1) and Form 141)

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