By Arosh John | Founder – John Real Estate (MahaRERA Reg. No. A51700001835) | Editor-in-Chief – Thane Real Estate News (TREN)
India | November 2025
The 1% Step Buyers Often Forget
Buying a home worth more than ₹ 50 lakh?
Even when the seller is an Indian resident, you — the buyer — must deduct and deposit 1% TDS (Tax Deducted at Source) under Section 194-IA of the Income-Tax Act.
It’s a small compliance step that keeps your deal legal and your seller’s taxes in order.
Ignoring it can invite penalties or delay your bank disbursement.
Who Must Deduct and When
The buyer must deduct 1% TDS from the total sale consideration at the time of each payment (including instalments).
This rule applies throughout India, except for agricultural-land transactions.
The deducted tax must be deposited with the Central Government within 30 days from the end of the month in which the deduction was made.
How to Pay Online (Form 26QB)
- Go to the official Income-Tax e-filing portal → https://www.incometax.gov.in/iec/foportal/
- Click “e-Pay Tax” → “Proceed” → “TDS on Sale of Property (Form 26QB)”.
- Fill in buyer & seller PANs, property details, total consideration, and payment date.
- Choose “Tax Applicable – 0020 (Company)” or “0021 (Other than Company)”.
- Pay online via net-banking, debit card, or through an authorised bank.
- Save the Acknowledgment Number — it’s your proof of deposit.
Editor’s Note (Portal Update — Verified)
Until mid-2023, Form 26QB payments were made on the TIN-NSDL portal.
All direct-tax payments, including TDS on property sales under Section 194-IA, are now processed only through the Income-Tax Department’s official e-filing portal at 👉 https://www.incometax.gov.in/iec/foportal/
Verified via the Income-Tax India “TDS on Sale of Immovable Property” page and e-Pay Tax FAQs (2023 – 2025).
Issue Form 16B to the Seller
After payment, log in to TRACES Portal, download Form 16B (TDS Certificate), and give it to the seller within 15 days.
This allows the seller to claim credit for the tax deducted in their income-tax return.
Why the Rule Exists
TDS on property sales creates a verifiable trail for high-value transactions, helping the government track capital-gain declarations and curb under-reporting.
It isn’t an extra tax — it’s an advance payment toward the seller’s tax liability.
Penalties for Missing Compliance
- Late deposit → Interest @ 1% – 1.5% per month
- Wrong PAN → TDS not credited to seller
- Non-filing of Form 26QB → Penalty up to ₹ 10,000 (Section 271H)
- Late Form 16B → ₹ 200 per day fine (Section 234E)
Practical Tip
In resale deals, most banks won’t release the final loan disbursement until the 26QB challan and Form 16B are submitted.
Handle them immediately after payment to save both time and penalties.
About the Author
Arosh John is the Founder of John Real Estate (MahaRERA Reg. No. A51700001835) and Editor-in-Chief of Thane Real Estate News (TREN) — a digital platform dedicated to factual, insight-driven coverage of Mumbai Metropolitan Region’s evolving property landscape. With over a decade of on-ground experience across Thane and MMR, Arosh specialises in resale transactions, NRI property advisory, and premium villa sales, blending local market intelligence with regulatory insight. He is widely regarded as one of the emerging voices of Thane’s new-age property journalism — bridging professional advisory and data-backed reporting for investors, developers, and end-users alike.
Disclaimer
This article is based on official Income-Tax Department and NSDL guidelines verified as of November 2025. It is meant for informational purposes only and should not be treated as professional advice. Consult a chartered accountant for case-specific guidance.
