TDS on Property Purchase 2026
Most buyers expect to pay stamp duty and GST when they buy a home, but many are surprised to learn that the buyer also has a small tax duty of their own at the point of purchase. Under the income tax law, a buyer must deduct a percentage of the sale value as tax at source, or TDS, and deposit it with the government on the seller's behalf. It is a compliance step rather than an extra cost out of your pocket, but getting it wrong can lead to notices and penalties, so it is worth understanding before you buy a flat in Kompally.
This guide explains when TDS on a property purchase applies, the value threshold that triggers it, the rate a resident buyer deducts, how the deposit and certificate work through Form 26QB and Form 16B, and how the rules change when the seller is an NRI. Tax rules and rates are revised from time to time, so treat the figures below as indicative and confirm the current position with a tax advisor or the income tax department before you act.
When TDS Applies on a Property Purchase
The rule that governs this for a resident seller is Section 194-IA of the Income Tax Act. It requires the buyer of an immovable property, other than certain agricultural land, to deduct TDS if the sale consideration is at or above a threshold that has long stood at Rs.50 lakh. In other words, when the value of the property crosses that threshold, the buyer must deduct tax at source on the payment made to the seller. The obligation sits with the buyer, not the seller, which is why buyers need to be aware of it even though it is the seller's income being taxed.
The Rate and the Threshold
For a resident seller, the TDS rate under Section 194-IA has generally been one percent of the sale consideration, and it is deducted when the payment is made. TDS applies on the consideration at or above the Rs.50 lakh threshold, and where payment is made in instalments, the deduction is applied on each instalment. A buyer under this section does not need a TAN and can use a PAN to comply, and the seller's PAN is essential; if the seller does not provide a valid PAN, a higher rate can apply.
| Point | Position for a resident seller |
|---|---|
| Governing section | Section 194-IA |
| Who deducts | The buyer |
| Threshold | Sale consideration at or above Rs.50 lakh |
| Rate | Generally 1% of the consideration |
| Deposit form | Form 26QB (challan-cum-statement) |
| Certificate to seller | Form 16B |
Indicative for a resident Indian seller. Rates, thresholds and rules are set by the income tax law and can be revised. Verify the current figures with a tax advisor or the income tax department.
How to Deposit It: Form 26QB and Form 16B
Once the buyer deducts TDS, it must be deposited with the government using Form 26QB, which is a combined challan and statement filed online. This is generally required within a set number of days from the end of the month in which the deduction was made, so it should not be left until after registration. After the deposit is processed, the buyer downloads Form 16B, the TDS certificate, and hands it to the seller as proof that the tax has been deducted and paid. Keeping these records is important, because they support both parties' tax filings for the year.
When the Seller Is an NRI
The one percent rule under Section 194-IA is for a resident seller. When the seller is an NRI, a different provision applies and the TDS is generally deducted at a higher rate linked to capital gains, with surcharge and cess as applicable, and the buyer typically needs a TAN to comply. Because the treatment is more involved, a purchase from an NRI seller is best handled with professional advice. If you are on the buyer side of such a transaction, our NRI property guide gives useful background on how NRI transactions are structured.
How TDS Fits Buying at Prestige Kompally
TDS on a property purchase is a compliance step, not an additional charge, because the amount deducted is adjusted against the seller's tax. Still, a buyer at Prestige Kompally should factor it into the paperwork timeline so the deduction and Form 26QB filing happen alongside the payment schedule rather than as an afterthought. It sits next to the one-time stamp duty and registration charges and any GST on an under-construction home as part of the total cost and compliance of a purchase. For the wider set of checks, read our home buying guide before you commit.
