TDS on Property Purchase in India (2026): Rules, 1% TDS, Payment Process & Penalties

Buying a property worth ₹50 lakh or more? Don’t forget about TDS!

When you purchase a house, flat, plot or commercial property, you need to take care of more than just the property cost, registration charges and stamp duty.

There is one more important thing to remember: TDS on Property Purchase.

Many property buyers are unaware of this rule. Some buyers even complete their property payments without deducting TDS, which can create financial and legal problems later.

In this article, Finservy explains everything you need to know about TDS on property purchases in India, in simple language.

1. What is TDS on Property Purchase?

TDS means Tax Deducted at Source.

In simple words, when you purchase a property worth ₹50 lakh or more, you generally have to deduct 1% TDS from the amount payable to the seller and deposit that amount with the Income Tax Department.

You don’t pay this 1% to the seller. Instead, you pay it directly to the government.

Let’s understand with an example:

Suppose you are purchasing a flat for ₹60 lakh.

Particulars	Amount
Property value	₹60,00,000
TDS at 1%	₹60,000
Amount payable to seller	₹59,40,000
Amount payable to government	₹60,000

Instead of paying the entire ₹60 lakh to the seller, you pay ₹59.40 lakh to the seller and ₹60,000 to the government.

The seller can claim credit for this ₹60,000 against their income tax liability.

2. When Does TDS Apply to Property Purchase?

TDS generally applies when the property sale consideration or stamp duty value is ₹50 lakh or more.

This rule applies to:

Residential flats and apartments.
Independent houses.
Residential plots.
Commercial properties.
Resale properties.
Under-construction properties.

Example:

Property Value	Is TDS Applicable?
₹35 lakh	No, if stamp duty value is also below ₹50 lakh
₹45 lakh	No, if stamp duty value is also below ₹50 lakh
₹50 lakh	Yes
₹65 lakh	Yes
₹1 crore	Yes

Remember: If either the property sale consideration or stamp duty value reaches ₹50 lakh, TDS applies.

Specified agricultural land is excluded under the applicable definition.

3. What Is the TDS Rate on Property Purchase?

For a qualifying purchase from a resident seller, the TDS rate is generally 1% of the higher of the sale consideration or stamp duty value.

Let’s understand another example.

Suppose:

Property agreement value: ₹75 lakh.
Stamp duty value: ₹80 lakh.

Since the stamp duty value is higher, TDS is calculated on ₹80 lakh.

TDS = 1% of ₹80 lakh = ₹80,000.

Therefore, the buyer must deposit ₹80,000 with the government.

4. Who Should Pay TDS: Buyer or Seller?

This is one of the most common questions.

The buyer is responsible for deducting and paying TDS.

The seller does not have to deposit this TDS separately.

The buyer has to:

Calculate the TDS amount.
Deduct it from the seller’s payment.
Pay the amount to the Income Tax Department.
Complete the required online filing.
Provide the TDS certificate to the seller.

Even if you are purchasing a property for your personal use, this rule applies.

5. What If Two People Buy a Property Together?

Suppose two people purchase a flat jointly.

Buyer 1: ₹25 lakh share.
Buyer 2: ₹25 lakh share.
Total property value: ₹50 lakh.

Does TDS apply?

Yes!

The government considers the total property value, not just the individual share of each buyer.

Therefore, even if each buyer pays less than ₹50 lakh, TDS may still apply when the total property value reaches the prescribed limit.

Each buyer must deduct and report TDS separately according to their respective share.

6. How to Pay TDS on Property Purchase Online in 2026?

The Income Tax Department has introduced a new Form 141 under the Income-tax Act, 2025.

For property transactions covered by the new Act from 1 April 2026 onwards, buyers need to use Form 141 instead of the earlier Form 26QB.

Here is how to make the payment.

Step 1: Visit the Income Tax Website

Go to:

https://www.incometax.gov.in

Step 2: Login to Your Account

Step 3: Go to E-Pay Tax

Select:

E-File → E-Pay Tax → New Payment.

Step 4: Select Form 141

Choose Form 141 under the Income-tax Act, 2025.

Step 5: Select Schedule B

Choose Schedule B, which is for TDS on the purchase of property from a resident seller.

Step 6: Enter Property Details

Enter the required details, such as:

Buyer’s PAN.
Seller’s PAN.
Property address.
Agreement date.
Property value.
Stamp duty value.
Payment details.
TDS amount.

Step 7: Make the Payment

Check all details carefully and complete the payment through the available online payment options.

Step 8: Save the Acknowledgement

Download and save the payment acknowledgement for future reference.

You can also obtain the applicable TDS certificate through the TRACES portal.

7. What Is the Last Date to Pay TDS?

The buyer must deposit the deducted TDS within 30 days from the end of the month in which TDS was deducted.

Example:

If you deduct TDS on 15 November 2026:

TDS deduction date: 15 November 2026.
Last date for payment and filing: 30 December 2026.

Do not wait until the final property registration to deduct TDS.

If you are paying the property amount in instalments, TDS must be deducted on each applicable instalment when it is paid or credited, whichever happens first.

A separate Form 141 may be required for each month of deduction.

8. Do You Need a TAN Number to Pay Property TDS?

For the normal PAN-based property TDS process, you do not need to obtain a separate TAN number.

You can complete the applicable Form 141 process using your PAN login.

9. What Happens If You Do Not Pay TDS on Property Purchase?

Many property buyers are unaware that paying TDS is their responsibility.

If you forget to deduct TDS, delay depositing the amount or fail to complete the required filing, you may face additional financial and legal consequences.

Let’s understand what can happen.

1. Interest for Not Deducting TDS

If you are required to deduct TDS but fail to do so, interest may be charged at 1% per month or part of a month for the period of delay, until the TDS is deducted.

2. Interest for Delayed TDS Payment

Suppose you deduct TDS from the seller’s payment but do not deposit it with the government on time.

In this case, interest may be charged at 1.5% per month or part of a month, from the date of deduction until the date of actual payment.

3. Recovery of TDS Amount

If you fail to deduct or deposit the required TDS, the Income Tax Department may treat you as an assessee in default.

This means the department may recover the unpaid TDS amount along with applicable interest.

4. Penalties for Non-Compliance

Depending on the nature of the default, you may also face penalties under the applicable income tax provisions.

The amount of penalty depends on the type of violation and the circumstances of the case.

5. Possible Prosecution

In certain cases, particularly where TDS has been deducted but not deposited with the government, prosecution proceedings may also be initiated under the applicable law.

6. Late Filing Consequences

Failure to submit the required TDS statement within the prescribed time can also attract applicable late filing fees and other penalties.

Example:

Suppose you purchase a property for ₹60 lakh and deduct ₹60,000 as TDS.

If you fail to deposit this amount within the prescribed deadline, you may have to pay:

The original TDS amount of ₹60,000.
Applicable interest for the delay.
Applicable late filing fees, if any.
Other penalties, where applicable.

These charges are over and above the original TDS amount.

Our suggestion: Do not ignore TDS compliance. Complete the deduction, payment and filing within the prescribed deadlines. If you have already missed a deadline, consult a Chartered Accountant and regularise the transaction as soon as possible.

10. What If You Purchase Property From an NRI?

If you are purchasing property from an NRI (Non-Resident Indian), the TDS rules are different.

The normal 1% TDS rule applicable to resident sellers should not be blindly applied to NRI property transactions.

The applicable tax rate depends on the relevant provisions and the seller’s circumstances.

From 1 October 2026, eligible resident individual and HUF buyers purchasing property from non-resident sellers can use Schedule E of Form 141 for the specified reporting.

It is advisable to consult a Chartered Accountant before making payments to an NRI seller.

11. Documents Required for TDS Payment

Before starting the online payment process, keep these details ready:

Buyer’s PAN card.
Seller’s PAN card.
Property sale agreement.
Property address.
Property value.
Stamp duty value.
Payment and instalment details.

Make sure the PAN details are correct to avoid filing errors.

12. Frequently Asked Questions

Q1. Is TDS applicable on a property worth ₹45 lakh?

No, if both the property value and stamp duty value are below ₹50 lakh.

Q2. Is TDS applicable on a property worth exactly ₹50 lakh?

Yes. The TDS rule applies when the prescribed threshold is reached.

Q3. Who is responsible for paying property TDS?

The buyer is responsible for deducting TDS from the seller’s payment and depositing it with the Income Tax Department.

Q4. Is TDS applicable on resale flats?

Yes. TDS applies to qualifying resale property purchases as well.

Q5. Is TDS applicable on under-construction flats?

Yes. If the property meets the prescribed value limit, TDS applies to the applicable instalments.

Q6. Can I pay TDS after property registration?

You should not wait until registration. TDS must be deducted when the payment is made or credited, whichever happens first.

Q7. Can I pay property TDS through a bank?

You can use the available online payment options on the Income Tax Department portal.

Q8. What is Form 141?

Form 141 is the new online form used for reporting and paying TDS on certain transactions, including property purchases from resident sellers, under the Income-tax Act, 2025.

Q9. Can the seller get the TDS amount back?

The seller can claim the TDS credit while filing their income tax return. Any refund depends on their overall tax calculation.

Q10. Does a home loan remove the TDS responsibility?

No. Even if you purchase a property using a home loan, the buyer must follow the applicable TDS rules.

Q11. What happens if I forget to deduct TDS?

You may have to pay the original TDS amount along with applicable interest and penalties. In certain cases, further legal proceedings may also apply.

Q12. Is TAN compulsory for property TDS?

No separate TAN is generally required for the PAN-based property TDS filing process.

Conclusion

Buying a property is a big financial decision. Before making the final payment, make sure you understand the applicable TDS rules.

A little awareness can save you from unnecessary penalties and payment-related problems.

Whether you are purchasing your first home, buying an investment property or planning to construct your dream house, understanding the financial and tax requirements is important.

At Finservy, we believe every property buyer should make informed financial decisions.

Whether you are planning to purchase a new home, transfer an existing home loan or looking for a loan against property, our team can help you explore suitable financing options.

Finservy – All Banks. All Loans. Under One Roof.

🌐 https://www.finservy.com/

📞 Contact our team for home loan and property financing assistance.

Disclaimer: This article is for general information only and is not tax or legal advice. Income tax provisions and procedures may change. Please consult a qualified Chartered Accountant for advice regarding your specific property transaction.