A buyer who pays a resident seller for a flat, house, office or plot has to deduct TDS before paying the seller, even if the buyer is a salaried individual who has never filed a TDS statement. The rule was section 194-IA of the Income-tax Act, 1961. For any credit or payment made on or after 1 April 2026, it is Serial No. 3(i) of the table in section 393(1) of the Income-tax Act, 2025, and the statement is filed in Form 141 instead of Form 26QB.
The rate, the ₹50 lakh threshold, the stamp duty comparison and the aggregation of joint buyers are unchanged. This guide sets out the current provision, the calculation with worked examples, the transition between the two Acts and a checklist to complete before the first payment.
The provision under the 2025 Act
Serial No. 3(i) of section 393(1) of the Income-tax Act, 2025 covers "any consideration for transfer of any immovable property (other than agricultural land)". The rate is 1% of the consideration or the stamp duty value of the property, whichever is higher. The threshold column reads "Fifty lakh rupees and as per Note 3", and Note 3 provides that tax is deducted where the consideration or the stamp duty value is equal to or greater than ₹50 lakh.
Note 1 to the table carries forward the joint-party rule: for the threshold, consideration is the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for that property.
For payments to residents, section 393(1) requires deduction at the time of credit to the payee's account or at the time of payment in cash, by cheque, by draft or by any other mode, whichever is earlier. For most individual buyers there is no ledger credit, so the payment of each instalment is the trigger.
The Income Tax Department's TDS compliance FAQs confirm that TDS rates and monetary thresholds for all categories of payments have been retained from the 1961 Act.
What the 1961 Act said, and why it still matters
The old section 194-IA applied 1% to the higher of the sum paid and the stamp duty value, and required no deduction where the consideration and the stamp duty value were both less than ₹50 lakh. Its Explanation defined immovable property as any land (other than agricultural land) or any building or part of a building, and defined consideration to include charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee and similar charges incidental to the transfer. Those definitions remain the best guide to what a builder's demand letter should be tested against, and section 194-IA still governs any instalment credited or paid on or before 31 March 2026.
No TAN needed
Under the 1961 Act, section 194-IA(3) switched off the TAN requirement of section 203A for property buyers. The 2025 Act keeps the same relief: section 397 requires every deductor to obtain a tax deduction and collection account number, but that requirement does not apply to a person deducting under section 393(1), Table Serial Nos. 2(i), 3(i) and 6(ii). A property buyer therefore reports using PAN through the challan-cum-statement.
Form 26QB or Form 141
The TDS compliance FAQs list the four old challan-cum-TDS statements: Form 26QB for property purchase under section 194-IA, Form 26QC for rent paid by certain individuals and HUFs, Form 26QD for certain payments to contractors and professionals, and Form 26QE for virtual digital assets. For transactions where credit or payment occurred on or after 1 April 2026, the statement must be filed under the new Act, and the FAQs state that under the Income-tax Rules, 2026 a common Form No. 141 can be used for any of these four types of transactions.
The Department's e-Pay Tax help page describes what the legacy Form 26QB asks for: the seller's residential status, PAN, name, category of PAN, address and contact details, the type and address of the property, agreement details and payment details. It notes that the form is not applicable where the seller is non-resident and that multiple forms are needed where multiple parties are involved. Keep the same data ready before starting Form 141.
Worked examples
1. Stamp duty value above the agreed price
Agreement value ₹48,00,000; stamp duty value ₹52,00,000. The threshold is met because the stamp duty value is ₹50 lakh or more. TDS is 1% of the higher figure, ₹52,00,000, which is ₹52,000.
2. Instalments
Agreement value ₹80,00,000; stamp duty value ₹70,00,000; payments of ₹20,00,000, ₹30,00,000 and ₹30,00,000. The consideration is higher, so the buyer deducts 1% from each payment: ₹20,000, ₹30,000 and ₹30,000, a total of ₹80,000. Each deduction is reported when that instalment is paid, not at registration.
3. Joint buyers
Two spouses buy a ₹90,00,000 flat in equal shares. Each pays ₹45,00,000, but under the aggregation note the property is tested at ₹90 lakh, so the threshold is crossed. Each buyer deducts 1% of the amount he or she pays, ₹45,000 each. If there are also two sellers with equal shares, each buyer is paying ₹22,50,000 to each seller, and TDS of ₹22,500 is reported for each buyer-seller pair. The legacy portal guidance required a separate form for each party combination.
4. Incidental charges in the demand letter
Base price ₹60,00,000, car parking ₹3,00,000, club membership ₹1,00,000 and advance maintenance ₹1,20,000. Following the 194-IA definition of consideration, all four form part of the price for transfer: ₹65,20,000. TDS is ₹65,200 (assuming the stamp duty value is not higher).
5. Exactly ₹50 lakh
Consideration ₹50,00,000 and stamp duty value ₹49,00,000. Note 3 uses "equal to or greater than fifty lakh rupees", so TDS of ₹50,000 applies. Under section 194-IA the exemption was only where both figures were less than ₹50 lakh, so the result was the same.
Instalments that straddle 1 April 2026
The FAQs state that the governing Act depends on the earlier of credit or payment. If that event occurred on or before 31 March 2026, the 1961 Act applies; if on or after 1 April 2026, the 2025 Act applies. A buyer who paid a booking amount on 20 March 2026 and the balance in May 2026 therefore reports the March payment under section 194-IA in Form 26QB and the May payment under section 393(1) Serial No. 3(i) in Form 141. The FAQs warn that quoting an old section for a new-Act transaction may lead to processing errors and a correction statement.
Checklist before the first payment
- Confirm the seller is resident. The portal notes that the property TDS form does not apply to a non-resident seller, whose sale needs a separate withholding analysis.
- Check the land is not agricultural land excluded by the provision.
- Obtain the stamp duty value and compare it with the agreement value; use the higher.
- Add parking, club, utility connection, maintenance and similar transfer charges to the consideration.
- Aggregate all buyers and sellers to test the ₹50 lakh threshold.
- Collect each seller's PAN and verify it before paying.
- For each instalment, identify the date of payment and pick Form 26QB (on or before 31 March 2026) or Form 141 (on or after 1 April 2026).
- Keep the agreement, stamp duty valuation, payment proofs, challans and statement acknowledgements with the property file.
Common errors
- Testing only the agreement value when the stamp duty value is ₹50 lakh or more.
- Treating each joint buyer's share as a separate transaction for the threshold.
- Deducting on the base price and ignoring parking, club or maintenance charges.
- Waiting for the sale deed when earlier instalments have already triggered deduction.
- Filing Form 26QB for a payment made after 1 April 2026.
Updated on 27 September 2026: merged our separate Form 141 and buyer checklist guide into this page, retitled it, and rebuilt it on the verified text of section 393(1) Serial No. 3(i), Notes 1 and 3, section 397 and the Department's Form 141 FAQs, with five worked examples added.
