Glossary
TDS under Section 194-IA
Under Section 194-IA, a buyer deducts 1% TDS from the price of a property worth ₹50 lakh or more and pays it to the government on the seller’s behalf.
In plain words
Section 194-IA of the Income Tax Act puts a small job on you, the buyer. When you buy a flat or other immovable property (other than farmland) for ₹50 lakh or more, you keep back 1% of each payment and deposit it with the government against the seller’s PAN. Since 1 April 2022, the 1% is worked out on the higher of the price and the stamp duty value.
A worked example (illustrative)
Your flat costs ₹80 lakh. TDS is 1%, so ₹80,000 in total. If you pay in stages, deduct 1% from each payment to the builder: on a ₹16 lakh instalment, you pay the builder ₹15,84,000 and deposit ₹16,000 as TDS. If the price were ₹48 lakh and the stamp duty value also under ₹50 lakh, no TDS would apply.
Buying jointly? Each buyer files for their share. With two equal owners, each deposits half.
How to do it
- You do not need a TAN; your PAN is enough.
- File Form 26QB online and pay the TDS within 30 days from the end of the month in which you deducted it.
- Download Form 16B and give it to the seller.
- Bank payments to the builder are your responsibility too. Deduct TDS on those stages as well.
- If the seller is an NRI, Section 195 applies instead, at different rates. Speak to a tax adviser.
Late filing brings interest and fees, so set a reminder with each payment.
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Related terms
See all glossary terms. This page explains a term; it is not legal or tax advice, and rupee figures are illustrative.
FAQ
TDS under Section 194-IA: common questions
Who pays the TDS on a flat purchase?
You deduct it from the price and deposit it. It is not an extra cost; it is part of the price, paid to the government for the seller.
Does TDS apply below ₹50 lakh?
No. Section 194-IA applies when the consideration is ₹50 lakh or more.
Is TDS deducted on the bank’s share of payments?
Yes. TDS applies on the whole price, whoever pays it. Deduct it on each payment made to the builder.
What if the seller has no PAN?
TDS is then deducted at a higher rate, 20%, under Section 206AA. Ask for the seller’s PAN before you pay.
Does GST count in the ₹50 lakh?
The Income Tax Department’s guidance treats the consideration as the full amount paid, which can include charges like parking and club fees. Check with your tax adviser how GST is treated in your case.
Want someone to walk you through it?
Ask the Reeva team about this, or anything else on your first-home paperwork. We will call back, with no pressure to buy.