Income tax / TDS on property

Section 194-IA: TDS on Purchase of Immovable Property in India

A practical guide to the 1% tax deduction on property purchases, the Rs. 50 lakh limit, stamp duty value, multiple buyers or sellers, and compliance under the Income-tax Act, 2025.

Reviewed: 27 October 2026 | India

Key rule: When covered immovable property is purchased from a resident seller, the buyer generally deducts 1% of the higher of the sale consideration or stamp duty value, provided either amount is Rs. 50 lakh or more. From 1 April 2026, see Section 393(1), Table Serial No. 3(i), of the Income-tax Act, 2025.

1. What is Section 194-IA?

Section 194-IA of the Income-tax Act, 1961 required a transferee (buyer) to deduct tax at source when paying a resident transferor (seller) for the transfer of specified immovable property, other than excluded agricultural land. Introduced with effect from 1 June 2013, it applied to individuals as well as other buyers, including persons not otherwise required to obtain a tax deduction account number (TAN).

The provision addressed ordinary purchases of land, houses, flats, commercial premises and buildings. Payments covered by the separate compulsory-acquisition provision (historically Section 194LA) are dealt with separately. The rule applies to a resident seller; for a non-resident seller, the buyer must examine the applicable non-resident withholding provisions instead of assuming that 1% is sufficient.

2. TDS rate and Rs. 50 lakh threshold

Condition	Treatment
Applicable rate	1%
Tax base	Higher of property consideration and stamp duty value
Threshold	Rs. 50,00,000; no deduction only when both consideration and stamp duty value are below Rs. 50 lakh
When to deduct	At credit or payment, whichever is earlier, including relevant instalments
Multiple buyers or sellers	Consider aggregate amounts paid or payable for the property; rule clarified from 1 October 2024
TAN	Not required solely for deductions under former Section 194-IA

The Finance Act, 2022 aligned the threshold and tax base with stamp duty value. The Finance (No. 2) Act, 2024 added the aggregation clarification effective 1 October 2024. The Rs. 50 lakh figure is a transaction-level trigger, not an exemption of the first Rs. 50 lakh.

Illustrations

Example A: Sale consideration Rs. 65 lakh; stamp duty value Rs. 68 lakh. TDS is 1% of Rs. 68 lakh, or Rs. 68,000.
Example B: Sale consideration Rs. 48 lakh; stamp duty value Rs. 52 lakh. The threshold is met; TDS is Rs. 52,000.
Example C: Sale consideration Rs. 46 lakh; stamp duty value Rs. 49 lakh. Both amounts are below Rs. 50 lakh; ordinarily no deduction under this provision.
Example D: Two buyers together pay Rs. 80 lakh for one property. Splitting the purchase into Rs. 40 lakh shares does not remove the TDS obligation.

Examples assume the seller is resident, no special tax-deduction certificate applies and the statutory 1% rate is available. Instalment and multi-party transactions require careful allocation and reporting.

3. Definitions: immovable property, agricultural land and consideration

Immovable property

For the historical provision, immovable property means land other than excluded agricultural land, or any building or part of a building. It includes residential flats and commercial buildings.

Agricultural land

The exclusion is for agricultural land in India outside the specified urban areas described in Section 2(14)(iii)(a) and (b) of the 1961 Act. Land merely described as agricultural in a document is not automatically excluded: its location and statutory classification matter.

Consideration and incidental charges

The definition of consideration includes amounts such as club membership, car parking, electricity or water facility, maintenance and advance fees, and similar charges incidental to the transfer. The buyer should review the agreement and associated invoices rather than looking only at the basic property price.

Stamp duty value

This is the value adopted, assessed or assessable by the relevant authority for stamp duty purposes, under the applicable statutory definition. It can exceed the agreed sale price, in which case the higher value determines the statutory 1% TDS base.

4. Buyer compliance: deduction, deposit and certificate

Confirm seller residency and PAN. The resident/non-resident distinction is essential. Missing or invalid PAN can affect the deduction rate under applicable provisions.
Check consideration and stamp duty value. Include relevant incidental charges and the entire transaction where there are joint buyers or sellers.
Deduct at the correct time. Tax is generally deducted when consideration is credited or paid, whichever is earlier. For instalments, plan the deduction and remittance carefully.
File and pay the challan-cum-statement. For events on or before 31 March 2026, the department identifies Form 26QB under the old Act, generally due within 30 days from the end of the month in which deduction was made.
Use the new-Act procedure where applicable. For relevant credit or payment events from 1 April 2026, the department identifies the common Form 141 under the Income-tax Rules, 2026. Verify the portal's current filing instructions and due dates.
Provide the TDS certificate. For old-Act transactions, the applicable certificate was Form 16B. Check the updated certificate process for new-Act transactions.

Use the official Income Tax e-Filing Portal for payment, filing and certificate services. Late deduction, late remittance or incorrect reporting may lead to interest, fees or penalties under the applicable law.

5. Position under the Income-tax Act, 2025

For the tax year commencing 1 April 2026, the corresponding withholding rule appears in Section 393(1), Table Serial No. 3(i) of the Income-tax Act, 2025. The table retains the 1% rate on the higher of the consideration or stamp duty value, subject to the Rs. 50 lakh threshold and the relevant statutory notes on aggregate consideration. The tax-year date and transitional rules should be checked where agreements, instalments and registrations span the changeover.

The older Section 194-IA remains important when reviewing earlier deductions, assessments, certificates and disputes. This page explains both provisions so historical references in property agreements remain understandable.

6. Frequently asked questions

Is TDS required on a property costing exactly Rs. 50 lakh?

Yes, if the transaction is otherwise covered. The exception applies only where both consideration and stamp duty value are less than Rs. 50 lakh.

Does a buyer need a TAN?

Under former Section 194-IA, the buyer was expressly exempt from the TAN requirement for this deduction. Follow the current portal process under the 2025 Act for new transactions.

Does each joint buyer get a separate Rs. 50 lakh limit?

No. The statutory clarification requires aggregation of consideration for the property where there are multiple buyers or sellers.

Is 1% sufficient when the seller is an NRI?

No. The provision concerns resident sellers. Non-resident payments require a separate analysis of withholding law and any applicable treaty or certificate.

Is TDS calculated only on the sale agreement amount?

No. The statutory comparison with stamp duty value is required, and incidental transfer charges may form part of consideration.

7. Official legal sources and useful links

This article is general information, not a substitute for examining the registered documents, seller's residential status, payment dates and applicable law for a specific property purchase.