TDS on Property Purchase Above ₹50 Lakhs: What Buyers Must Do
Under Section 194-IA of the Income Tax Act, a buyer purchasing immovable property above a specified value threshold is required to deduct tax at source on the transaction and deposit it with the government — this is a genuine compliance obligation on the buyer, distinct from any tax the seller separately owes on their capital gains.
Who this applies to
This applies to resident-to-resident transactions above the specified threshold (a different, higher-rate provision under Section 195 applies when the seller is a non-resident — see our separate guide on buying from an NRI seller for that specific case). Most straightforward resident purchases above the threshold fall under this standard rule.
What the buyer actually needs to do
- ✦Deduct TDS at the applicable rate on the full sale consideration at the time of payment
- ✦Deposit the deducted amount with the government within the prescribed timeline using Form 26QB
- ✦Issue a TDS certificate (Form 16B) to the seller as proof of the deduction
- ✦Keep records of the transaction and TDS filing, since these matter for both your compliance and the seller's own tax filing
Why this often gets missed or handled incorrectly
Many buyers, especially first-time buyers, aren't aware this obligation exists and are surprised to learn the compliance burden sits with them, not the seller or a bank. Some transactions inadvertently skip this step entirely, which can create compliance issues down the line for the buyer specifically, since the obligation to deduct and deposit was theirs.
A practical note if you're financing through a home loan
Some lenders build TDS deduction into the disbursement process for eligible transactions, but this isn't universal — confirm directly with your lender whether they handle this on your behalf or whether you need to manage the Form 26QB filing independently.
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Frequently Asked Questions
What is the current TDS rate and threshold under Section 194-IA?+
This is set by the Income Tax Act and can be revised in a Finance Act — confirm the current threshold and rate directly with a CA or the Income Tax Department's official portal at the time of your transaction rather than relying on a figure that may be outdated.
Does this apply to under-construction property too?+
TDS obligations under this provision generally apply to the consideration paid for the property, which can include instalment payments for an under-construction purchase — confirm the specific application to instalment-based payments with a CA, since the mechanics differ from a single lump-sum resale transaction.
What happens if the buyer forgets to deduct TDS on the transaction?+
The buyer can face interest, penalties, and compliance notices for the missed deduction — this is a real obligation, not a minor formality, and it's worth confirming with a CA before the transaction whether it applies to your specific purchase.
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