Buying a property is one of the biggest financial decisions a person makes in life. While most buyers focus on location, price, and legal documentation, there’s a crucial tax aspect often overlooked — TDS on property purchases. If you're planning to buy a property in India, understanding TDS payment on property is essential to ensure compliance and avoid penalties.
In this guide, we at EGSTIN explain what TDS on property is, who should deduct it, how much to deduct, and how it connects with RERA Registration and other compliance requirements.
What is TDS on Purchase of Property?
Under Section 194-IA of the Income Tax Act, any person (buyer) who purchases an immovable property (excluding agricultural land) in India, worth ₹50 lakhs or more, is required to deduct TDS at 1% of the sale consideration. This is called TDS payment on property.
The buyer must deduct this tax before making the payment to the seller and deposit it with the government within the specified time.
Who is Liable to Deduct TDS?
The buyer of the property is responsible for deducting and depositing the TDS.
This applies whether you’re buying residential, commercial, or land property (except for agricultural land).
The seller can be a resident individual, a builder, or a company.
Important: If the property is purchased jointly, the TDS obligation applies to all buyers in proportion to their share.
When and How to Pay TDS on Property?
Here's a simple step-by-step guide:
Deduct 1% TDS at the time of making payment or when giving credit to the seller, whichever is earlier.
File Form 26QB (a challan-cum-statement) on the TIN-NSDL website.
Deposit the TDS within 30 days from the end of the month in which the deduction is made.
Generate TDS certificate in Form 16B and issue it to the seller within 15 days from the due date of filing Form 26QB.
No TAN (Tax Deduction and Collection Account Number) is required for the buyer to deduct TDS on property. Your PAN number is sufficient.
How Does It Connect with RERA Registration?
The Real Estate (Regulation and Development) Act (RERA) was introduced to protect homebuyers and bring transparency to the real estate sector. Under RERA, all real estate projects above a certain size must be registered.
Here’s where TDS and RERA registration intersect:
When buying from a builder, check the RERA registration of the project before making any payment.
The TDS deducted must match the details shared in your RERA-compliant sale agreement.
RERA ensures that your investment is legally secure, while TDS ensures that the transaction is tax-compliant.
Together, they provide a dual layer of protection — legal and financial — to the homebuyer.
Common Mistakes to Avoid
Forgetting to file Form 26QB: This is a common error that leads to notices from the Income Tax Department.
Incorrect PAN details: Double-check PAN details of both buyer and seller while filling the form.
Not generating Form 16B: Without this certificate, the seller won’t get credit for the TDS, leading to disputes.
Ignoring RERA compliance: Always verify that the property is RERA registered to avoid legal complications.
Why It Matters
Failing to deduct or deposit TDS on time may result in:
Interest on late payment
Penalty under Income Tax Act
Legal trouble if the seller claims TDS was not paid
And more importantly, it can delay your registration process and possession of the property.
Final Thoughts
Whether you're a first-time buyer or an investor, understanding TDS Payment on Property is vital for a smooth and legally sound transaction. Always consult a tax or legal expert to ensure that all documents, payments, and filings are accurate and complete.
At EGSTIN, we help buyers with property TDS compliance, RERA registration assistance, and other legal support to make your property journey easier and safer.
