Filing Online TDS on Property Sale

Filing Online TDS on Property Sale

If you are buying immovable property in India for ₹50 lakh or more from a resident seller, you — the buyer — must deduct TDS at 1% of the higher of sale consideration or stamp duty value, then deposit it through Form 26QB within 30 days from the end of the month of payment. Miss that window and interest at 1.5% per month and a mandatory ₹200-per-day late filing fee start accruing automatically. For NRI sellers the obligation is heavier still: different rates, Form 27Q, and a compulsory TAN. This guide covers every step, with worked numbers and the errors that practitioners see repeatedly.

When Does TDS on Property Apply?

Section 194-IA: The Core Trigger

Section 194-IA of the Income-tax Act 1961 places the deduction obligation on the buyer, not the seller and not the sub-registrar. The moment you agree to purchase any immovable property — other than agricultural land as defined in section 2(14)(iii) — and the consideration is ₹50 lakh or more, TDS applies to every rupee of consideration, not just the amount above the threshold.

The rate is 1% of the higher of:

• the actual sale consideration, or
• the stamp duty value (SDV) adopted by the state authority for stamp-duty purposes

No TAN is required for a buyer in a resident-to-resident transaction. Your PAN and the seller's PAN are sufficient identifiers. There is no minimum deduction-free band within a qualifying transaction.

What Counts as "Consideration"?

The CBDT has made clear that "consideration" is not limited to the headline figure on the sale deed. Every payment that flows from the buyer to the seller or developer as part of the deal is included. That means:

• Club membership and one-time maintenance deposits stipulated in the agreement
• Car-parking charges listed in the booking letter or sale agreement
• Preferential location charges (PLC) for floor, facing, or corner units
• Electricity and water connection charges payable to the developer
• Infrastructure levies or development charges forming part of the agreement value

If your sale deed reads ₹92 lakh but a separate developer letter charges ₹6 lakh for car parking, clubhouse, and PLC, your TDS base is ₹98 lakh and TDS = ₹98,000 — not ₹92,000. Buyers who route these charges through separate invoices to keep any single document below ₹50 lakh should note that AIS (Annual Information Statement) now aggregates sub-registrar data, GST invoices, and banking credits. The department uses this cross-referencing to identify TDS gaps and issue notices under section 201.

The Stamp Duty Value Trap

Many buyers discover this too late: if the SDV fixed by the state authority is higher than the agreed price, TDS must be computed on the SDV — even though less cash changed hands. A distress sale of a flat at ₹60 lakh when the circle rate implies an SDV of ₹75 lakh means your TDS liability is ₹75,000, not ₹60,000.

The seller receives credit in Form 26AS for the full ₹75,000. They must separately offer the notional gain on the SDV differential to tax under section 50C when computing capital gains. For you as the buyer, the practical step is to check the sub-registrar's schedule of rates before computing TDS — not after registration.

NRI Sellers: Section 195, Form 27Q, and TAN

When the seller is a non-resident — whether an NRI, Person of Indian Origin (PIO), or a foreign company — section 194-IA does not apply. Section 195 governs instead, and the compliance burden on the buyer increases substantially.

Key Differences at a Glance

TDS Rates for NRI Property Sellers (FY 2026-27)

Under the Finance Act 2024 (effective 23 July 2024), long-term capital gains (LTCG) on immovable property held for more than 24 months are taxed at 12.5% without indexation for property acquired after 23 July 2024. For property acquired before 23 July 2024, the taxpayer may elect whichever outcome is more favourable: 20% with cost-inflation-index-adjusted indexation or 12.5% without indexation. Short-term gains are taxed at applicable slab rates.

Surcharge on LTCG from immovable property is capped at 15%, regardless of the NRI's total income level, with 4% Health and Education Cess applied thereafter.

Illustrative computation — NRI seller, property acquired pre-23 July 2024, LTCG ₹80 lakh, opting for 20% with indexation:

• Base tax: ₹80,00,000 × 20% = ₹16,00,000
• Surcharge at 15%: ₹2,40,000
• Cess at 4% on (tax + surcharge): ₹73,600
• TDS the buyer must deduct: ₹18,13,600

This is the amount that must be deposited before the balance consideration is paid to the NRI seller. The buyer's liability for under-deduction under section 201 is severe; do not accept verbal assurances that the NRI "has no gain."

Lower Deduction Certificate Under Section 197

NRI sellers frequently obtain a certificate from the Assessing Officer under section 197 authorising a lower rate after the AO reviews the expected net tax liability. As buyer, you must:

1. Receive the original certificate — photocopies, screenshots, or WhatsApp images have no legal standing.
2. Deduct at the rate specified in the certificate precisely.
3. Quote the certificate number on Form 27Q.
4. Verify the validity period has not expired and the property address matches.

If no valid certificate is produced, deduct at the full statutory rate. Over-deduction is the seller's inconvenience, recoverable through the seller's own ITR. Your risk as buyer is under-deduction, which makes you an assessee in default.

Step-by-Step: Filing Form 26QB on the Income Tax Portal

Form 26QB is simultaneously a challan and a TDS statement. Once submitted and paid, there is no separate quarterly e-TDS return for resident-seller transactions. The filing lives on incometax.gov.in (the new e-filing portal, not the old portal).

Before You Begin: What to Gather

• PAN of every buyer and every seller (verified against PAN card, not from memory)
• Full property address with PIN code and state
• Agreement / booking date and each payment date
• Total sale consideration (sum of all amounts, including ancillary charges)
• Stamp duty value as per the sub-registrar's schedule for that locality
• Net banking credentials or a RTGS-enabled account for payment

The Filing Sequence

1. Log in to incometax.gov.in → e-Pay Tax → select TDS on Property Purchase — Form 26QB.
2. Choose Financial Year 2026-27 for any payment made between April 2026 and March 2027.
3. Enter buyer's PAN and seller's PAN exactly as they appear on the respective PAN cards. One transposed digit will invalidate Form 16B and require a TRACES correction request.
4. Enter the property address, type (land / building / both), and state.
5. Enter date of agreement and date of payment or credit to the seller.
6. Enter total consideration and stamp duty value. The portal automatically takes the higher of the two as the TDS base.
7. Confirm TDS amount = 1% of the base. Do not round down.
8. If filing after the due date, enter applicable interest (section 201(1A)) and late filing fee (section 234E) — the portal provides fields for both.
9. Choose payment mode:
10. Net banking (immediate): Preferred. Payment is confirmed in real time.
11. Over the counter / RTGS: System generates a challan; deposit at an authorised bank branch within 15 calendar days of challan generation.
12. On confirmation, save the 15-digit Acknowledgement Number (PRN — Provisional Receipt Number). This is the key to downloading Form 16B later.

Challan-cum-Statement and AIS Reflection

The payment confirmation generates the Form 26QB challan-cum-statement. Within 3–7 working days the TDS credit appears in the seller's AIS under "TDS / TCS Credits." If it does not appear, verify the seller's PAN on your challan before assuming a system error.

Issuing Form 16B from TRACES

Form 16B is the TDS certificate the seller needs to claim credit against their capital-gains tax liability. You must issue it within 15 days from the due date of furnishing Form 26QB.

How to download:

1. Visit TRACES (tdscpc.gov.in) and register as a taxpayer (not as a deductor — buyers register under the taxpayer category using their PAN).
2. Navigate to Downloads → Form 16B.
3. Enter the PRN (acknowledgement number from Form 26QB), the seller's PAN, and the assessment year.
4. The certificate downloads as a password-protected PDF. The password is the seller's date of birth in DDMMYYYY format.
5. Share the decrypted PDF with the seller, or confirm the password so they can open it.

Sub-registrars in several states now check Form 16B or the Form 26QB challan as a precondition for completing registration. Carry both documents on registration day. If registration happens before TDS is deposited — which sometimes occurs when a buyer pays the full consideration but delays filing — the sub-registrar's records will reflect no TDS, which triggers an AIS flag and potential notice.

Worked Example: Joint Buyers, SDV Higher Than Consideration

Facts: Priya and Rahul (joint buyers, 50:50 registered share) purchase a flat in Bengaluru from Sanjay (resident individual seller).

• Agreed sale consideration: ₹1,20,00,000
• Stamp duty value (sub-registrar's circle rate): ₹1,35,00,000
• TDS base: ₹1,35,00,000 (SDV is higher)
• Payment date: 10 May 2026
• Form 26QB due: 30 June 2026 (30 days from end of May)

Filing requirement — two separate Form 26QBs:

Scenario — Priya files on time; Rahul files on 20 August 2026:

Rahul is 51 days late (due 30 June, filed 20 August).

• Section 234E fee: ₹200 × 51 = ₹10,200
• Section 201(1A) interest (late deposit, 1.5% per month):
• Months in default: June, July, August = 3 commenced months
• ₹67,500 × 1.5% × 3 = ₹3,038
• Rahul's avoidable extra cost: ₹13,238

If there had been two sellers (e.g., Sanjay and his wife as joint sellers), the filing count would double to four Form 26QBs — one for each buyer–seller pair.

Due Dates, Interest, and Penalties in Detail

The 30-Day Rule

Form 26QB is due within 30 days from the end of the month in which TDS was deducted. For FY 2026-27:

Note that the year-end does not accelerate the due date. March 2027 payments are still due on 30 April 2027, not 31 March.

Interest Under Section 201(1A)

Two distinct interest streams apply, and both can run simultaneously in a delayed filing:

• 1% per month (or part thereof): From the date TDS was deductible to the date it was actually deducted. Applies when the buyer failed to deduct in the first place or deducted a short amount.
• 1.5% per month (or part thereof): From the date TDS was deducted to the date it was actually deposited. Applies when the buyer deducted correctly but delayed deposit.

Both are mandatory, simple-interest computations. A "part of a month" counts as a full month.

Late Filing Fee Under Section 234E

₹200 per day for every day after the due date, from day one of delay, capped at the TDS amount. Unlike a penalty, this fee is automatically levied by the system when you file — there is no appeal or waiver route. Filing even one day late means a minimum ₹200 charge.

Penalty Under Section 271H

Beyond section 234E, the Assessing Officer may impose a penalty of ₹10,000 to ₹1,00,000 for filing incorrect information in Form 26QB (wrong PAN, wrong SDV, wrong consideration) or for failure to file at all. The AO has discretion, but incorrect PAN data and SDV understatements are the most common triggers that draw penalty orders.

Under-Construction Properties: The Instalment Problem

Builder purchases on a construction-linked plan (CLP) create multiple TDS events, not one at registration. TDS applies on each payment instalment from the first rupee paid, provided the total agreement value (not the individual instalment) is ₹50 lakh or more. The trigger date is each payment date, not the possession or registration date.

Illustration — FY 2026-27, flat booked February 2026 at ₹1,50,00,000:

A buyer who waits until possession in December 2026 and deposits TDS of ₹1,50,000 as a lump sum has been late on the first three instalments. Interest accrues on each delayed tranche:

• ₹15,000 late from March 2026 to December 2026 (~10 months): ₹15,000 × 1.5% × 10 = ₹2,250
• ₹30,000 late from June 2026 to December 2026 (~6 months): ₹30,000 × 1.5% × 6 = ₹2,700
• ₹45,000 late from October 2026 to December 2026 (~2 months): ₹45,000 × 1.5% × 2 = ₹1,350
• Total interest for this common mistake: ₹6,300

The developer will not remind you to file Form 26QB after each payment. Put a recurring calendar alert on every payment date.

Common Mistakes That Cost Buyers Money

1. Wrong or transposed PAN. A single-character error in the seller's PAN means the TDS credit cannot be matched to the seller's Form 26AS. The seller cannot claim it. Correction requires a formal TRACES request with supporting documentation and typically takes 30–60 days. Verify PAN by cross-checking it on the Income Tax portal's "Verify PAN" service before filing.

2. Filing one Form 26QB for joint buyers. Each buyer must file independently for their proportionate consideration. Filing a single form in one buyer's name leaves the other buyer in technical default — still liable for interest and fees on their share.

3. Ignoring a higher SDV. Deducting TDS at 1% of the agreed price when the SDV is higher is an under-deduction. The shortfall makes the buyer an assessee in default under section 201, and the seller cannot claim the full credit that the AO expects to see.

4. Treating ancillary charges as separate contracts. Splitting car parking, PLC, and club fees across separate invoices or agreements to bring any one document below ₹50 lakh does not remove the TDS obligation. AIS cross-referencing catches this pattern.

5. Applying section 194-IA to an NRI seller. Filing Form 26QB at 1% for an NRI is a severe under-deduction — the applicable rate for LTCG alone is approximately 14.95% to 23.92% inclusive of surcharge and cess. The buyer bears the shortfall liability under section 201.

6. Accepting verbal lower-deduction assurances. A seller's claim that their gain is nil or exempt, however plausible, does not entitle the buyer to deduct less. Only a written section 197 certificate issued by the Assessing Officer, produced in the original, authorises a reduced rate.

7. Missing the Form 16B issue deadline. Form 16B must be issued to the seller within 15 days of the due date of Form 26QB. Sellers need it before filing their ITR for the year. If you delay, the seller may face a mismatch notice from the department when their ITR is processed.

8. Assuming TDS can be reversed at the buyer's end. If TDS was over-deducted — because the deal price changed, or because the buyer mistakenly paid twice — the refund route is through the seller's ITR, not a buyer-side reversal. The seller claims the excess credit in their return and receives a refund from the department. Coordinate early.

AIS / TIS Cross-Referencing in 2026

The department's AIS (Annual Information Statement) and TIS (Taxpayer Information Summary), available at incometax.gov.in, now routinely reflect property purchase and sale transactions sourced from sub-registrar data, GST returns, and banking systems. Both parties — buyer and seller — can see the transaction in their AIS within weeks of registration.

If Form 26QB is not filed or the TDS amount in Form 26QB does not reconcile with the registered consideration, the buyer will see an AIS entry without a corresponding TDS credit, and the seller may see a mismatch that generates a compliance query or notice. Checking your AIS 30–45 days after registration and after filing Form 26QB is a simple validation step that catches errors before they become notices.

Key Takeaways

• Section 194-IA requires the buyer to deduct TDS at 1% on the higher of sale consideration or stamp duty value for any immovable property purchase of ₹50 lakh or more; deduction is on the full consideration, not just the excess.
• Form 26QB is due within 30 days from the end of the month of each payment; in instalment-linked purchases, every payment date is a fresh TDS event and a fresh filing deadline.
• Joint buyers must each file a separate Form 26QB for their proportionate share per seller; two buyers and two sellers = four forms, four separate TDS deposits.
• NRI sellers require section 195 compliance — a TAN, quarterly Form 27Q, and TDS computed at capital gains rates (approximately 14.95%–23.92% for LTCG including surcharge and cess), not at 1%.
• Delayed deposit attracts mandatory 1.5% per month interest under section 201(1A), and delayed filing attracts a mandatory ₹200 per day fee under section 234E — both automatic, both non-waivable.
• The TDS base includes all consideration — parking fees, PLC, club memberships, connection charges — not just the base price in the deed; AIS data from sub-registrar records will surface any under-deduction.
• Issue Form 16B to the seller from TRACES within 15 days of the Form 26QB due date; if over-deducted, the seller's ITR — not a buyer-side reversal — is the correct refund route.