TDS when you buy property worth ₹50 lakh or more

The rule

From 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961. Under section 393(1) of the new Act, a buyer who pays a resident seller for immovable property other than agricultural land must deduct tax at source (TDS) when the price or the property’s stamp duty value is ₹50 lakh or more. The stamp duty value is the value the state charges stamp duty on; in Karnataka that is usually the guidance value. The rule used to be in section 194-IA of the old Act, which still governs payments made before 1 April 2026.

• Rate: 1% of the price or the stamp duty value, whichever is higher.
• Who deducts: the buyer, from every payment, including the advance and each instalment.
• What it covers: plots, houses, flats and other buildings. Agricultural land, as the tax law defines it, is left out. A plot in a layout on converted land is generally not agricultural land; ask a chartered accountant if the land is still farmed or still recorded as farmland.

So TDS applies when either amount is ₹50 lakh or more, and it is 1% of the higher one. A plot sold for ₹45 lakh with a guidance value of ₹52 lakh needs TDS of ₹52,000. Only when both are below ₹50 lakh is there no TDS.

How to deduct and pay

1. Get the seller’s PAN and check that it is valid. Without a valid PAN, a higher rate applies.
2. Deduct 1% when you pay the seller.
3. File Form 141, the challan-cum-statement, online with your PAN and the seller’s, and pay the tax with it. You do not need a TAN.
4. Do this within 30 days from the end of the month in which you deducted the tax.
5. Download the TDS certificate, Form 132, from the TRACES website and give it to the seller within 15 days of the date Form 141 was due.

If there are two or more buyers, each one files for their own share. If there are two or more sellers, enter each seller and their share. Deducting or filing late brings interest and a late fee.

When the seller is an NRI

When the seller is not resident in India, the 1% rule does not apply. The buyer must instead deduct tax under section 393(2) at the rates that apply to the seller’s capital gain, which are much higher. From 1 October 2026, a buyer who is a resident individual or Hindu undivided family can deposit that tax with their PAN instead of a TAN; the change was notified on 22 September 2026. Companies and firms still need a TAN. The seller can ask the Income Tax Department for a certificate that lowers the deduction. Speak to a chartered accountant before you pay an NRI seller anything.

What to keep

• The Form 141 acknowledgement and the challan.
• The Form 132 certificate you gave the seller.
• A note of each payment: the date, the amount and the TDS on it.