Compliance · Pillar Guide📘 Updated 5 Nov 2026 · ⏱ 13 min read
TDS on Property Purchase 194-IA for Resident Sellers, 195 for NRI Sellers
The buyer deducts it, but the agent usually sees it coming first. The new 2025 Act sections and forms, the NRI trap, and a token-stage checklist.
Quick Answer
The buyer deducts TDS. For a resident seller it is 1% of the price or stamp duty value, whichever is higher, once that is ₹50 lakh or more (old Section 194-IA, now Section 393(1)). For an NRI seller it is tax on the capital gain, often 13–15% of the price, with no threshold (old Section 195, now Section 393(2)).
Spot the tax issue before it becomes a dispute.
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1% of price or stamp duty value, whichever is higher
Rates in force on capital gains, plus surcharge and 4% cess
Threshold
₹50 lakh, counted on the total for all buyers and sellers
None reported
TAN needed?
No
Not for resident individual or HUF buyers from 1 Oct 2026 (Reported); earlier, yes
Form to pay and report
Form 141, Schedule B (was Form 26QB)
Form 141, Schedule E from 1 Oct 2026
Due date
Within 30 days from end of the month of deduction
Same for Form 141 (Reported); verify on incometax.gov.in
Certificate to seller
Form 132 from TRACES (was Form 16B)
Form 132 from TRACES
Confirmed = checked on the Income Tax Department's own pages or the Act text. Reported = from a secondary source; confirm on incometaxindia.gov.in or with a chartered accountant.
Why Did Section 194-IA Become Section 393?
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 (tax year 2026-27). It puts most TDS provisions into tables in one section: Section 393(1) for payments to residents, Section 393(2) for non-residents.
The Income Tax Department's Form 141 FAQ confirms that purchase of immovable property is reported "under section 393(1) [Table Sl. No. 3(i)]". CBDT Notification No. 121/2026 of 22 September 2026 refers to tax on immovable property bought from a non-resident under "section 393(2) (Sl. No. 17)". Payments before 1 April 2026 stay under the old Act, and everyone still says "194-IA", so use both numbers.
Who Deducts TDS on a Property Purchase?
The buyer, always: not the seller, builder, bank, Sub-Registrar or agent. The buyer withholds part of each payment and deposits it in the seller's name; the seller claims credit.
So a deal can go wrong unnoticed: the seller expects the full cheque, the buyer has never heard of TDS, and only the agent sees both sides early enough to raise it.
How Does TDS Work When the Seller Is Resident?
Rate: 1%, on the higher figure
The Act text sets 1% "of the consideration or the stamp duty value, whichever is higher". A ₹48 lakh sale with a ₹52 lakh stamp duty value attracts TDS on ₹52 lakh. (Confirmed: same wording in old Section 194-IA(1) and new Section 393(1) Table 3(i).)
Threshold: ₹50 lakh on the total deal
TDS is on the whole amount. Since 1 October 2024 (Finance (No. 2) Act, 2024, reported) the threshold uses the total paid by all buyers to all sellers. (Confirmed in the Act text: "aggregate of the amounts paid or payable by all the transferees".)
"Price" includes the extras
Club, parking, electricity and water facility, maintenance and advance fees count as consideration. (Confirmed in old Section 194-IA Explanation; verify the matching clause in the 2025 Act.)
Covers new and resale, but not rural farm land
Land (other than rural agricultural land), buildings and parts of buildings: under-construction and resale flats, plots and shops.
No TAN
The buyer files Form 141 using their own PAN. The department's FAQ says: "Filing is to be done using PAN of the deductor." (Confirmed.)
The six steps a buyer follows
1. Confirm the seller's residential status
Ask every seller in writing: resident or non-resident? This decides the rate, the form and whether the ₹50 lakh threshold applies.
2. Compare price with stamp duty value
Use the higher of the price (with parking and club charges) and the stamp duty value.
3. Collect PAN of every seller and buyer
Without a valid seller PAN the rate rises under Section 397(2) (earlier Section 206AA).
4. Deduct on every payment, including the token
Deduct at payment or credit, whichever is earlier: token, instalments and final cheque.
5. File Form 141 and pay
Each buyer files Form 141 with PAN (Schedule B for a resident seller; Schedule E for an NRI seller from 1 October 2026) within 30 days from the end of the month of deduction.
6. Issue Form 132 to the seller
Download Form 132 from TRACES after processing and give it to the seller for credit.
Deadlines, late fee and interest
Item
Rule now
Status
Pay and file Form 141
Within 30 days from the end of the month in which tax is deducted
Confirmed (Form 141 FAQ)
Late filing fee
₹200 per day, capped at the TDS amount (Section 427; was 234E)
Confirmed
Interest
Section 398(3)(a): 1% a month for not deducting; 1.5% a month for deducting but not paying
Section confirmed; rates reported
No PAN, or invalid PAN
Higher rate under Section 397(2) (was 206AA): highest of the normal rate, rate in force, or 20%
Confirmed (CBDT FAQ)
PAN not linked with Aadhaar
Has been treated as inoperative, which can trigger the higher rate
Verify on incometax.gov.in
Certificate to seller
Form 132, downloaded from TRACES after processing
Confirmed; timeline: verify on TRACES
Worked Example 1: ₹75 Lakh Resale Flat, Two Joint Buyers
Aman and Neha buy a resale flat 50:50 from a resident seller for ₹75 lakh: ₹5 lakh token on 10 December 2026, ₹70 lakh at registry on 20 January 2027. Each share is under ₹50 lakh, but the total is not, so both deduct.
Payment
Aman pays
Aman's TDS
Neha's TDS
Deposit by
Token, 10 Dec 2026
₹2,50,000
₹2,500
₹2,500
30 Jan 2027
Balance, 20 Jan 2027
₹35,00,000
₹35,000
₹35,000
2 Mar 2027
Total
₹37,50,000
₹37,500
₹37,500
4 Form 141s in all
The seller gets ₹74,25,000 in hand plus ₹75,000 of TDS credit via Form 132. Per the department's FAQ, "separate forms are required to be filed for each deductor for its proportionate share". Filing the same week as the payment beats counting days.
Twist: if the stamp duty value were ₹80 lakh, TDS would be ₹80,000 in all (₹40,000 each). Check it early; our stamp duty and registration charges by state guide shows where to find it.
How Is It Different When the Seller Is an NRI?
Completely. The 1% rule and ₹50 lakh threshold are for resident sellers only. For a non-resident seller the buyer deducts tax on the seller's gain at the rates in force: old Section 195, now Section 393(2), Table Sl. No. 17.
Long-term (held more than 24 months)
12.5% without indexation for transfers from 23 July 2024; the 20%-with-indexation option is for resident individuals and HUFs only. Add surcharge (10% above ₹50 lakh, 15% above ₹1 crore) and 4% cess: roughly 13% to 14.95%. (Reported; confirm with a CA.)
Short-term
Slab rates; buyers commonly deduct at the highest slab plus surcharge and cess without a certificate. (Reported.)
On what amount?
The law taxes the gain, but a buyer cannot verify the seller's cost, so without a certificate buyers commonly deduct on the full price. That is the seller's cash-flow shock. (Reported practice.)
TAN: the 1 October 2026 change
Earlier, a buyer from an NRI needed a TAN and quarterly returns. From 1 October 2026, CBDT Notification 121/2026 adds Schedule E to Form 141 for resident individual and HUF buyers, filed with PAN; reports say no TAN is needed. It asks for the seller's foreign address, contacts, and tax residency certificate and foreign tax ID if there is no PAN. (Schedule E confirmed; TAN removal reported.)
The lower deduction certificate
An NRI seller who expects a small gain (or a loss) can apply for a certificate letting the buyer deduct less. Under the 2025 Act this is Section 395(1), and the application is Form 128 (earlier Form 13), filed only online on TRACES. A PAN is required. The department's FAQ warns that "such application cannot be processed once the transaction involving TDS/TCS is completed". So the seller applies before the agreement; the buyer then deducts at the certificate's rate. No processing time is published.
Worked Example 2: ₹1.2 Crore Flat Sold by an NRI
Rohit, an NRI in Dubai, sells a flat he bought in 2015 for ₹60 lakh to a resident buyer for ₹1.2 crore. It is long-term. Simplified figures, ignoring transfer costs and any reinvestment exemption:
Step
No certificate (deduct on full price)
With certificate (tax on gain)
Base
₹1,20,00,000
Gain ₹60,00,000
Tax at 12.5%
₹15,00,000
₹7,50,000
Surcharge
15% = ₹2,25,000
10% = ₹75,000
Cess 4%
₹69,000
₹33,000
TDS
₹17,94,000 (14.95%)
About ₹8,58,000 (7.15%)
Seller gets in hand
₹1,02,06,000
About ₹1,11,42,000
Had everyone assumed Rohit was resident, the buyer would have deducted ₹1,20,000 and been liable for a shortfall of over ₹16 lakh plus interest. The certificate column is illustrative: the Assessing Officer fixes the rate. Excess TDS comes back only through Rohit's return.
Every term in one place: stamp duty value, consideration, TRC, Form 132
The India Real Estate Dictionary PDF explains deal terms from token to registry in plain English. The online dictionary is free.
What Does a Trained Agent Know That an Untrained One Doesn't?
Untrained agent says
Trained agent knows
"TDS is the seller's headache."
The buyer is the deductor and carries the default, interest and late fee.
"You are two buyers at ₹37.5 lakh each, so no TDS."
The ₹50 lakh threshold counts the total paid by all buyers to all sellers.
"Deduct 1% at registry, it is the same for everyone."
If the seller is an NRI the rate is on capital gains, often about 13–15% of the price, with no threshold.
"File 26QB."
From tax year 2026-27 it is Form 141 (Schedule B, or Schedule E for NRI sellers), and the seller gets Form 132.
"We will sort the NRI certificate after the agreement."
Form 128 cannot be processed once the transaction is done. It comes first.
Agent Checklist: Token and Agreement Stage
Flag NRI status on day one. A power-of-attorney holder in India does not change the owner's status. If the owner may be non-resident, tell both sides TDS may be far above 1% and the seller should see a CA about a certificate now.
Before the token
☐ Seller's residential status, in writing ☐ All sellers and all buyers listed with shares ☐ PAN of every seller; checked operative ☐ Total price including parking, club and other charges ☐ Stamp duty value from the state portal ☐ NRI seller: told to talk to a CA about Form 128 now
In the agreement and at payment
☐ Clause: price is gross; buyer deducts TDS as required by law ☐ Payment schedule shows TDS against each instalment ☐ NRI: certificate number and rate written in, if obtained ☐ Buyer reminded: Form 141 within 30 days of month-end ☐ Seller told to expect Form 132 for every filing ☐ File note: tax questions referred to a CA
No. Commission has its own TDS: 2% once commission from one payer crosses ₹20,000 in a financial year (earlier Section 194H, now Section 393(1) of the 2025 Act), deducted by whoever pays you. It is separate from TDS on the property price. See real estate commission in India.
How This Protects You and Your Buyer
Your buyer
Avoids being in default, with interest, a daily late fee and a demand notice months after registry, and pays TDS out of the price instead of savings.
Your seller
Knows the in-hand amount in advance, gets Form 132 for credit, and as an NRI has time to seek a lower deduction certificate.
You
Fewer deals that break at registry, and a record that you flagged the issue and referred both sides to a CA. Clean deals get commission paid.
Agents are not tax advisers
Spot the issue, raise it early, put it in writing. Do not compute the seller's tax, pick the rate or file forms for anyone. Refer both sides to a chartered accountant and note that you did.
Frequently Asked Questions
Is TDS deducted on property purchase above ₹50 lakh?
Yes, if the seller is resident: 1% of the price or stamp duty value, whichever is higher, once either is ₹50 lakh or more. Old Section 194-IA; from 1 April 2026, Section 393(1), Table Sl. No. 3(i) of the Income-tax Act, 2025.
What replaced Form 26QB?
From tax year 2026-27, Form 141 Schedule B, a challan-cum-statement filed with the buyer's PAN, due within 30 days from the end of the month of deduction. Earlier payments stay on Form 26QB.
How much TDS is deducted when buying from an NRI?
No 1% rate and no ₹50 lakh threshold. The buyer deducts at the rates in force on capital gains, such as 12.5% on long-term gains plus surcharge and 4% cess (old Section 195, now Section 393(2), Sl. No. 17). A lower deduction certificate can reduce it.
Does a buyer need a TAN to buy property from an NRI?
Earlier, yes. From 1 October 2026 a resident individual or HUF buyer reports it in Form 141 Schedule E using PAN, so a TAN is reported to be no longer needed. Companies and firms should check with a CA.
How does an NRI seller get a lower TDS certificate?
The seller files Form 128 (earlier Form 13) on TRACES under Section 395(1) of the 2025 Act, with a PAN and an income estimate. Apply before the deal: it cannot be processed once the transaction is complete.
What happens if the buyer forgets to deduct TDS?
The buyer is in default: interest under Section 398(3) (reported at 1% a month for not deducting, 1.5% for not paying), plus a ₹200-a-day late fee under Section 427, capped at the TDS amount.
Is TDS on property the same as TDS on the agent's commission?
No. TDS on the property price is deducted by the buyer from the seller's money. TDS on commission is deducted by whoever pays the agent: 2% once commission from one payer crosses ₹20,000 in a year, under Section 393(1) of the 2025 Act (earlier Section 194H).
Know the Deal Before the Registry Does.
RERACertified™ Pro covers the RERA Act, your state track and deal documents, so you flag TDS and stamp duty issues early.
5 Nov 2026: Published. Covers the Income-tax Act, 2025 section numbers, Form 141 Schedules B and E (Schedule E from 1 October 2026), Form 132 and Form 128.