TDS on Property Sale

The buyer, not the seller, is responsible for deducting TDS on a property purchase and depositing it with the government. Get it wrong and the penalty falls on the buyer.

For a resident seller the rate is 1% where the consideration or the stamp duty value, whichever is higher, is ₹50 lakh or more — section 393(1), Table Sl. No. 3(i) of the Income-tax Act, 2025. When the seller is an NRI, deduction is at capital-gains rates instead — 12.5% plus surcharge and cess on a long-term gain, with no ₹50 lakh threshold at all. Buyers routinely miss this and end up personally liable.

Resident seller — 1%

If the consideration, or the stamp duty value, whichever is higher, is ₹50 lakh or more, the buyer deducts 1% and deposits it using Form 26QB within 30 days of the end of the month of payment. No TAN is needed — the buyer's PAN is enough. Below ₹50 lakh there is no TDS. Where there are joint buyers or sellers, the consideration is aggregated across all of them for the threshold test, and each pair files a separate 26QB.

The provision is section 393(1), Table Sl. No. 3(i) of the Income-tax Act, 2025. It replaced section 194-IA of the 1961 Act when the new Act came into force on 1 April 2026, and it carried the 1% rate and the ₹50 lakh threshold across unchanged.

NRI seller — deduction at capital-gains rates

This is the trap. There is no ₹50 lakh threshold for a non-resident seller — TDS applies on any value. The buyer must hold a TAN, deduct at the long-term capital-gains rate of 12.5% plus applicable surcharge and 4% cess (or slab rates on a short-term gain), and file Form 27Q. Deducted on the whole sale value, that works out at roughly 13% to 14.95% of the price depending on the surcharge band.

The 12.5% is the general long-term rate in section 197(1)(b) of the Income-tax Act, 2025. Anything still quoting 20% is showing you the pre-23-July-2024 rate — that includes a lot of published guidance, and an earlier version of this page.

The NRI seller can apply to the assessing officer for a lower or nil deduction certificate, so TDS applies only to the actual gain. Without it, the buyer must deduct on the gross amount and the seller waits for a refund after filing a return.

A worked example

An ₹80 lakh flat from a resident seller: TDS is ₹80,000, the seller receives ₹79,20,000, and the buyer files Form 26QB. The same flat from an NRI without a lower-deduction certificate: TDS at 12.5% + 10% surcharge + 4% cess = 14.30% of ₹80 lakh = ₹11,44,000 withheld.

Failing to deduct makes the buyer liable for the tax plus interest and a penalty. If you are buying from anyone with a foreign address, an OCI card or an NRE account, confirm residential status in writing before paying anything.

Frequently asked questions