TDS on Purchase of Property in 2026: The 1% Rule, Form 141 and NRI Sellers

Buying a flat, a shop or a plot is usually the one time an ordinary family has to act as a tax deductor. If the price or the government's stamp duty value is high enough, the buyer must hold back part of the payment, deposit it with the Income Tax Department and give the seller a certificate. This guide is for home buyers, small businesses buying premises, builders' accounts teams and sellers checking their credit. It explains the 1% rate and the ₹50 lakh test, how instalments and joint owners work, how Form 141 replaced Form 26QB from 1 April 2026, and what changes when the seller is a non-resident — with worked examples in rupees.

Quick answer

TDS on purchase of property is 1% of the sale price or the stamp duty value, whichever is higher, when either is ₹50 lakh or more. The buyer deducts it from each payment, pays it with Form 141 (Schedule B) using their PAN within 30 days from the end of the month in which tax is deducted, and gives the seller a Form 132 certificate from TRACES. Since 1 April 2026 the rule is section 393(1) Table Sl. No. 3(i) of the Income-tax Act, 2025 (old section 194-IA).

• Applies to buildings, flats and non-agricultural land bought from a resident — no TAN needed

• Threshold tested on the whole property, even with several buyers or sellers

• Seller without a valid PAN: 20% instead of 1%

• Seller is an NRI: tax on capital gains at 12.5% or 30% plus surcharge and cess, no threshold

• From 1 October 2026, resident individuals buying from NRIs can use Form 141 Schedule E instead of a TAN

What the property TDS rule covers

The rule applies to "consideration for transfer of any immovable property (other than agricultural land)" paid to a resident seller. Section 402(19) of the Income-tax Act, 2025 defines immovable property as any land other than agricultural land, or any building or part of a building. That takes in flats, independent houses, villas, shops, offices, warehouses, factory sheds and non-agricultural plots, whether you buy them from a builder, a development authority or another owner in a resale.

The payer column says "person", so the duty falls on every buyer: a salaried individual, a pensioner, an HUF, a proprietor, a partnership firm or a company. The only buyers carved out are those who must deduct under the compulsory acquisition row instead. It does not matter whether the property is for living in, for letting out or for business use, and it does not matter whether the seller is a builder that will pay tax on business income or an individual who will pay capital gains tax.

Three neighbouring situations are handled elsewhere. Agricultural land, as defined for capital gains, is outside the rule completely. Compensation on compulsory acquisition of land or buildings under a law such as the Right to Fair Compensation Act carries TDS at 10% above ₹5,00,000 under Table Sl. No. 3(iii), deducted by the paying authority. And money paid to a landowner under a joint development agreement covered by section 67(14) attracts 10% under Sl. No. 3(ii); Note 2 to the table says that where both rows could apply, only the joint development row is used.

Property TDS at a glance (2026-27)

1%

Rate on resident sellers

of price or stamp duty value, whichever is higher

₹50 lakh

Threshold

price or stamp value; whole property

20%

Seller without valid PAN

s.397(2)

30 days

Pay with Form 141

from the end of the month of deduction

The ₹50 lakh test and the 1% rate

The rate column of Table Sl. No. 3(i) says 1% of the consideration for the property or of its stamp duty value, whichever is higher. The stamp duty value is the value adopted or assessable by a state authority for stamp duty — the ready reckoner or circle rate in most states. When a buyer negotiates a price below the circle rate, TDS is still worked out on the circle-rate value. This link to stamp duty value has applied since 1 April 2022 under the old Act and was carried into the new one.

The threshold works the same way. Note 3 to the table says tax is deducted where the consideration or the stamp duty value is equal to or greater than fifty lakh rupees. So a property sold for ₹49 lakh with a stamp duty value of ₹51 lakh is caught. As enacted, Note 3 mistakenly pointed to the compulsory acquisition row; the Finance Act 2026 corrected the cross-reference with effect from 1 April 2026, so the intended rule applies from the first day of the new Act.

Does the property TDS rule apply to your purchase?

Step 1

Land, building or part of a building?

Step 2

Agricultural land? → no TDS

Step 3

Seller a non-resident? → s.393(2) Sl. 17

Step 4

Price or stamp value ≥ ₹50 lakh?

No → no TDS

Step 5

Deduct 1% of the higher figure

Form 141 Schedule B

Note 1 settles a question that caused years of disputes. For the threshold, the consideration is the total paid by all buyers to all sellers for the property. Before 1 October 2024, some buyers argued that a ₹70 lakh flat bought jointly by two people was two purchases of ₹35 lakh each, below the limit. That argument no longer works: the test is the property's total price, and each buyer then deducts on their own payments.

The consideration is also wider than the headline price. Section 402(9) says it includes club membership fees, car parking fees, electricity or water facility fees, maintenance fees, advance fees and any similar charges incidental to the transfer. A builder's demand letter that lists the base price, a covered car park and a club membership is one consideration for TDS purposes, and all of it counts towards ₹50 lakh and towards the 1% deduction.

When to deduct: advances, instalments and home loans

Section 393(1) requires the deduction at the time of credit or payment, whichever is earlier. For most individual buyers, that means each time money leaves their account for the seller. A token advance, the booking amount, every construction-linked instalment and the final payment on registration are each a payment from which 1% is withheld, once the property crosses the threshold.

Under-construction flats generate the most filings. If you pay a builder in eight instalments over three years, you deduct on each instalment and file a separate Form 141 for each month in which you deduct. Many builders send a TDS reminder with every demand letter and will show the TDS as a "receivable" on your account until the certificate reaches them, so keep the Form 141 acknowledgements together with the builder's receipts.

Home loans do not shift the duty. When a bank disburses a tranche straight to the builder, the payment is still made on your behalf and the TDS is still yours to deduct and deposit. Most buyers handle this by paying the 1% from their own funds on the date of disbursement and asking the builder to treat the bank amount plus the TDS as the full instalment. Ask your bank in advance whether it will disburse the instalment less TDS; some banks do, some do not.

Joint buyers and joint sellers

Joint ownership is common, especially between spouses and in inherited property. Because Note 1 tests the threshold on the property's total price, joint buyers either all deduct or none of them do. Once the property is caught, each buyer deducts 1% from the amount they personally pay, and each files their own Form 141. The Department's FAQs are explicit that every deductor must report and deposit separately on their own share.

Multiple sellers work in a similar way. Each buyer deducts on the amount paid to each seller, against that seller's PAN, so each seller gets credit for their own share. One Form 141 can cover several sellers only if they fall in the same category — all corporate or all non-corporate, judged by the fourth character of the PAN — and the tax was deducted in the same month. Two buyers and two sellers therefore usually means at least two forms, and four certificates.

Paying the TDS with Form 141 (old Form 26QB)

Buyers under this row do not need a TAN. Section 397(1)(c)(i) exempts anyone deducting under Table Sl. No. 3(i) from obtaining one, and the Form 141 FAQs say Schedule B can be filed by all categories of assessee — so even a company buying an office from a resident seller can use its PAN. Form 141 is a challan-cum-statement: you report the transaction and pay the tax in one step on the e-filing portal, and the portal hands the data to TRACES.

The deadline is the same as it was for Form 26QB: the tax must be paid within 30 days from the end of the month in which tax is deducted, with the statement furnished in the same window. A deduction made from a payment on 12 November 2026 is due by 30 December 2026. The "month of deduction" is the month in which you actually deducted, not the month of the agreement.

Filing Form 141 for a property purchase

1. 1

   Collect the details

   Seller's PAN and address, property address, date of agreement, total consideration, stamp duty value, your share, and the date and amount of this payment. Check the seller's PAN is valid and linked to Aadhaar.

2. 2

   Open Form 141

   Log in with your PAN and go to e-File → e-Pay Tax → Income Tax Act 2025 → New Payment → Form 141. Choose Schedule B (immovable property).

   Form 141 FAQs
3. 3

   Enter the transaction

   Select the seller category (corporate only if the PAN's fourth letter is C), fill in the property and payment details, and confirm the TDS amount.

4. 4

   Pay

   Pay through net banking, debit card, UPI or a bank counter. Keep the challan identification number (BSR code, date and serial number).

5. 5

   Download the certificate

   After the payment is processed, register on TRACES as a taxpayer, download Form 132 and give it to the seller.

   TRACES

Mistakes in a filed Form 141 — a wrong PAN, the wrong amount, the wrong month — are corrected on TRACES, not on the e-filing portal, after registering there as a taxpayer. If you paid too much TDS, the seller still gets credit for the full amount and can claim a refund in their return; you cannot claw it back from the Department yourself.

The seller's certificate: Form 132 (old Form 16B)

Rule 215 of the Income-tax Rules, 2026 prescribes Form 132 as the certificate for deductions reported through Form 141. It merged the old Forms 16B, 16C, 16D and 16E. The buyer must download it from the portal — an Excel sheet or a letter typed by the buyer is not a valid certificate — and give it to the seller within 15 days from the due date for furnishing Form 141. For a Form 141 due on 30 December, that is 14 January.

Sellers do not depend only on the paper. The deduction appears against their PAN in the Annual Information Statement, which is what the return form draws on when they claim the credit. A seller who sees no entry a month after the sale should ask the buyer for the Form 141 acknowledgement; often the buyer simply entered a wrong PAN or chose the wrong seller category. The penalty for not issuing a certificate is ₹500 a day, capped at the tax deducted.

Buying property from an NRI

When the seller is a non-resident, the 1% row does not apply at all. The payment falls under section 393(2) Table Sl. No. 17 — "any other sum chargeable" paid to a non-resident — and tax is deducted at the rates in force on the income included in it. There is no ₹50 lakh threshold: a ₹30 lakh plot bought from an NRI attracts TDS just as a ₹3 crore flat does.

For 2026-27 the rates in force come from Part II of the First Schedule to the Finance Act 2026. On long-term capital gains of a non-resident individual the rate is 12.5%; on short-term gains from property, which fall under "the whole of the other income", it is 30%. Surcharge is added at 10% where the sum exceeds ₹50 lakh and 15% above ₹1 crore (capped at 15% for capital gains), and then 4% health and education cess. On a long-term gain, that works out to 13%, 14.3% or 14.95% of the amount deducted on.

Before anything else, confirm the seller's residential status for the tax year. Residence for income tax depends on days spent in India, not on citizenship or an overseas address, so ask the seller for a written statement of status and keep it with the sale papers. If the seller turns out to be non-resident and you deducted only 1%, the shortfall is your liability as the deductor, with interest.

Resident seller vs NRI seller

Point	Resident seller	Non-resident seller
Provision	s.393(1) Table Sl. 3(i) (old 194-IA)	s.393(2) Table Sl. 17 (old 195)
Rate	1% of price or stamp value	12.5% LTCG / 30% STCG + surcharge + 4% cess
Threshold	₹50 lakh	None
TAN needed?	No — any buyer	No for resident individuals/HUFs from 1 October 2026; yes for others
Return / form	Form 141 Schedule B	Form 141 Schedule E (individual/HUF) or Form 144 (others)
Certificate	Form 132	Form 132 via Schedule E, or Form 131 via Form 144

Provision

Resident seller

s.393(1) Table Sl. 3(i) (old 194-IA)

Non-resident seller

s.393(2) Table Sl. 17 (old 195)

Rate

Resident seller

1% of price or stamp value

Non-resident seller

12.5% LTCG / 30% STCG + surcharge + 4% cess

Threshold

Resident seller

₹50 lakh

Non-resident seller

None

TAN needed?

Resident seller

No — any buyer

Non-resident seller

No for resident individuals/HUFs from 1 October 2026; yes for others

Return / form

Resident seller

Form 141 Schedule B

Non-resident seller

Form 141 Schedule E (individual/HUF) or Form 144 (others)

Certificate

Resident seller

Form 132

Non-resident seller

Form 132 via Schedule E, or Form 131 via Form 144

In law, tax is deducted on the part of the payment that is income. In practice, buyers cannot safely work out an NRI seller's capital gain, so they deduct on the whole price unless they hold a certificate. Two routes exist. The seller can apply for a lower or nil deduction certificate in Form 128 under section 395(1), and the buyer can apply under section 395(2) for the Assessing Officer to determine the portion of the price that is chargeable. Either way, the buyer then deducts as the certificate says. Our lower TDS certificate guide explains Form 128.

The paperwork changed mid-year. Until 30 September 2026, every buyer from an NRI needed a TAN, paid through a TAN challan and filed the quarterly non-resident statement, Form 144 (old Form 27Q), with a Form 131 certificate to the seller. The Finance Act 2026 amended section 397(1)(c) so that, from 1 October 2026, a resident individual or HUF buying from a non-resident need not obtain a TAN. The Form 141 FAQs say these buyers now report the seller's details in a new Schedule E, filed with their PAN. Companies, firms and other buyers continue with TAN, Form 144 and Form 131.

Worked examples in ₹

1. Resale flat above the limit. Neha buys a resale flat in Pune for ₹72 lakh; the stamp duty value is ₹68 lakh. She pays the whole amount on registration on 12 November 2026. TDS is 1% × ₹72,00,000 = ₹72,000. The seller receives ₹71,28,000. Neha files Form 141 Schedule B and pays ₹72,000 by 30 December 2026, then gives the seller Form 132 by 14 January 2027.

2. Price below the circle rate. A trader buys a shop for ₹48 lakh, but the stamp duty value is ₹52 lakh. The stamp duty value crosses the threshold, so TDS applies on the higher figure: 1% × ₹52,00,000 = ₹52,000. It comes out of the ₹48 lakh payment, so the seller receives ₹47,48,000.

3. Under-construction flat in instalments. Arjun books a ₹90 lakh flat in Bengaluru. He pays ₹9 lakh on booking in May 2026 and his bank disburses ₹27 lakh in August 2026. He deducts ₹9,000 in May (Form 141 due 30 June) and ₹27,000 in August (due 30 September), paying the second amount from his savings because the bank releases the full ₹27 lakh to the builder. A ₹3 lakh car park billed in a later instalment carries ₹3,000 of TDS too.

4. Joint buyers, joint sellers. A couple buys a ₹60 lakh flat in equal shares from two brothers who own it equally. Each spouse pays ₹15 lakh to each brother and deducts 1% — ₹15,000 per payment, ₹30,000 per spouse. Both brothers are non-corporate and the payments are in the same month, so each spouse files one Form 141 covering both sellers. In total ₹60,000 is deducted and the brothers get two certificates each.

5. Below the threshold. A plot sells for ₹45 lakh with a stamp duty value of ₹42 lakh. Neither figure reaches ₹50 lakh, so no TDS is due and no Form 141 is filed.

6. Seller without a valid PAN. In example 1, if the seller's PAN is invalid or inoperative, section 397(2) requires 20%: ₹14,40,000 instead of ₹72,000. Check the PAN on the e-filing portal's "Verify Your PAN" service before the registration date.

7. Buying from an NRI. In November 2026 Ravi, a resident, buys a ₹1.2 crore flat from an NRI who has owned it since 2015. With no certificate, Ravi deducts on the full price at 12.5% plus 15% surcharge plus 4% cess — 14.95%, or ₹17,94,000 — and files Form 141 Schedule E with his PAN. If the seller had produced a Form 128 certificate allowing a deduction of, say, ₹6,50,000, Ravi would deduct that amount instead.

Check the TDS on a paymentEnter the payment and rate to see the TDS and the net amount payable — free, no login.

Late payment, wrong rates and other consequences

A buyer who fails to deduct, or deducts and pays late, is an assessee in default under section 398(1). Interest runs at 1% a month or part of a month from the date tax should have been deducted until it is deducted, and at 1.5% a month or part of a month from deduction until payment. A late fee of ₹200 a day applies for each day Form 141 is late, capped at the TDS amount, and must be paid before the form is accepted. Our guide to TDS interest and penalties works through the calculation month by month.

The demand usually arrives as a notice from the TDS Centralised Processing Cell, sometimes years after the purchase, when the seller's return or the registration data shows a sale with no matching TDS. Buyers who discover a missed deduction should file Form 141 for the month in which they actually deduct and pay the tax with interest straight away, rather than wait for the notice. Penalties equal to the tax not deducted are also possible under section 448, though officers must consider whether the buyer had good reason.

Common mistakes and how to fix them

Testing the price only. Buyers who negotiate below the circle rate often skip TDS. Always compare the agreed price with the stamp duty value on the registration estimate and use the higher figure.

Splitting the threshold between joint buyers. Since 1 October 2024 the test is the whole property's price. If you skipped TDS on a jointly bought ₹80 lakh flat on the old reasoning, deduct and pay with interest now.

Using Form 26QB for 2026-27 payments. For payments on or after 1 April 2026, use Form 141. Form 26QB and Form 16B remain only for payments made, or credited, on or before 31 March 2026.

Treating an NRI like a resident. Deducting 1% on an NRI sale leaves a large shortfall. Confirm the seller's status first, and if they are non-resident, use Schedule E (individual or HUF buyer) or a TAN and Form 144.

Forgetting bank-disbursed instalments. The bank's payment to the builder is your payment. Deduct and pay TDS for each disbursement month.

Not giving the certificate. File Form 141 early enough to download Form 132 on time, and send it to the seller with the registration documents or the instalment receipt.

What changed under the Income-tax Act, 2025

The Income-tax Act, 2025 came into force on 1 April 2026. Section 194-IA became row 3(i) of the table in section 393(1), with the same rate, threshold and stamp-duty-value test, and the payments to non-residents formerly under section 195 became row 17 of the table in section 393(2). The Income Tax Department's transition FAQs confirm that rates and thresholds were not changed; the section numbers, form numbers and payment route were.

The transition rule turns on the earlier of credit or payment. If you paid an instalment on or before 31 March 2026, that instalment was governed by the 1961 Act and reported in Form 26QB, even if you file late. Instalments paid on or after 1 April 2026 belong to the new Act and go in Form 141. A buyer of an under-construction flat whose payments straddle the two years will therefore hold Form 16B certificates for the early instalments and Form 132 certificates for the later ones.

Official links

• Income-tax Act, 2025 — Gazette texts.393(1) Table Sl. 3; s.393(2) Sl. 17; s.397(1)(c); s.402(9) and (19)
• Form 141 FAQsSchedule B, Schedule E, due dates, corrections
• TDS compliance helpTransition rule and interest
• Memorandum to Finance Bill 2026TAN relaxation for buyers from NRIs
• e-Filing portalFile Form 141 with PAN; verify PAN
• TRACESDownload Form 132; correct Form 141

What to do next

Before you sign, ask for the stamp duty value estimate, the seller's PAN and a written statement of residential status, and add the TDS dates to your payment schedule. Then work out the amount on each payment with our free TDS calculator. If you are buying from a builder, our guide to GST on flat purchase explains the other tax on your demand letters, and what TDS is and how it works covers the wider system.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the TDS rate on purchase of property in 2026?

The buyer deducts 1% of the sale consideration or the stamp duty value, whichever is higher, when either figure is ₹50 lakh or more. The rule sits in section 393(1) Table Sl. No. 3(i) of the Income-tax Act, 2025, which replaced section 194-IA from 1 April 2026. Agricultural land is outside it. If the seller has no valid PAN, the rate rises to 20%.

Is TDS deducted on property below ₹50 lakh?

No, as long as both the agreed price and the stamp duty value are below ₹50 lakh. If either one reaches ₹50 lakh, TDS applies. For example, a flat bought for ₹48 lakh with a stamp duty value of ₹52 lakh attracts TDS of 1% on ₹52 lakh, which is ₹52,000. Where there are several buyers or sellers, the total price of the property is tested, not each person's share.

What replaced Form 26QB?

For property bought on or after 1 April 2026, the buyer pays and reports TDS through Form 141, a single challan-cum-statement that replaced Forms 26QB, 26QC, 26QD and 26QE. Property purchases from resident sellers go in Schedule B. The tax is due within 30 days from the end of the month in which tax is deducted, and no TAN is needed — you file with your own PAN on the e-filing portal.

Do I need a TAN to buy property from an NRI?

From 1 October 2026, not if you are a resident individual or HUF. The Finance Act 2026 amended section 397(1)(c) so these buyers can deduct and report through Form 141 Schedule E using their PAN. Companies, firms and other buyers still need a TAN, and so did individuals for purchases before that date. The TDS rate on an NRI sale is much higher than 1%.

How much TDS is deducted when buying from an NRI?

TDS is deducted at the rates in force on the seller's capital gain: 12.5% for long-term gains and 30% for short-term gains of an individual, plus surcharge and 4% cess. There is no ₹50 lakh threshold. Unless the seller or buyer obtains a certificate from the Assessing Officer fixing a lower amount, buyers usually deduct on the full price.

How does the seller get the TDS certificate for a property sale?

The buyer downloads it from TRACES after filing Form 141 and hands it to the seller. For deductions under the new Act the certificate is Form 132, which replaced Form 16B, and it is due within 15 days from the due date for furnishing Form 141. The seller can also check the credit in the Annual Information Statement before filing the return that reports the sale.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.The Income-tax Act, 2025 (Act No. 30 of 2025), Gazette of India Extraordinary, 21 August 2025 — Ministry of Law and Justice (Legislative Department) · accessed 12 October 2026
2. 2.Finance Bill, 2026 — First Schedule, Part II (rates for deduction of tax at source) — Ministry of Finance (Union Budget 2026-27) · accessed 12 October 2026
3. 3.Memorandum explaining the provisions in the Finance Bill, 2026 — Ministry of Finance (Union Budget 2026-27) · accessed 12 October 2026
4. 4.Form 141 — FAQs — Income Tax Department (e-Filing portal) · accessed 12 October 2026
5. 5.TDS Compliance — e-Filing help (FAQs on the transition to the Income-tax Act, 2025) — Income Tax Department (e-Filing portal) · accessed 12 October 2026
6. 6.Rule 215, Income-tax Rules 2026 — certificates of TDS/TCS — TaxHeal (reproducing the notified rule) · accessed 12 October 2026
7. 7.Form 132 — TDS certificate for rent, property, contract payments and VDA — ClearTax · accessed 12 October 2026
8. 8.Buying property from an NRI? TDS rules change from 1 October 2026 — Setindiabiz · accessed 12 October 2026