TDS on Property Buy 2026: Why ₹60 Lakh Flat Cuts 1% at Source

You've finally found the flat. After months of site visits, EMI calculations and haggling with the builder, you've agreed on ₹60 lakh. The token amount is paid, the loan is sanctioned, and you're ready to register. Then your CA drops a bombshell: "Before you pay the seller, you need to deduct 1% TDS and deposit it with the government — or you're the one who pays the penalty."

Most first-time homebuyers have never heard of Section 194-IA. And here's the surprising part: the tax department doesn't chase the seller for this money. It chases you, the buyer. Miss the deadline and you're looking at interest, late fees under Section 234E of ₹200 per day, and a potential penalty that can equal the entire TDS amount. On a ₹60 lakh flat, that 1% is ₹60,000 you must route through the government — and getting the paperwork wrong is expensive.

In this guide I'll walk you through exactly what TDS on property purchase 2026 means, how much you deduct on a ₹60 lakh flat, the step-by-step Form 26QB process, the tighter reporting rules kicking in from October 2026, and the mistakes that quietly cost buyers thousands. Let's make sure you're the buyer who gets it right.

Key Takeaways

• 1% TDS applies when you buy immovable property (except agricultural land) for ₹50 lakh or more. A ₹60 lakh flat means ₹60,000 deducted at source.
• The buyer is responsible, not the seller — you deduct, deposit via Form 26QB, and issue Form 16B.
• Deadline: deposit within 30 days from the end of the month in which payment/credit is made.
• The threshold is on total consideration, not per instalment — even a ₹52 lakh property paid in parts attracts TDS on the full amount.
• From October 2026, reporting tightens for joint buyers and multiple sellers — each PAN combination needs its own Form 26QB.
• No PAN of seller = 20% TDS. Always collect and verify the seller's PAN before paying.

What is TDS on property purchase and why does a ₹60 lakh flat trigger it?

Under Section 194-IA of the Income Tax Act, when you buy any immovable property — a flat, a house, a commercial unit, or a plot (other than rural agricultural land) — for a consideration of ₹50 lakh or more, you must deduct 1% TDS on the amount you pay the seller.

The logic is simple: the government wants a paper trail on high-value property deals. Real estate has historically been a favourite place to park unaccounted money, so the tax department made the buyer the collection agent. You deduct 1%, deposit it against the seller's PAN, and that amount reflects in the seller's Form 26AS — where they can claim it against their capital gains tax.

A ₹60 lakh flat crosses the ₹50 lakh threshold comfortably, so 1% TDS is mandatory. That's ₹60,00,000 × 1% = ₹60,000. You pay ₹59,40,000 to the seller and ₹60,000 to the government. The full ₹60 lakh still gets counted as the sale value — you're just splitting where the last ₹60,000 goes.

What counts towards the ₹50 lakh threshold?

This trips up a lot of buyers. The threshold is on the total consideration, not just the base price. As per the current rules, it includes club membership fees, car parking charges, electricity and water connection charges, maintenance advances, and any other charge that's incidental to the transfer of the property.

So if the base flat price is ₹49 lakh but the builder adds ₹3 lakh for a covered parking slot and ₹1 lakh for a clubhouse membership, your total consideration is ₹53 lakh — and TDS applies on the whole ₹53 lakh.

How much TDS do you deduct on a ₹60 lakh flat? A worked example

Let's take a real scenario. Priya is buying a ₹60 lakh 2BHK in Pune from a resident seller, Mr. Deshmukh. She's paying ₹15 lakh from savings and ₹45 lakh via a home loan disbursed by the bank. Here's how the TDS works.

• Total consideration: ₹60,00,000
• TDS rate: 1% (seller is a resident with valid PAN)
• Total TDS to deduct: ₹60,000
• Net amount to seller: ₹59,40,000

Now here's the practical bit. Priya is paying in two tranches — her own ₹15 lakh first, then the bank's ₹45 lakh. TDS must be deducted on each payment proportionally:

• On the ₹15 lakh she pays: TDS = ₹15,00,000 × 1% = ₹15,000. She pays ₹14,85,000 to the seller and ₹15,000 as TDS.
• On the ₹45 lakh bank disbursement: TDS = ₹45,00,000 × 1% = ₹45,000. The bank disburses to the seller net of TDS (or Priya arranges the TDS deposit alongside).

Pro tip: When a home loan funds part of the purchase, coordinate the TDS deposit with your bank before the disbursement. Many banks now insist you file Form 26QB and share the challan before they release the final tranche, because the sale deed value and the deposited TDS must match. If you've already worked out your EMI on our Home Loan EMI Calculator, factor the ₹60,000 TDS into your down-payment cash flow so you're not scrambling at registration.

Step-by-step: How to deduct and deposit TDS via Form 26QB

You don't need a TAN (Tax Deduction Account Number) for property TDS — your PAN and the seller's PAN are enough. Here's the exact process on the Income Tax e-filing portal.

1. Collect the seller's PAN and confirm residential status. If the seller is an NRI, this entire process changes (more below).
2. Log in to the Income Tax e-filing portal (incometax.gov.in) using your PAN.
3. Go to e-File → e-Pay Tax → New Payment and select Form 26QB (TDS on Sale of Property).
4. Fill buyer and seller details — PANs, addresses, and whether there are multiple buyers or sellers.
5. Enter property details — address, type, date of agreement, and total consideration (₹60 lakh in Priya's case).
6. Enter the amount paid in this tranche and the TDS amount (1% of that tranche).
7. Pay the TDS immediately via net banking or generate a challan to pay at an authorised bank within the validity window.
8. Download Form 16B from the TRACES portal about 2–3 days after payment. This is the TDS certificate you must hand to the seller as proof.

What is the deadline to deposit property TDS?

You must deposit the TDS within 30 days from the end of the month in which the deduction was made. So if Priya paid her ₹15 lakh tranche on 10 April 2026, the TDS deposit deadline is 30 May 2026 (30 days after 30 April).

Common mistake: Buyers assume the 30 days counts from the payment date. It doesn't — it counts from the end of the month of payment. Getting this wrong invites a late-filing fee under Section 234E of ₹200 per day (capped at the TDS amount) plus interest of 1% or 1.5% per month.

What's changing in TDS on property purchase 2026 reporting?

The government has been steadily plugging loopholes in property TDS, and the reporting norms getting tightened around October 2026 focus on joint buyers and multiple sellers. Earlier, some buyers deducted TDS on only part of the consideration by splitting the deal artificially across PANs. That's being closed.

The core clarification: when there are multiple buyers and/or multiple sellers, a separate Form 26QB must be filed for every buyer-seller PAN combination, and the ₹50 lakh threshold is judged on the aggregate consideration for the whole property — not each person's share.

Take a couple buying a ₹60 lakh flat jointly (50:50) from a single seller. Each pays ₹30 lakh — below the ₹50 lakh threshold individually. But because the property's total value is ₹60 lakh, TDS still applies. Each buyer files a Form 26QB for their ₹30 lakh, deducting ₹30,000 each (₹60,000 total). You cannot escape TDS by claiming your individual share is under ₹50 lakh.

Scenario	Total Value	Buyers	Sellers	TDS Applicable?	Forms 26QB Needed
Single buyer, single seller	₹60 lakh	1	1	Yes (₹60,000)	1
Joint buyers (50:50), single seller	₹60 lakh	2	1	Yes (₹30,000 each)	2
Single buyer, two co-owners selling	₹60 lakh	1	2	Yes (₹30,000 per seller)	2
Joint buyers, two sellers	₹60 lakh	2	2	Yes	4
Single buyer, single seller	₹48 lakh	1	1	No	0

The takeaway from the 2026 tightening is simple: match the number of Form 26QB filings to the number of PAN combinations. If the sale deed lists two co-owner sellers, you deduct and file separately for each, even if the money goes to one bank account.

What happens if you don't deduct or deposit TDS?

This is where casual buyers get burnt. The penalties stack up fast:

• Interest for non-deduction: 1% per month from the date TDS was deductible to the date it's actually deducted.
• Interest for late deposit: 1.5% per month from the date of deduction to the date of deposit.
• Late filing fee (Section 234E): ₹200 per day of delay in filing Form 26QB, capped at the TDS amount.
• Penalty (Section 271H): ₹10,000 to ₹1,00,000 for failure to file the statement.

Let's see how ugly this gets. Say Priya forgot to file Form 26QB for four months on her ₹45 lakh tranche (TDS ₹45,000):

• Interest at 1.5% per month × 4 months = ₹45,000 × 1.5% × 4 = ₹2,700
• Late fee at ₹200/day × ~120 days = ₹24,000 (but capped at ₹45,000, so ₹24,000 applies)
• Total avoidable cost: ₹26,700+ — for simply missing a form.

That's real money lost to procrastination. Treat Form 26QB with the same urgency as the sale deed itself.

Buying from an NRI seller? The rules are completely different

Section 194-IA (the 1% flat rate) applies only when the seller is a resident. If your seller is an NRI, the transaction falls under Section 195, and the TDS rate is dramatically higher — based on capital gains, it can be around 20% (plus surcharge and cess) on long-term gains, and higher for short-term.

For NRI sellers you also need a TAN, must file Form 27Q instead of 26QB, and the ₹50 lakh threshold does not apply — TDS kicks in from rupee one. Many buyers unknowingly deduct just 1% from an NRI seller and later face a demand notice for the shortfall, plus interest. Always verify residential status in writing before you pay.

How TDS fits into your overall home-buying budget

Buyers often forget that TDS is one of several charges layered on the base price. On a ₹60 lakh flat, your true outflow looks something like this:

Cost Component	Typical Rate	Amount (₹60L flat)
Base consideration	—	₹60,00,000
Stamp duty	5–7% (state-dependent)	₹3,00,000–₹4,20,000
Registration charges	~1%	₹60,000
GST (under-construction only)	5% (no ITC)	₹3,00,000
TDS (adjusted from payment to seller)	1%	₹60,000

Note that TDS isn't an extra cost to you — it's carved out of the ₹60 lakh you'd pay the seller anyway. But GST, stamp duty and registration are genuine additional outflows. For a ready-to-move flat with completion certificate, GST doesn't apply. If you want to estimate GST on an under-construction purchase, our GST Calculator gives you a quick number.

Before you commit, run your affordability through the Loan Eligibility Calculator, and if you're weighing whether to prepay the loan later, the Home Loan Prepayment Calculator shows how much interest you'd save. You can browse the full set on our free calculators page.

A quick checklist before you register your flat

1. Confirm total consideration crosses ₹50 lakh (including parking, club, and incidental charges).
2. Verify the seller's PAN and residential status in writing.
3. If joint buyers or multiple sellers, plan one Form 26QB per PAN combination.
4. Deduct 1% on each payment tranche (or 20% if seller has no PAN).
5. Deposit via Form 26QB within 30 days from month-end of payment.
6. Download Form 16B from TRACES and hand it to the seller.
7. Keep the challan and Form 16B safely — you may need them for future capital gains reporting.

Frequently Asked Questions

Do I need to pay TDS if my flat costs exactly ₹50 lakh?

Yes. Section 194-IA applies when the consideration is ₹50 lakh or more. A property at exactly ₹50 lakh attracts 1% TDS of ₹50,000. Only properties strictly below ₹50 lakh are exempt.

Who deducts TDS on property — buyer or seller?

The buyer. You are legally responsible for deducting 1% from the payment, depositing it via Form 26QB, and issuing Form 16B to the seller. The seller then claims this credit against their capital gains tax liability.

Is TDS on property calculated on the base price or the agreement value?

It's calculated on the total consideration — which includes parking, clubhouse, maintenance advances and other incidental charges. If the stamp duty value (circle rate) exceeds the agreement value, TDS is computed on the higher of the two.

What if the seller doesn't provide a PAN?

Then you must deduct TDS at 20% instead of 1%, as per Section 206AA. Never proceed without a verified PAN — a 20% deduction on ₹60 lakh is ₹12 lakh, which creates massive complications for both parties.

Can I get a refund if I deducted excess TDS by mistake?

Corrections to Form 26QB (like an incorrectly entered amount) can be requested through the TRACES portal, and the seller can claim any excess as a refund in their income tax return. But it's a slow process — better to get the deduction right the first time.

Does TDS apply when I buy an under-construction flat in instalments?

Yes. You deduct 1% on each instalment as it's paid to the builder, once the total consideration crosses ₹50 lakh. File a separate Form 26QB (or use the instalment option) for each payment within the deadline.

Is TDS the same as the GST I pay on my flat?

No. GST (5% without ITC, or 1% for affordable housing) applies only to under-construction properties and is a separate cost paid to the builder. TDS is an income-tax mechanism deducted from the seller's payment and deposited with the government against their PAN.

Final word on TDS on property purchase 2026

The 1% you deduct on a ₹60 lakh flat isn't a tax on you — it's your legal duty to route ₹60,000 of the seller's money to the government and document it correctly. Where buyers lose money is in the paperwork: missing the 30-day deadline, ignoring joint-owner rules, or assuming an NRI seller is treated like a resident. With the October 2026 reporting rules demanding one Form 26QB per PAN combination, precision matters more than ever.

Do it right and it costs you nothing extra — just an hour on the e-filing portal and a downloaded Form 16B. Do it wrong and a ₹200-a-day fee quietly eats into your down payment. Plan the TDS into your cash flow alongside stamp duty and registration, coordinate with your bank, and keep every challan.

Before you sign the sale deed, model your full home-buying cost — EMI, prepayment savings, and eligibility — using our Home Loan EMI Calculator and related tools. If you're also sorting out the tax side of your salary this year, our Income Tax Calculator and the guide on the New Income Tax Act 2025 changes are worth a read. And if you're comparing HRA benefits before buying, see why ₹3L rent may not save you tax in 2026. Have a specific query on your deal? Feel free to reach out to us — or learn more about AlarmDaddy and our mission to make Indian personal finance genuinely understandable.

Image credit: Scrabble Series Income Tax — ccPixs.com, via flickr (BY 2.0), sourced from Openverse.