Form 26QB: 1% TDS on Sale of Property in India (Section 194-IA) — Complete 2026 Guide

If you are buying any immovable property in India worth ₹50 lakh or more (other than agricultural land), you — the buyer — are legally required to deduct 1% TDS from the payment and deposit it with the Income Tax Department using Form 26QB. This is one of the most commonly missed compliances, and the penalties are heavy.

Note: there is no "Form 141" for TDS on property — the correct statutory form is Form 26QB (challan-cum-statement) and Form 16B (TDS certificate issued to the seller).

What is Section 194-IA?

Section 194-IA of the Income Tax Act requires the buyer of any immovable property (land, building, flat, shop — excluding rural agricultural land) to deduct TDS @ 1% on the higher of:

• The total sale consideration, OR
• The stamp duty value (added by Finance Act 2022)

This applies when the consideration OR stamp duty value is ₹50 lakh or more. If the seller does not provide a PAN, TDS is deducted at 20% under Section 206AA.

Who deducts the TDS — buyer or seller?

The buyer is responsible. The seller does not need a TAN — the buyer uses their own PAN. In a joint purchase, each buyer files a separate Form 26QB for their share of the consideration paid to each seller.

When to deduct and when to pay

• TDS must be deducted at the time of credit or payment, whichever is earlier — including every instalment in an under-construction property.
• The deducted TDS must be deposited within 30 days from the end of the month in which deduction was made, through Form 26QB on the Income Tax e-filing portal.

How to file Form 26QB (step-by-step)

1. Log in to the Income Tax e-filing portal → e-File → e-Pay Tax → New Payment → "26QB (TDS on Sale of Property)".
2. Enter buyer and seller PAN, address details and property details (address, type, date of agreement, total value).
3. Enter the amount paid/credited, calculate 1% TDS and pay via net banking or generate a challan for offline payment.
4. Save the acknowledgment — you'll need it to download Form 16B.

Form 16B — the TDS certificate

Once Form 26QB is processed (usually 5–7 days), the buyer must log in to TRACES (tdscpc.gov.in) and download Form 16B, then issue it to the seller within 15 days of filing Form 26QB. Without Form 16B, the seller cannot claim TDS credit in their ITR.

Penalties for non-compliance

• Late filing of Form 26QB: ₹200 per day under Section 234E (capped at the TDS amount).
• Interest on late deduction: 1% per month under Section 201(1A).
• Interest on late deposit: 1.5% per month from date of deduction till date of deposit.
• Penalty under Section 271H: ₹10,000 to ₹1,00,000 for non-filing.

Common mistakes we see

• Not deducting TDS on instalments in under-construction flats — TDS applies on every payment, not just the final one.
• Computing TDS on stamp duty value when consideration is higher, or vice versa — use the higher of the two.
• Joint buyers filing one combined Form 26QB instead of separate forms — leads to rejection at the seller's end.
• Forgetting to issue Form 16B to the seller — the seller then cannot claim TDS in their ITR, leading to disputes.
• Using buyer's TAN — Form 26QB is PAN-based, no TAN is required.

NRI seller? Different section, different rate

If the seller is an NRI, Section 194-IA does not apply. Instead, Section 195 applies — TDS is deducted at 20% (LTCG) or slab rate (STCG) plus surcharge & cess on the full sale value, and the buyer must obtain a TAN and file Form 27Q. This is a very different — and far costlier — compliance, so always confirm the seller's residential status before transferring funds.

Need help filing Form 26QB?

Tax Easy India handles end-to-end Form 26QB filing — Section 194-IA computation, challan payment, Form 16B download from TRACES and delivery to the seller, all within 24-48 hours. Pricing starts at ₹1499 per transaction. Talk to our property TDS expert before you make the next payment to the seller.