Buyers of immovable property above the threshold in the Income-tax law must deduct tax at source from payments to the seller and deposit it with the government. The rate, threshold and section depend on the law in force — confirm with your chartered accountant.
Example
Buying a resale flat in Pune
A buyer pays a resident seller for a resale flat in Pune that is above the threshold. Before releasing each payment, the buyer deducts TDS at the rate in force, deposits it with the Income Tax Department online using the buyer’s PAN, files the statement and later gives the seller the TDS certificate. The seller sees the credit in their tax records.
Across India
- From 1 April 2026, the Income-tax Act, 2025 replaces the 1961 Act, renumbering sections and forms; the familiar section 194-IA references now point to the new law.
- When the seller is a non-resident, a different and stricter regime applies: TDS is usually far higher and there is no threshold.
Questions about TDS on property purchase
Does the buyer need a TAN for TDS on property?
For a resident seller, no: the buyer pays and files using their PAN through the Income Tax Department’s online process. Purchases from a non-resident seller have traditionally needed a TAN; confirm the current requirement on the department’s website.
Is TDS calculated on the agreement value or the stamp duty value?
Under current rules, if the stamp duty value is higher than the price, TDS is calculated on the higher figure. Charges such as parking and club membership that form part of the deal are also counted. A chartered accountant can confirm the base for a specific deal.
What if the seller is an NRI?
TDS on purchases from non-resident sellers follows separate rules at much higher rates, on the full price unless the seller obtains a lower-deduction certificate from the tax department. Buyers should get professional advice before paying, because the buyer is liable if too little is deducted.
Sources
- Income Tax Department · accessed
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