When a buyer pays a resident seller for a property worth ₹50 lakh or more, the buyer has to deduct 1% as income tax and deposit it with the government. The duty is the buyer's, not the broker's, but a broker who knows the rule can raise it before the payment schedule is fixed. This article sets out the rule as the Income Tax Department publishes it.
Which law applies: 194-IA or 393
The Income-tax Act, 2025 came into force on 1 April 2026.[1] Under the old Income-tax Act, 1961, this deduction was section 194-IA.[2] Under the 2025 Act it is section 393(1), Table serial number 3(i).[3] For deductions made on or after 1 April 2026, the buyer reports in Form 141, which the Income Tax Department introduced as a single form in place of Forms 26QB, 26QC, 26QD and 26QE.[4]
Older guides still say "194-IA" and "26QB". The 1% rate and the ₹50 lakh threshold carried over; the section number and the form changed.
The rule
| Who deducts | The buyer (transferee) paying the seller. Table 3(i) applies to payments to a resident.[3] |
|---|---|
| What property | Any immovable property other than agricultural land.[3] The old section defined immovable property as any land (other than agricultural land) or any building or part of a building.[2] |
| Rate | 1% of the consideration for the transfer or the stamp duty value of the property, whichever is higher.[3] |
| Threshold | Fifty lakh rupees, read with Note 3 to the Table, which says tax is deducted where the consideration or the stamp duty value is equal to or greater than fifty lakh rupees.[3] The old section said the same in reverse: no deduction only where both are below ₹50 lakh.[2] |
| More than one buyer or seller | For the threshold, the consideration is the aggregate of the amounts paid or payable by all the buyers to all the sellers.[3] |
| When | At the time the sum is credited to the seller or paid, whichever is earlier.[3] |
Example. A flat's agreement value is ₹60,00,000 and its stamp duty value is ₹64,00,000. Both are above ₹50 lakh, so TDS applies, and it is 1% of the higher figure: ₹64,000.
Two buyers buying a ₹70,00,000 plot together, ₹35,00,000 each, are judged on the total of ₹70,00,000, not on their individual shares.
Agricultural land is outside the rule, but check the definition
Agricultural land is excluded, but "agricultural land" has a specific meaning here. The Income Tax Department's guide to the old section explains that land is not treated as agricultural land for this purpose if it lies within a municipality or cantonment board with a population of at least 10,000, or within a set distance of such a municipality, measured aerially: 2 km, 6 km or 8 km depending on the municipality's population.[2] Land that a seller calls "agricultural" can therefore still attract TDS if it sits close to a town. The 2025 Act carries its own definition, so check how it reads for your case.
Depositing the tax and reporting it
- Form 141. The deducted amount must be paid within 30 days from the end of the month in which it was deducted, together with the challan-cum-statement in Form 141.[4]
- PAN login. Form 141 is filed only through the buyer's PAN login on the e-filing portal.[4]
- One form per buyer. Where there are several buyers, each buyer files a separate Form 141 for their own share of the amount.[4]
- Certificate for the seller. After Form 141 is filed, the TDS certificate can be downloaded from the TDS-TRACES portal.[4]
Two cases that need extra care
- A non-resident seller. Table 3(i) covers resident sellers. A non-resident seller falls under section 393(2) instead. From 1 October 2026, Form 141 has a Schedule E for this case, which resident individual and HUF buyers can file.[4] Get a CA involved before the first payment.
- A seller without a valid PAN. The Form 141 FAQs say the applicable rate depends on, among other things, whether the deductee's PAN is available, and that a higher rate applies where section 397(2) applies.[4] That is why the seller's PAN should be collected and checked at the start.
A broker's checklist
- As soon as the price is agreed, check whether the price or the stamp duty value is ₹50 lakh or more.
- Collect the seller's PAN early, and ask whether the seller is resident in India.
- Tell the buyer about TDS before the payment schedule is fixed, so each payment is made net of 1%.
- If there are several buyers, remind each that they file their own Form 141.
- If the land is described as agricultural, check its location against the definition above.
This TDS is separate from the TDS a broker may have to deduct when paying another broker's share of the commission. That is covered in how to split commission between two brokers.