TDS on Sale of Property: How to File TDS on Sale of Property

TDS on Sale of Property

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TDS on Sale of Property

2 min 02 Apr 2025

Highlights:

Understanding Section 194IA of the Income Tax Act
Documents Required for TDS on Property Sale
Step-by-Step Guide to Filing TDS on Property Sale Online
How to Obtain Form 16B After Filing TDS?
TDS on Property Purchase: What Buyers Must Remember

If you are purchasing a property in India worth Rs.50 Lakh or more, you are legally required to deduct TDS (Tax Deducted at Source) under Section 194IA of the Income Tax Act, 1961. The buyer must deposit this TDS with the government using Form 26QB. The process of filing and making the online payment of TDS on the sale of the property has become simple and convenient through the official income tax portal.

Here is everything you need to know about filing TDS, the documents required, and how to generate Form 16B.

Understanding Section 194IA of the Income Tax Act

Under Section 194IA, TDS is applicable at 1% of the total sale consideration for immovable property (excluding agricultural land) if the sale value is Rs.50 Lakh or more. The buyer must deduct this amount before making the payment to the seller. TDS must be deposited within 30 days from the end of the month in which it is deducted. If the property is purchased in instalments, TDS must be deducted at the time of each instalment payment. Both buyer and seller must have valid PANs. Buyers do not need a TAN to deposit TDS under this Section.

Documents Required for TDS on Property Sale

Before initiating the payment, ensure you have the following:

PAN of both buyer and seller
Property sale agreement
Payment details (transaction date and amount)
Buyer’s bank account details for online payment
Valid mobile number and email ID for OTP and communication
Login credentials for the Income Tax e-filing portal

Step-by-Step Guide to Filing TDS on Property Sale Online

To complete the TDS on the sale of property online payment, follow these steps:

Visit the Income Tax e-filing portal and log in using your PAN and password.
Click on ‘e-File’ then ‘e-Pay Tax’ and then select ‘+ New Payment’.
Choose ‘26QB – TDS on Property’ and click ‘Proceed’.
Enter buyer and seller details, property address, transaction date, and total sale amount.
The system will automatically calculate 1% of the sale value as TDS. Verify and confirm the details.
Choose your preferred mode of payment.
Complete the payment and download the challan receipt for reference.

How to Obtain Form 16B After Filing TDS?

After the TDS payment is processed, Form 16B can be downloaded as follows:

Wait for a few days from the payment date.
Visit the TRACES portal.
Login using your PAN (as a buyer).
Go to ‘Downloads’ and then ‘Form 16B (for Buyer)’.
Enter the acknowledgement number from Form 26QB and generate the form.
Download and share Form 16B with the seller as proof of TDS deduction.

TDS on Property Purchase: What Buyers Must Remember

Buyers must deduct TDS before making each payment, especially if the sale is done in instalments. If there are multiple buyers or sellers, TDS still applies to the total sale value. Failure to deduct or deposit TDS on time can attract penalties and interest. In the absence of the seller’s PAN, TDS must be deducted at 20% instead of 1%, so verifying PAN details is essential.

The online payment of TDS on the sale of the property is an essential step in the property-buying process. Ensuring timely deduction and accurate filing not only keeps you compliant with tax regulations but also avoids legal complications later.

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