Published 19 October 2026
Most people who buy a flat or a plot never deduct tax from anyone else. Then, at the point of paying the seller, they are told that 1 per cent of the price belongs to the Government, has to be paid within a month, and has to be reported on a form most of them have never seen. Banks and builders often handle it, but the duty is the buyer’s. This guide covers who must deduct, how much, on which form, by when, and what a missed or late deduction costs. It deals with a resident seller. A purchase from a non-resident follows a different section and is covered in Buying Property from a Non-Resident.
Which Act applies
The test is the date on which the buyer pays or credits the instalment.
- Paid or credited up to 31 March 2026. Section 194-IA of the Income-tax Act, 1961 applies, with rules 30(2A), 31A(4A) and 31(3A) of the Income-tax Rules, 1962. The form is Form 26QB and the certificate is Form 16B.
- Paid or credited from 1 April 2026. Section 393(1) [Table: Sl. No. 3(i)] of the Income-tax Act, 2025 applies, with rules 218(3), 219(5) and 215 of the Income-tax Rules, 2026. The form is Form No. 141 and the certificate is Form No. 132.
Section 536 of the 2025 Act repeals the 1961 Act but saves obligations and liabilities already incurred under it (section 536(2)(b)). A buyer who paid an instalment in March 2026 and the next in May 2026 therefore deals with both regimes for the same flat.
When the deduction applies
Both Acts use the same conditions.
The payer. Section 194-IA(1) applies to “any person, being a transferee”. Column C of Sl. No. 3(i) says “Person [other than the person who are required to deduct tax under serial number 3(iii)]”, which carves out compulsory acquisition. It does not matter whether the buyer is an individual, a company or a trust.
The seller. Section 194-IA covers payments “to a resident transferor”. Section 393(1) applies only to payments “to a resident”. The e-filing portal’s e-Pay Tax FAQ says that Form 26QB is “only available to Resident Deductees” and that for a non-resident seller “applicable form is Form 27Q”.
The property. It covers any land (other than agricultural land) or any building or part of a building (section 402(19); Explanation (b) to section 194-IA). “Agricultural land” here means rural agricultural land only. Land in the urban areas described in section 2(14)(iii)(a) and (b) of the 1961 Act, now section 2(22)(iii) of the 2025 Act, is not excluded (section 402(2)(a)).
The threshold: Rs 50 lakh. Section 194-IA(2) says no deduction is made where the consideration and the stamp duty value “are both, less than fifty lakh rupees”. Note 3 to Sl. No. 3 says tax is deducted where either “is equal to or greater than fifty lakh rupees”. The effect is the same: if either figure reaches Rs 50 lakh, tax is deducted. As enacted, Note 3 referred to “serial number 3(iii)”. The Finance Act, 2026 corrected it to “serial number 3(i)” with effect from 1 April 2026.
What counts as consideration. Explanation (aa) to section 194-IA and section 402(9) include club membership, car parking, electricity or water facility, maintenance and advance fees, and “any other charges of similar nature” incidental to the transfer.
Joint buyers and joint sellers
Where a property had two or more buyers, the Tribunals had applied the Rs 50 lakh threshold to each buyer’s own share. In Vinod Soni v ITO (ITAT Delhi, 10 December 2018, ITA No. 2736/Del/2015), four family members bought a Faridabad plot for Rs 1.5 crore under a single sale deed, each paying Rs 37.5 lakh for an undivided quarter share. The Assessing Officer treated all four as in default for not deducting. The Tribunal deleted the demand. It held that section 194-IA(2) applied “w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed”, and that the law could not differ depending on whether one deed or four were executed.
The Finance (No. 2) Act, 2024 reversed this from 1 October 2024. A proviso to section 194-IA(2) now says that where there is more than one transferor or transferee, “the consideration shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors”. Note 1 to Sl. No. 3 of section 393(1) carries the same rule. Each buyer still deducts only on what he or she pays. The portal’s challan manual adds that “For multiple sellers, multiple 26QB forms are required to be filled”, so a property with two buyers and two sellers needs four forms. Joint, Inherited and Gifted Property covers the tax position of co-owners.
How much, and when
Rate. One per cent of the consideration or the stamp duty value, “whichever is higher”. This is the wording of both section 194-IA(1) and Sl. No. 3(i). Stamp duty value is the value adopted or assessable by a State authority for stamp duty (section 2(105)).
Timing. Tax is deducted “at the time of credit … or at the time of payment …, whichever is earlier” (section 194-IA(1); section 393(1)©). A flat bought in instalments therefore carries a deduction on each instalment, including any part paid by the buyer’s bank out of a loan.
No PAN, or an inoperative PAN. If the seller does not furnish a valid PAN, tax is deducted at the highest of the section rate, the rate in force, or 20 per cent (section 206AA; section 397(2)(b)(i)). Rule 162(3)© of the 2026 Rules applies the same higher rate where a PAN has become inoperative because Aadhaar was not linked.
No TAN. Section 194-IA(3) switched off the TAN requirement in section 203A for these deductors. Under the 2025 Act, section 397(1)© does the same for a transaction under Sl. No. 3(i), both in its original form and as substituted by the Finance Act, 2026 from 1 October 2026. The buyer uses his or her own PAN. The portal FAQ confirms that the payer “is not required to obtain Tax Deduction and Collection Account Number (TAN)” because the challan-cum-statement “is PAN based”.
What to have ready
- PANs of every buyer and every seller. The portal manual says the PANs of buyer and seller must be valid before the form is filed.
- Each seller’s residential status, address and contact details. These come from the seller.
- The agreement. This means the date, the total consideration, and each buyer’s and seller’s share, taken from the agreement for sale.
- The stamp duty value. It comes from the sub-registrar’s valuation or the State’s published rates.
- The payment schedule. List the date and amount of each instalment, from the buyer’s bank and loan statements.
- Property details. Record the type of property and its full address.
- Net banking or another electronic mode. Rule 30(6A) of the 1962 Rules required tax accompanying Form 26QB to be remitted electronically.
The form and the certificate
| 1961 Act | 2025 Act | |
|---|---|---|
| Challan-cum-statement | Form 26QB (rules 30(2A), 31A(4A)) | Form No. 141 (rules 218(3), 219(5)) |
| Covers | Section 194-IA only | Section 393(1) [Table: Sl. Nos. 2(i), 3(i), 6(ii), 8(vi)]: rent, property, contract and professional payments by individuals and HUFs, and virtual digital assets |
| Certificate to seller | Form 16B (rule 31(3A)) | Form No. 132 (rule 215, Table Sl. No. 3) |
The challan-cum-statement is a single filing. It pays the tax and reports the deduction together. It is not a quarterly return.
Due dates
| Step | 1961 Act | 2025 Act |
|---|---|---|
| Pay the tax and file the challan-cum-statement | Within 30 days from the end of the month of deduction (rules 30(2A), 31A(4A)) | Within 30 days from the end of the month of deduction (rule 218(3), rule 219(5)) |
| Give the certificate to the seller | Within 15 days from the due date of Form 26QB (rule 31(3A)) | Within 15 days from the due date of Form No. 141 (rule 215) |
For example, if an instalment is paid on 10 June 2026, Form No. 141 and the tax are due by 30 July 2026, and Form No. 132 by 14 August 2026.
Portal steps
The portal’s “Create Challan Form (CRN)” user manual describes Form 26QB as a post-login service on the e-filing portal:
- Log in with the buyer’s PAN. Go to e-File, then e-Pay Tax, then New Payment.
- Choose the tile “26QB (TDS on Sale of Property)”.
- On the Add Seller Details page, enter the seller’s residential status, PAN, name, address and contact details.
- On the Add Property Transferred Details page, enter the type of property, its address and the agreement details.
- Choose a payment mode and pay. The challan receipt is then available under Payment History.
The FAQ adds that the buyer’s own details are pre-filled from the profile and can only be changed under “My Profile”. The manual was written for Form 26QB. For deductions from 1 April 2026 the same data is reported in Form No. 141. Deducting and Depositing TDS explains how payment and the Form No. 141 statement are made together.
Signing. There is no separate signature. The form is submitted from the buyer’s logged-in account and is completed by the electronic payment.
The certificate. Rule 31(3A) and rule 215 both require the certificate to be generated and downloaded from the web portal specified by the Director General of Income-tax (Systems). That portal is TRACES, which the buyer can use with his or her PAN once the statement is processed. See TDS Certificates: Form 16 and 16A.
If the deduction is missed or late
- Interest. Interest is charged at 1 per cent a month from the date tax was deductible to the date of deduction, and at 1.5 per cent a month from deduction to payment. Part of a month counts as a whole month (section 201(1A); section 398(3)).
- Assessee in default. The buyer is deemed to be in default for the tax not deducted or not paid (section 201(1); section 398(1)). This does not apply if the seller has returned the income and paid the tax, and the buyer furnishes an accountant’s certificate (Form 26A; Form No. 149 under the 2026 Rules). Interest is still payable up to the date of the seller’s return.
- Late fee. A fee of Rs 200 a day is charged while the challan-cum-statement remains unfiled, capped at the tax deductible (section 234E; section 427).
- Penalty. A penalty of Rs 10,000 to Rs 1,00,000 may be levied for failure to file the statement or for incorrect information (section 271H; section 461). Quarterly TDS and TCS Statements sets out the one-month safe harbour.
Deducting and Depositing TDS covers each of these in detail.
What can be changed after filing
A paid challan cannot be cancelled. A wrong PAN, amount, date or property detail is put right through a correction, and challan errors through the challan correction facility. Both are covered in Correction Statements and TRACES Defaults. The seller sees the credit in Form 26AS and the annual information statement only after the statement is processed, so an error delays the seller’s credit (see Reconciling AIS, TIS and Form 26AS).
Summary
- Fix the Act by the date of each payment or credit. Payments up to 31 March 2026 fall under section 194-IA and Form 26QB. Payments from 1 April 2026 fall under section 393(1) [Table: Sl. No. 3(i)] and Form No. 141.
- Confirm that the seller is resident and that the property is not rural agricultural land.
- Check the Rs 50 lakh threshold against the higher of the total consideration and the stamp duty value. Since 1 October 2024, count all buyers and sellers together.
- On each instalment, deduct 1 per cent of the higher of the consideration and the stamp duty value, or 20 per cent if the seller has no valid PAN.
- Within 30 days from the end of the month of deduction, pay the tax and file one challan-cum-statement for each buyer and seller pair, using the buyer’s PAN.
- Download Form 16B or Form No. 132 from TRACES and give it to the seller within 15 days of that due date.
The next guide, Buying Property from a Non-Resident, covers the buyer whose seller lives abroad.