Tds on Property Sale India: New Rules, Forms & Rates (2026)

Dealing with TDS on property sale in India now requires handling two compliance hurdles before you hand over the balance money: stamp duty and tax under Section 393. On 1 April 2025, the government replaced the old Section 194-IA with a new provision that changes how you calculate, deposit, and certify the tax.

For homebuyers, this means swapping Form 26QB for Form 141 and watching a strict 30-day deposit window. If you are buying from a non-resident, the calculation shifts entirely because the ₹50 lakh exemption vanishes, but a major simplification regarding your TAN requirement arrives on 1 October 2026.

This guide breaks down current rates and runs through clear rupee examples. You will see exactly when payments hit the government account. Follow these steps to finish the registry without freezing your own funds.

TDS on property sale explained

When you must deduct TDS on property sale (residents)

The obligation to deduct tax falls squarely on the buyer, not the seller. Under the new law, if the total transaction value exceeds ₹50,00,000 for a single property, you must deduct tax at source.

Under this rule, the ₹50 lakh trigger uses the higher of your agreed price or the official stamp duty valuation. For instance, if you agree to ₹70 lakh but the local circle rate sets the stamp duty value at ₹75 lakh, TDS applies to ₹75 lakh. Agricultural land transfers in rural areas remain excluded from this provision.

Different rules when buying from an NRI seller

Once the seller is a non-resident, that ₹50 lakh threshold vanishes completely. The buyer must withhold tax on every rupee transferred for Indian immovable property. Whether the deal costs ₹10 lakh or ₹10 crore, the deduction applies equally.

You also lose access to the flat 1% rate. Instead, you must deduct tax at the seller's actual capital gains rate. This pushes your deduction percentage well above what applies to domestic sellers.

Current TDS rates and worked examples

Flat 1% for resident sellers (₹1 Crore example)

The math is straightforward. The deposit timing is where buyers slip up. You deduct tax only on the amount above ₹50 lakh and retain exactly 1% of the total value.

Assume you buy a resale apartment in Mumbai for ₹1,00,00,000. You do not deduct tax on the first ₹50 lakh. You keep ₹1,00,000 (1% of ₹1 crore) in your own bank account.

Transfer the remaining ₹99,00,000 to the seller after signing the agreement. You must deposit that ₹1,00,000 directly to the government within 30 days from the month-end. Use a challan generated on the income tax portal. Keep the deposit proof separate from your payment receipts.

NRI seller rates: LTCG, STCG, and surcharge math

Because the ₹50 lakh floor vanishes for non-residents, your liability jumps sharply. The buyer must deduct tax at the same rate the seller will eventually pay on their capital gains. This rate applies to the entire sale price.

A holding period over 24 months triggers Long Term Capital Gains (LTCG). The base rate is 12.5%. Factor in the surcharge of 10% to 15% and the 4% health cess. Your effective deduction lands between 13.75% and 16.25%.

Under 24 months, the transaction counts as Short Term Capital Gains (STCG). You deduct tax at the seller's highest applicable slab rate, roughly 30%, plus surcharge and cess. Total withholding easily reaches 42.74%.

On a standard ₹1 crore deal, a 3-year holding period requires you to withhold roughly 16%. You retain ₹16 lakh, pay ₹84 lakh to the seller, and deposit the ₹16 lakh within 30 days. Buyers routinely suggest arranging a lower deduction certificate early. This frees up essential cash flow for the seller.

Step-by-step compliance under the new Income Tax Act 2025

Filing Form 141 and meeting the 30-day deadline

Form filing marks the biggest procedural shift. Log into the taxpayer website and use the dedicated property module to submit Form 141. This fully replaces the discontinued Form 26QB.

Start by generating an online challan. Select tax head '100 - TDS' and subsection '100 - Other'. Pick Scheme Code 50T for Section 393 payments. Pay instantly via net banking and save the Challan ID for your records.

Deposit the funds strictly within 30 days from the month-end when liability triggered. This usually matches the agreement month. Do not club payments for later deposit. Late deposits trigger immediate interest penalties that complicate your closure process.

Oct 2026 update: PAN-based TDS instead of TAN for NRI purchases

Past rules required a Tax Deduction Account Number (TAN) for all deductions. Buyers frequently delayed registry appointments waiting for TAN approval. The latest Finance Bill inserted a practical exemption to clear this bottleneck.

Individuals and HUFs buying from NRIs no longer need a TAN after 1 October 2026. You can generate the challan using your personal PAN instead. Select Schedule E on the portal when creating the form. Corporate buyers and LLPs must continue using a TAN.

Issuing Form 132 to the seller

Generating the challan completes only half the process. You must formally notify the seller that you deposited the tax. This proof arrives as Form 132, the direct replacement for Form 16B.

Deadlines here are strict. You have exactly 15 days from the deposit due date to send this certificate. Miss that window and a ₹200 daily penalty applies. Sellers typically refuse final handover until you deliver it.

Reducing NRI TDS through a lower certificate

Buyers and sellers frequently pre-plan NRI transactions to avoid heavy upfront withholding. The seller may legally request a Lower TDS Certificate under Section 395 of the new Act.

This mechanism lets the seller demonstrate minimal capital gains from long-term holding or Section 54 exemptions. They file Form 128 with the assessing officer alongside the original purchase deed. Approval yields a certificate defining a lower deduction percentage.

Securing this certificate prior to registration lets you deposit a fraction of the usual amount. You then release the bulk sale proceeds directly to the seller. This converts a severe cash-flow crunch into routine paperwork. Explore related guidelines here: [INTERNAL LINK: NRI investment in India 2026].

Before you pay the balance consideration

Map tax liabilities immediately after signing the agreement. Check if the stamp duty valuation matches your offer price. Run the specific TDS on property sale calculation for a resident versus a non-resident. Isolate the tax portion in a separate ledger before wiring the balance.

Ignore pressure to release full amounts upfront. Promises to handle taxes later shift legal liability onto you. Ensure the Form 141 challan generates before submitting final payments. Demand the Form 132 certificate within two weeks. Clean compliance safeguards your title deed and buyer reputation.

Frequently asked questions

What is the current TDS rate for property sale in India?

If you are purchasing property from a resident Indian seller, the flat TDS rate stands at 1% of the consideration value or the stamp duty value, whichever is higher, provided the transaction exceeds ₹50 lakh. When buying from a non-resident, the rate is not flat; you must deduct tax at the applicable capital gains rate, which typically ranges from 12.5% for long-term holdings to 30% or more for short-term holdings, plus surcharge and health cess.

Do I need a TAN to pay TDS on property for an NRI seller?

Starting from 1 October 2026, individual buyers and Hindu Undivided Families (HUFs) do not need a TAN to make TDS payments on properties purchased from NRIs. You can simply use your personal PAN to generate the tax challan on the income tax portal. This exception does not apply if the buyer is a corporate entity, partnership firm, or LLP, which must still use a TAN.

When is the deadline to deposit TDS on property?

You must deposit the deducted TDS to the government within 30 days from the end of the month in which you became liable to deduct the tax. Usually, your liability triggers the moment you sign the sale agreement or make the first payment. If you sign the agreement on 15 August, you have exactly until 30 September to deposit the funds via an online challan.

Can an NRI seller apply for lower TDS deduction?

Yes, an NRI seller can apply for a Lower TDS Certificate under Section 395 of the Income Tax Act 2025. By filing Form 128, the seller demonstrates that their actual taxable income from the sale is low due to long-term holding or eligible exemptions. Once approved, the Assessing Officer issues a certificate allowing the buyer to deduct a reduced percentage of tax instead of the standard capital gains rate.

Which form replaces Form 26QB for property TDS?

Under the new Income Tax Act 2025 regulations, the old Form 26QB has been completely phased out for property transactions. Buyers must now use the newly structured Form 141 to report and deposit TDS on immovable property sales. The digital module on the income tax portal handles challan generation and submission under Scheme Code 50T.

Sources

• TaxGST.in: TDS rules under Section 393 and Form 141 breakdown (accessed September 2026)
• TaxSocial.pro: Resident and NRI seller TDS mapping under the Income Tax Act 2025 (accessed September 2026)
• Policybazaar: Budget 2026 update on TAN relaxation for NRI property purchases (accessed September 2026)
• Income Tax Department of India: Online challan generation and Scheme Code 50T details (accessed September 2026)

Enjoyed this blog article? Visit PropTech Pulse for more interesting blogs.