Section 194-IA puts the withholding duty on the buyer of immovable property. Not the seller, not the broker, not the bank — the buyer. It applies whether or not you have a business, and it does not require a TAN, which is the one concession the section makes to the fact that most people deducting under it have never deducted anything before.
The essentials
- Threshold: consideration of ₹50 lakh or more. Agricultural land is outside the section.
- Rate: 1% of the consideration. Where the stamp duty value is higher, the higher figure generally governs.
- Who: the buyer deducts and deposits, at the time of credit or payment, whichever is earlier.
- Form 26QB: a challan-cum-statement filed per buyer-seller pair, with no TAN required.
- Form 16B: the certificate the buyer downloads and gives to the seller as proof.
If the seller is a non-resident, this section does not apply at all — a different and much heavier provision governs, at rates far above 1%, and it does require a TAN. Establish the seller’s residential status before you plan the payment.
The joint-buyer trap
The ₹50 lakh test looks at the property, not at each person’s share. Two buyers purchasing a ₹70 lakh flat cannot each say their ₹35 lakh share is below the line — the section still applies. What they must do is file separate Form 26QBs, one for each buyer-seller combination.
Two buyers and two sellers means four forms. Getting this wrong is the single most common cause of a demand notice on a property purchase, and it surfaces months later when the seller cannot find their credit.
Sequence it before the registry, not after
- Confirm the seller is resident, and collect PAN for every seller.
- Agree in the sale agreement that 1% will be withheld, so the payment schedule already nets it.
- Deduct at each instalment where the payment is staged, not in a lump at the end.
- File Form 26QB within the prescribed window of the month of deduction.
- Download Form 16B and hand it to the seller — they will need it, and an unhappy seller is a slow closing.
Where the property is being bought by a business, this sits alongside the depreciation and cash limit questions on the same transaction.
Where we come in
Property transactions carry TDS, stamp duty, capital gains and often a cash-limit question at once. We handle the buyer-side compliance and the seller-side capital gains planning together — see notice handling if a demand has already been raised.
This article is general information, not professional advice. Limits, rates and dates change by notification — confirm the position for your own year before acting on it.