How to Deduct and Deposit TDS — Step by Step
| Step | Action |
|---|---|
| 1 | Calculate TDS = 1% × Sale Price. Get seller PAN. |
| 2 | Pay seller: Sale Price minus TDS deducted |
| 3 | Fill Form 26QB online at tin.tin.nsdl.com — enter buyer/seller PAN, property details, TDS amount |
| 4 | Pay TDS via net banking — within 30 days from end of payment month |
| 5 | Download Form 16B from TRACES portal (tdscpc.gov.in) — 7–10 days after deposit |
| 6 | Give Form 16B to seller — they claim TDS credit in their ITR |
Common mistake: Many buyers pay the full sale price without deducting TDS. The IT Department tracks large property transactions via registration data. Failure to deduct attracts interest (1%/month) and penalties. Deduct TDS before paying the seller — not after.
TDS When Seller is NRI
When buying from an NRI seller, TDS rules are significantly different — the buyer must deduct at capital gains tax rates (20% LTCG or 30% STCG), not the standard 1%. The NRI can apply for a lower deduction certificate from the IT Department. Always seek CA advice before any payment to an NRI seller.
Related Terms
Frequently Asked Questions
TDS on property (Section 194IA) requires buyers of property worth ₹50 lakh or more to deduct 1% TDS from payment to the seller and deposit it via Form 26QB. The seller claims this as tax credit. The buyer — not the seller — is responsible for deducting and depositing TDS.
The buyer is responsible — not the seller. The buyer deducts 1% from the sale consideration before paying the seller, files Form 26QB online, pays TDS, and issues Form 16B to the seller. Failure by the buyer leads to penalties and interest notices from the Income Tax Department.
Form 26QB is the online TDS return form for property transactions under Section 194IA. Buyers fill it on tin.tin.nsdl.com entering buyer/seller PAN, property details, and TDS amount. After payment, Form 16B TDS certificate can be downloaded from TRACES portal.
No. TDS under Section 194IA applies only when sale consideration is ₹50 lakh or more. Transactions below ₹50 lakh are exempt. The threshold applies per transaction — each individual transaction is assessed independently.
Failure to deduct and deposit TDS attracts: interest at 1% per month, penalty equal to TDS amount, and possible prosecution. The seller also faces issues as TDS credit does not reflect in their Form 26AS. File Form 26QB and deposit TDS with interest immediately to regularise.