Section 194IA requires every buyer of immovable property (land or building) to deduct TDS at 1% of the purchase price when the consideration exceeds ₹50 lakh. Failure to deduct or deposit this TDS makes the buyer (not the seller) liable for penalty — including ₹200/day late fee and possible prosecution.
Key TDS Provisions Under Section 194IA
| Parameter | Details |
|---|---|
| Rate | 1% of total sale consideration |
| Trigger threshold | Property consideration > ₹50 lakh |
| Who deducts | Buyer (not seller) |
| When to deduct | At time of payment — each installment |
| Due date to deposit | 30 days from end of month in which TDS deducted |
| Form to use | Form 26QB (online on TIN-NSDL portal) |
| TDS certificate to issue | Form 16B — within 15 days of Form 26QB filing |
| Who is exempt | Central/State Government as buyer; NRI sellers (different rule — Section 195) |
Step-by-Step: How to Pay TDS via Form 26QB
- Visit TIN-NSDL portal (tin.tin.nsdl.com) → TDS on Property → Online Form 26QB
- Select 'Assessment Year' (year of payment), enter buyer and seller PAN
- Enter property details: complete address, type (land/building), date of agreement
- Enter total sale value and amount paid in this installment
- Calculate TDS: 1% of the installment paid (or total if paid at once)
- Pay via net banking — immediately generates 9-digit acknowledgement
- After 5 working days: Download Form 16B (TDS certificate) from TRACES for the seller
Special Case: NRI Seller — Higher TDS Rate
If the seller is an NRI, Section 194IA does NOT apply. Instead, Section 195 applies with much higher TDS rates — 20% to 30% LTCG tax or 30% STCG tax depending on holding period. The buyer must deduct at source before the NRI receives any payment. This is often misunderstood and leads to significant exposure.
Penalties for Non-Compliance
- Section 201(1A): Interest at 1.5% per month if TDS deducted but not deposited
- Section 271C: Penalty equal to the TDS amount if TDS not deducted at all
- Section 234E: Late fee of ₹200/day for delay in Form 26QB filing
- Property registration may be rejected by sub-registrar if TDS not paid