Buying or selling a property worth Rs 50 lakh or more in Pune involves a TDS obligation that many first-time buyers overlook. Under Section 194-IA of the Income Tax Act, the buyer — not the seller — is responsible for deducting and depositing this tax. Missing this step can lead to penalties and interest, so it's worth understanding exactly how it works before your registration date.
This article is for general information only and is not legal, financial, or tax advice. Please consult a chartered accountant or tax professional for guidance specific to your transaction.
Why This Matters
TDS under Section 194-IA ensures the government captures tax on large property transactions at the point of sale, rather than relying solely on the seller's later tax filing. For buyers, getting this wrong — deducting too little, filing late, or skipping it altogether — can mean penalties, interest, and complications when the seller later claims TDS credit on their tax return.
Who Is Covered and When TDS Applies
Under Section 194-IA, any person purchasing immovable property (other than agricultural land) must deduct tax at source if the sale consideration, or the stamp duty value of the property, is Rs 50 lakh or more. This applies to residential flats, plots, and commercial property purchases across Pune and the rest of India.
TDS Rate and Calculation Basis
The applicable rate is 1% of the sale consideration. Since 1 October 2024, TDS must be calculated on whichever is higher: the actual sale consideration or the stamp duty value (the value used by the state government, including IGR Maharashtra, for stamp duty purposes). This matters in Pune, where stamp duty valuations (ready reckoner rates) can sometimes exceed the agreed sale price.
If the seller does not provide a valid PAN, the TDS rate jumps to 20% instead of 1%, so buyers should always collect and verify the seller's PAN before the transaction.
Step-by-Step: Filing Form 26QB
- Deduct 1% TDS from the sale consideration at the time of payment or credit to the seller, whichever is earlier.
- File Form 26QB online through the Income Tax Department's e-filing portal or the TIN-NSDL/Protean portal, providing PAN details of both buyer and seller.
- Deposit the TDS amount along with the form submission — this can typically be done via net banking or other approved payment modes.
- Complete this within 30 days from the end of the month in which the deduction was made.
- Download and issue Form 16B (the TDS certificate) to the seller, which they need to claim credit for the tax already deducted on their behalf.
Timeline and Penalty Summary
| Step | Requirement | Deadline |
|---|---|---|
| TDS deduction | 1% of sale consideration or stamp duty value, whichever is higher | At time of payment/credit |
| Form 26QB filing + deposit | Buyer files and pays via NSDL/Income Tax portal | Within 30 days from end of the month of deduction |
| Form 16B issuance | Buyer issues TDS certificate to seller | Within 15 days of filing Form 26QB |
| Missing PAN | TDS rate increases to 20% | Applies immediately if PAN not furnished |
| Late filing | Interest and late fees apply | Accrues until compliance |
Important Change from April 2026
Form 26QB has been renumbered as Form 141 under the Income Tax Act, 2025, effective from 1 April 2026. If payment to the seller was made or credited on or before 31 March 2026, the earlier rules apply — Section 194-IA, Form 26QB, and Form 16B. For payments made on or after 1 April 2026, the transaction falls under Section 393(1) of the new Act, requiring Form 141 (Schedule B) and Form 132 as the certificate. Buyers completing registrations in Pune around this transition date should check which regime applies to their specific payment date.
Common Mistakes to Avoid
- Assuming the seller handles TDS. The legal responsibility lies with the buyer, not the seller.
- Calculating TDS only on the agreement value when the stamp duty/ready reckoner value is higher — always compare both and use the higher figure.
- Skipping PAN verification, which can trigger the much higher 20% TDS rate.
- Missing the 30-day filing window, which attracts interest and penalties.
- Forgetting to issue Form 16B to the seller, which can delay their tax filing and credit claims.
- Not accounting for multiple buyers or sellers, which requires separate Form 26QB filings for each combination of buyer and seller shares.
FAQs
1. Is TDS under Section 194-IA applicable to under-construction properties? Yes, it applies to payments made in instalments for under-construction property as well, with TDS deducted on each instalment.
2. Who deducts TDS — buyer or seller? The buyer is responsible for deducting and depositing TDS, and for filing Form 26QB.
3. What happens if the property value is below Rs 50 lakh? Section 194-IA does not apply if both the sale consideration and stamp duty value are below Rs 50 lakh.
4. Can the seller claim credit for this TDS? Yes, once the buyer files Form 26QB and issues Form 16B, the seller can claim credit for the TDS while filing their income tax return.
5. What changes from April 2026 for Pune buyers? Transactions with payment dates on or after 1 April 2026 will follow the new Income Tax Act, 2025 framework — Form 141 instead of Form 26QB — so buyers should confirm which rules apply based on their payment date.
Final Verdict / Compliance Checklist
- Confirm whether the sale consideration or stamp duty value crosses Rs 50 lakh.
- Collect and verify the seller's PAN before the transaction.
- Deduct 1% TDS on the higher of sale consideration or stamp duty value.
- File Form 26QB (or Form 141 if paying on/after 1 April 2026) within 30 days from month-end.
- Issue Form 16B (or Form 132) to the seller promptly.
- When in doubt, consult a CA — TDS errors can complicate both parties' tax filings.
If you're planning a property purchase in Pune, browse verified listings at Roomii Properties or check locality-specific options like Properties in Kharadi. For registration-related costs, see our guide on property registration charges in Maharashtra.
Property prices and project availability may change over time. Always verify the latest information before making a purchase decision.
Sources
| Source Name | Article/Page Title | Date | URL |
|---|---|---|---|
| Tax2win | Section 194IA - TDS on Property Sale: Rules & Guide | 2026 | tax2win.in ↗ |
| Tax2win | Form 26QB: TDS on Property (194-IA) Due Date & Penalty | 2026 | tax2win.in ↗ |
| Bajaj Finserv | Section 194IA of Income Tax Act - TDS on Sale of Property | 2026 | bajajfinserv.in ↗ |
| 49Tax | TDS on Property Purchase in India — Buyer's Complete Guide to Section 194-IA and Form 26QB for AY 2026-27 | 2026 | 49tax.ai ↗ |
| Kotak Life | TDS on Sale of Property Under Section 194IA | 2026 | kotaklife.com ↗ |