TDS on Sale of Property in Karnataka: Section 194IA (Guide 2026)

Learn what TDS on property means in Karnataka. Understand Section 194IA, the ₹50 lakh rule on sale consideration or guidance value, Form 26QB filing, and compliance in 2026.

Quick Summary (TL;DR)

If you are buying a property where the sale consideration or the guidance value (whichever is higher) is ₹50 lakh or more from a resident Indian seller, TDS is applicable and the responsibility lies entirely with the buyer. The buyer must deduct 1% from the payment made to the seller and deposit it using Form 26QB within 30 days. This process is governed by Section 194-IA, and failure to comply with any step may result in penalties.

What Is TDS on Property in India?

Tax Deducted at Source (TDS), In the context of real estate. TDS is the tax a buyer deducts from the seller's payment at the time of purchase. This is not a new tax on top of the property price. It is a portion of the payment that the buyer holds back and deposits directly with the government on the seller’s behalf. The seller’s overall tax liability remains the same. The government collects its share upfront, before high-value property taxes can be evaded.

Which Law Governs TDS on Property?

TDS on property is governed by Section 194IA of the Income Tax Act, 1961, introduced in 2013 to bring high-value property transactions into the tax net.

It applies when:

• The property is land or a building and not an agricultural land

• The seller is a resident of India

• The total sale consideration or guidance value is ₹50 lakh or more

The 2022 Amendment:

Before 2022, TDS was calculated on the agreed sale price. The Finance Act 2022 changed that. TDS now applies on whichever is higher, the actual sale price or the stamp duty value. This closed the door on deliberate undervaluation.

When Does TDS on Property Apply?

TDS on property purchase under Section 194IA applies when all of the following conditions are met:

• The property being purchased is immovable property - land or a building (not agricultural land)

• The seller is a resident Indian (different rules apply for NRI sellers under Section 195)

• The total sale consideration or guidance value is ₹50 lakh or more

• The buyer is making a payment ( full or part to the seller)

What Is the TDS Rate on Property Purchase?

The standard TDS rate under Section 194IA is 1% of the higher of the sale consideration or stamp duty value. Simple enough, until the seller cannot produce a PAN. From July 2021, that single missing document pushes the rate from 1% to 20%. Always collect the seller's PAN before the first rupee changes hands. 

Who Is Legally Obligated to Deduct TDS When Buying Property in India?

Under Section 194IA, responsibility is not shared. The buyer deducts, deposits, and files all three. If any step is missed, the seller walks away clean. The buyer does not. What makes this simpler than other TDS situations is that no TAN is required. The buyer's PAN and the seller's PAN are enough to complete the entire process through Form 26QB.

How to File TDS on Property Purchase: Form 26QB

Form 26QB is the single document that handles both the TDS deposit and the filing. It is completed online, either through the TIN NSDL portal or the Income Tax e-filing portal. No physical paperwork, no branch visits.

 Step-by-Step Process for Filing Form 26QB

1. Select Form 26QB under 'TDS on Property'

2. Enter both PANs, property details, and the sale consideration

3. TDS base: sale consideration or stamp duty value whichever is higher

4. TDS amount: 1% of that figure

5. Pay via net banking or at an authorised bank

6. Save the acknowledgement number

7. Download Form 16B from TRACES after 10 to 15 days

8. Hand Form 16B to the seller. It is their proof of deduction

Note: The deposit window is 30 days from the end of the month in which TDS was deducted. 

What Are the Penalties for Non-Compliance?

Skipping TDS on property or filing it late is not a minor oversight. Non-compliance under Section 194IA does not go unnoticed. The Income Tax Act prescribes exact penalties and interest charges for every default.

Do not let a missed step, Which cost you months. Get your property transaction handled Hassle Free with Vault.

TDS on Property Sale: What the Seller Needs to Know

From the seller’s perspective, TDS on property sale is not an additional tax. The government does not wait until the seller files their return. TDS pulls a portion of that liability forward, collected at the point of sale itself.

After the buyer deposits TDS via Form 26QB, the amount reflects in the seller's Form 26AS. The seller uses it as a tax credit at the time of filing their return. If TDS exceeds their actual liability for the year, the government refunds the difference.

What Should the Seller Do?

• Share your PAN before any payment, no PAN means TDS jumps to 20%

• Check Form 26AS after the buyer deposits TDS and confirm the credit appears correctly

• Collect Form 16B from the buyer, your proof that TDS was deducted and deposited

• Claim the TDS credit while filing your income tax return for that year

• Selling at a loss? Apply under Section 197: the Income Tax department can reduce the TDS rate or bring it to nil.

Also Read: How to Verify your Property (Due Diligence) Before buying a Property.

How Vault Proptech Helps with TDS (Tax Deducted at Source)

Every property transaction in Karnataka comes with its share of documentation and compliance requirements. Vault Proptech makes sure none of that falls through the cracks.

• TDS applicability, calculation, and Form 26QB filing guidance

• Property due diligence to surface hidden liabilities before purchase

• Document verification at every stage of the transaction

• Title deed checks, Encumbrance Certificate verification, and registration compliance

• Post-purchase record updates: Khata transfer, MODT cancellation, and revenue mutation

Do not let a missed step, Which cost you months. Get your property transaction handled Hassle Free with Vault.