TDS on Sale of Property- As per section 194-IA of the Income Tax Act, 1961, it is. The responsibility of the buyer to deduct tax @ 1% of the sale consideration or stamp duty value. ( whichever is higher) if the total sale consideration is 50 Lakhs or More.

Buyer has to file Form 26QB Challan and deposit tax and issue TDS Certificate ( form 16B) to seller. He require seller PAN ,Address, Mobile No. and Mail ID to file the form 26QB.

If the sale consideration is paid in installments then TDS to be deducted and deposited on every Installment.

However if the seller is  inoperative, then a higher rate of TDS will be. Deductible in accordance with section 206AA of. The Income-tax Act, 1961 read with CBDT Notification No. 15 of 2023 dated 28th March 2023 and Circular No.3 of 2023 dated 28th March 2023. Thus buyer should check status of seller through Verify PAN option available at Quick Link on E-Filing Portal.

TDS on Sale of Property by NRI- As per section 195 of the Income Tax Act, 1961, it is. The responsibility of buyer to deduct tax in range of 12.5% to 30%. (for LTCG or as per slab rates of STCG ) of the sale consideration or stamp duty value. ( whichever is higher) on purchase of property from NRI.

Applicable TDS Rates for NRI (U/S 195)

Type of Capital Gain	Holding Period	Base TDS Rate	Effective TDS Rate (with surcharge & cess)
Short-Term Capital Gain	< 2 years	As per income slab	Up to 30% + surcharge + 4% cess
Long-Term Capital Gain	≥ 2 years	12.5%	~Upto 14.95% (with surcharge + cess)
Long-Term Capital Gain (property bought before 23rd July, 2024	≥ 2 years	20%	Up to 20% + surcharge + 4% cess

To facilitate this process, the buyer is required to apply for and obtain. Tax Deduction Account Number (TAN) in their name. In cases where two or more individuals jointly purchase the property, each person involved must acquire a TAN.

Once the TAN is secured, the buyer is obligated to deduct. The TDS amount during each transaction of transferring payment to the NRI seller. The deducted TDS amount must then be deposited with the Income Tax Department. Through an e-challan by the 7th day of the subsequent month in which the payment was made to the seller.

To fulfill their regulatory obligations, the buyer must file the TDS return in the following quarter after depositing the TDS amount. Upon successful filing of the TDS return, the buyer can obtain Form 16A, which is then provided to the NRI seller.

As per the recent amendment in Budget 2026-27 in Income Tax Act,1961-TDS will now be deposited using the buyer’s PAN instead of TAN, simplifying compliance.