TDS on Sale of Property in India Under Income Tax Act
By REDTAX
Published on Nov 26, 2025TDS on Sale of Property in India is governed primarily under Section 194IA of the Income Tax Act, which applies when a buyer purchases an immovable property from a Resident Indian. As per this provision, if the sale value of the property exceeds ₹50 lakh, the buyer must deduct TDS at the rate of 1% of the total sale consideration. This deduction must be made at the time of payment or at the time of property registration, whichever occurs earlier. The buyer is also required to deposit the deducted tax using Form 26QB within 30 days of the end of the month in which the deduction was made and issue Form 16B to the seller as proof of TDS deduction. However, when the property is purchased from a Non-Resident Indian (NRI), Section 194IA does not apply. Instead, Section 195 governs such transactions, requiring the buyer to deduct TDS irrespective of the sale value. In the case of an NRI seller, the TDS rate depends on whether the gain is short-term or long-term; typically, it is 20% (plus surcharge and cess) for long-term capital gains and around 30% (plus surcharge and cess) for short-term capital gains. The TDS is usually deducted on the entire sale consideration unless the NRI obtains a Lower TDS Certificate from the Income Tax Department. Thus, while Resident property sales attract a straightforward 1% TDS above the ₹50 lakh threshold, transactions involving NRIs require higher TDS and stricter compliance under Section 195.
