TDS on Property Purchase in Punjab 2026: Buyer’s Guide
Updated July 2026. Most Punjab buyers carefully budget for stamp duty and registration, then get blindsided by a tax they were supposed to handle themselves: TDS on property purchase in Punjab. If the home is priced at ₹50 lakh or more, the law makes you — the buyer — responsible for deducting 1% of the price and depositing it with the Income Tax Department. Miss it, and the penalty lands on you, not the seller. Here is exactly how it works, when it applies, and the mistakes that cost Mohali, Ludhiana and Zirakpur buyers the most.
TDS on property purchase in Punjab: the 1% rule in plain English
Under Section 194-IA of the Income Tax Act, when you buy any immovable property (other than agricultural land) from a resident seller for ₹50 lakh or more, you must deduct 1% of the total sale consideration as TDS (Tax Deducted at Source), pay the seller the remaining 99%, and deposit that 1% with the government in the seller’s name. It is not an extra cost on top of the price — it is a slice of the price that goes to the tax department instead of the seller. But the responsibility to deduct and deposit it is entirely yours as the buyer.
Two things trip people up immediately. First, the 1% is calculated on the higher of the sale value or the stamp duty (collector rate) value — the same “whichever is higher” logic that governs your collector rate and stamp duty. Second, you do not need a TAN (Tax Deduction Account Number) for this — you deposit it using just your PAN and the seller’s PAN. Both PANs are mandatory.
| Question | Answer under Section 194-IA |
|---|---|
| Who deducts the TDS? | The buyer (transferee) |
| Rate | 1% of consideration (5% if seller has no PAN) |
| Threshold | Sale value or stamp duty value ≥ ₹50 lakh |
| When | At each payment / instalment, whichever is earlier |
| Seller must be | A resident of India (NRI seller = different rule) |
| Applies to | Flats, plots, houses, commercial — not agricultural land |
| TAN needed? | No — PAN of both parties is enough |
How it actually works on a ₹75 lakh Mohali flat
Say you are buying a 3 BHK in Mohali for ₹75 lakh from a resident owner, paying in one shot at registration. Here is the money flow the law expects:
- 1% TDS = ₹75,000 (1% of ₹75,00,000)
- You pay the seller ₹74,25,000 (99%)
- You deposit ₹75,000 with the Income Tax Department via Form 26QB, in the seller’s name against the seller’s PAN
- You download Form 16B and hand it to the seller as proof — the seller claims that ₹75,000 as tax already paid when filing their return
If you are paying in instalments (common for under-construction flats), you deduct 1% on every instalment as you pay it, not in one lump at the end. A ready-to-move purchase is simpler: one payment, one 1% deduction, one Form 26QB. Many buyers assume the builder or the seller “handles the TDS” — they do not, and cannot. It is legally the buyer’s job.
The ₹50 lakh threshold — and the loophole closed in 2024
For years, buyers dodged 194-IA with a simple trick: split a ₹90 lakh flat between two buyers (say husband and wife) at ₹45 lakh each on paper, so each “share” fell under the ₹50 lakh line and no TDS was deducted. The Finance Act 2024 closed this loophole with effect from 1 October 2024.
Now, where there is more than one buyer or more than one seller, the ₹50 lakh threshold and the 1% are calculated on the total (aggregate) value of the property — not each person’s share. So a ₹90 lakh flat with two joint buyers is firmly inside 194-IA: TDS of ₹90,000 is due regardless of how the ownership is split. If you are buying jointly, assume the aggregate value is what counts.
What if the seller is an NRI? A completely different section
Section 194-IA applies only when the seller is a resident of India. If you are buying from an NRI seller, 194-IA does not apply — instead Section 195 kicks in, and the TDS is far higher (based on the seller’s capital gains, typically 12.5%–20% plus surcharge and cess, not a flat 1%). This is one of the most expensive mistakes a Tricity buyer can make: deducting only 1% from an NRI seller leaves you liable for the shortfall plus interest. If there is any chance your seller is an NRI, confirm their residential status in writing before you pay, and read our NRI Tricity buying checklist for the full picture. If you are the one selling as an NRI, see our NRI property selling guide for TDS, capital gains and repatriation rules.
Form 26QB, Form 16B and the deadlines you cannot miss
- Deduct 1% at the time of payment (or each instalment).
- File Form 26QB — a challan-cum-statement — within 30 days from the end of the month in which you made the deduction, and pay the TDS at the same time. File it on the income tax e-filing portal.
- Download Form 16B (the TDS certificate) and give it to the seller within 15 days of the 26QB due date.
Miss these and the cost is real. If you fail to deduct or deposit, you are treated as an “assessee-in-default” and charged interest of 1% per month (for non-deduction) or 1.5% per month (deducted but not deposited). Late filing of Form 26QB attracts a fee of ₹200 per day under Section 234E, and a separate penalty of up to ₹1 lakh under Section 271H. You can confirm the current rules directly on the Income Tax Department portal before you file.
TDS is only one of several closing costs. Plan for it alongside your registration and stamp duty, and if you are also working out your seller-side tax, our Capital Gains Tax Calculator and capital gains guide cover the other half of the transaction.
FAQ — TDS on property purchase in Punjab
Is the 1% TDS an extra cost I pay on top of the price?
No. It is carved out of the price you already agreed. You pay the seller 99% and deposit 1% with the government in the seller’s name. The seller adjusts it against their own tax. Your only extra effort is the filing — not extra money — provided you deduct it correctly.
Does TDS apply if my flat is exactly ₹50 lakh?
Yes. The rule applies at ₹50 lakh and above. It is calculated on the higher of the agreement value or the stamp duty value, so if your agreement is ₹48 lakh but the collector-rate value is ₹51 lakh, TDS is due on ₹51 lakh.
Do I need a TAN to deduct property TDS?
No. Section 194-IA is the one TDS provision where an ordinary buyer does not need a TAN. You use your PAN and the seller’s PAN on Form 26QB. If the seller cannot give a valid PAN, the rate jumps to 20%, so insist on it before paying.
We are two joint buyers, each paying under ₹50 lakh. Are we exempt?
No longer. Since 1 October 2024, the threshold is judged on the total property value, not each buyer’s share. A ₹90 lakh flat with two joint buyers attracts TDS on the full ₹90 lakh. The old “split it under ₹50 lakh” workaround no longer works.
The seller says they will handle the TDS. Is that fine?
No. The legal duty to deduct and deposit sits with the buyer, full stop. If it is not done, the Income Tax Department pursues you for the tax, interest and penalty — not the seller. Never let the seller “take care of it” off your PAN.
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