TDS on Property Purchase: Resident and NRI Sellers

When you buy property in India, you may have to deduct tax from the price and deposit it with the government. The rules differ sharply depending on whether the seller is resident or an NRI.

Buying From a Resident Seller

• Deduct 1% TDS where the consideration is ₹50 lakh or more.
• Where the stamp duty value is higher than the price, TDS is on the higher amount.
• Deposit the TDS using Form 26QB, a combined challan and statement, within 30 days from the end of the month of deduction.
• No TAN is needed.
• Download Form 16B from TRACES and give it to the seller.
• If the seller doesn't provide a PAN, a higher rate applies.

Buying From an NRI Seller

• TDS applies at the rates applicable to the seller's capital gains — for long-term gains, 12.5% plus surcharge and cess — on the full sale consideration, not just the gain.
• There's no ₹50 lakh threshold.
• The buyer needs a TAN, files a quarterly TDS return, and issues Form 16A.
• If the seller obtains a lower deduction certificate from the tax department, deduct at the rate in the certificate.

Consequences of Not Deducting

Buyers who don't deduct or deposit TDS can be treated as assessees in default, liable for the tax, interest and penalties.

Practical Tips

• Confirm the seller's residential status in writing.
• For NRI sellers, ask for a lower deduction certificate early.
• For joint buyers or sellers, apply TDS for each share.
• Keep all challans and certificates with the property documents.

Getting Help

Think Filing handles TDS on property purchases, TAN registration and lower deduction certificates.