TDS on Rent (Section 194-IB) and Property Purchase (Section 194-IA)

Section 194-IA: TDS on purchase of immovable property

• Applies when you buy immovable property (other than rural agricultural land) from a resident seller and the consideration or the stamp duty value is Rs 50 lakh or more.
• Rate: 1% of the higher of the sale consideration and the stamp duty value (20% if the seller has no PAN).
• "Consideration" includes incidental charges such as club membership fee, car parking, electricity and water facility fees, maintenance fee and advance fee charged with the sale.
• Where there are multiple buyers or sellers, the Rs 50 lakh limit applies to the aggregate consideration for the property — splitting payments below Rs 50 lakh per person does not avoid TDS (clarified with effect from 1 October 2024).
• TDS is deducted at the time of each payment (including instalments to a builder) or credit, whichever is earlier.
• If the seller is a non-resident, Section 195 applies instead — higher rates and a TAN are required; see our NRI income tax guide.

Section 194-IB: TDS on rent paid by individuals and HUFs

• Applies to individuals and HUFs not liable to tax audit under Section 44AB(a)/(b), paying rent to a resident exceeding Rs 50,000 per month (or part of a month).
• Rate: 2% with effect from 1 October 2024 (earlier 5%); 20% if the landlord does not furnish PAN, capped at the rent of the last month.
• TDS is deducted once a year — from the rent of the last month of the financial year (March) or the last month of tenancy if you vacate earlier — on the rent for the whole period.
• Businesses already under tax audit deduct monthly under Section 194-I instead (10% on land/building rent above Rs 50,000 per month from FY 2025-26).

Forms, certificates and due dates

Particular	Property purchase (194-IA)	Rent (194-IB)
Trigger	Consideration or stamp duty value Rs 50 lakh or more	Monthly rent above Rs 50,000
Rate	1% (on higher of price and SDV)	2% (from 1 Oct 2024)
Challan-cum-statement	Form 26QB	Form 26QC
Deposit due date	30 days from end of month of deduction	30 days from end of month of deduction
TDS certificate	Form 16B to seller within 15 days of filing 26QB	Form 16C to landlord within 15 days of filing 26QC
TAN needed?	No — PAN of buyer and seller	No — PAN of tenant and landlord

Penalties for non-deduction or late filing

• Interest at 1% per month for failure to deduct and 1.5% per month for deducting but not depositing (Section 201).
• Late filing fee of Rs 200 per day under Section 234E until Form 26QB/26QC is filed (capped at the TDS amount).
• Penalty of Rs 10,000 to Rs 1,00,000 under Section 271H for non-filing or incorrect details.
• Penalty of Rs 100 per day for delay in issuing Form 16B/16C.
• The buyer or tenant is treated as an "assessee in default"; the department traces missed deductions through property registration data and AIS, and often issues notices — see how to respond to a tax notice.

Which ITR form should be used?

• Deducting TDS does not by itself change your ITR form — salaried tenants typically file ITR-1 or ITR-2.
• The seller claims the Form 26QB credit (visible in Form 26AS/AIS) in the return where capital gains are reported — usually ITR-2; see the capital gains tax guide.
• The landlord claims Form 26QC credit against rental income taxed under house property.

Documents to keep ready

• Sale agreement/deed with payment schedule and stamp duty value.
• PAN of all buyers and sellers, or tenant and landlord (verify PAN-Aadhaar linking to avoid 20% TDS).
• Rent agreement and rent payment proofs.
• Form 26QB/26QC acknowledgement and challan.
• TRACES registration details for downloading Form 16B/16C.

Get expert-assisted filing

All India ITR can compute the correct TDS, file Form 26QB or 26QC, generate Form 16B/16C and report the related property or rental income correctly before filing.

Get help with property TDS and rental income

Frequently asked questions

Is TDS applicable if I buy a property worth Rs 50 lakh or more?

Yes. Under Section 194-IA, a buyer of immovable property (other than agricultural land) must deduct TDS at 1% where the sale consideration or the stamp duty value is Rs 50 lakh or more. TDS is calculated on the higher of the two. The buyer deposits it with Form 26QB within 30 days from the end of the month of deduction — no TAN is required.

What is the TDS rate on rent above Rs 50,000 per month?

Under Section 194-IB, an individual or HUF (not liable to tax audit) paying monthly rent above Rs 50,000 to a resident landlord must deduct TDS at 2% (reduced from 5% with effect from 1 October 2024). The deduction is made once a year, from the rent of the last month of the financial year or of the tenancy, and deposited with Form 26QC.

Do I need a TAN to deduct TDS on rent or property purchase?

No. Both Section 194-IA (Form 26QB) and Section 194-IB (Form 26QC) are challan-cum-statement based. The buyer or tenant quotes only their PAN and the PAN of the seller or landlord; no TAN registration is needed.

What is the penalty for late filing of Form 26QB or 26QC?

Late filing attracts a fee of Rs 200 per day under Section 234E (capped at the TDS amount), interest at 1% per month for late deduction and 1.5% per month for late deposit, and a penalty of Rs 10,000 to Rs 1,00,000 under Section 271H in serious cases.

Sources reviewed

• Income Tax Department – TDS on Purchase of Immovable Property
• Income Tax Department – TDS on Rent by Certain Individual or HUF (Section 194-IB)
• Income Tax Department – Form 141 challan-cum-statement for TDS on property and rent (e-filing help)

This guide is for general understanding. TDS obligations differ for non-resident sellers, audit cases and commercial arrangements — confirm your specific facts before deducting or filing.