When you buy a home in Hyderabad, the law makes you — the buyer — responsible for deducting a small slice of the price and paying it straight to the income tax department on the seller's behalf. This is Tax Deducted at Source, or TDS, on property purchase. It catches many first-time buyers by surprise because the duty sits on the purchaser, not the seller, and missing it carries interest and penalties. For anyone booking a premium apartment such as Godrej Brooklyn Avenue in Kukatpally, west Hyderabad, the consideration almost always crosses the threshold where TDS applies, so it is worth understanding the rule before you transfer your final instalment. This guide explains Section 194-IA, the 1% rate, Form 26QB, the 30-day deadline, the rules for joint buyers and NRI sellers, and the penalties for getting it wrong. All external figures are accurate as of 2026; verify the live position on the income tax portal before you act.

What TDS on a Property Purchase Actually Means

TDS is not an extra tax on top of the price — it is a part-payment of the seller's eventual income tax, collected at the point of sale. The buyer withholds a fixed percentage of the consideration, deposits it with the government against the seller's PAN, and pays the seller the balance. The seller later claims that amount as a credit when filing their own return. So the money is not lost to either party; it simply moves through the buyer's hands to ensure the tax department has a record of the transaction and a slice of the tax in advance.

Section 194-IA and the 1% Rule

The governing provision is Section 194-IA of the Income Tax Act. It says that on the transfer of any immovable property — other than agricultural land — where the sale consideration is Rs 50 lakh or more, the buyer must deduct TDS at 1% of the consideration. Two points trip people up. First, the 1% applies to the full sale value, not just the amount above Rs 50 lakh. So on a Rs 1 crore flat the TDS is Rs 1 lakh, not 1% of the Rs 50 lakh excess. Second, where the stamp duty value is higher than the agreed price, the 1% is computed on whichever of the two is greater. No TAN is required for this — the buyer and seller simply use their PANs, which keeps the process light for individuals.

A Worked Example at Godrej Brooklyn Avenue

Suppose you book a 3 BHK at Godrej Brooklyn Avenue for Rs 2.10 crore, the entry price for the project. Because that figure is well above the Rs 50 lakh threshold, Section 194-IA bites. The TDS works out to 1% of Rs 2.10 crore, which is Rs 2.10 lakh. In practice you would pay the seller Rs 2,07,90,000 and deposit Rs 2,10,000 with the government through Form 26QB, then hand the seller a Form 16B as proof. If you instead picked a larger unit at the top of the band — say Rs 4.40 crore — the 1% deduction would be Rs 4.40 lakh. The rate never changes; only the base on which you apply it moves with the price you negotiate.

TDS Quick Facts on Property Purchase (2026)

Item	Detail
Governing section	Section 194-IA (resident seller); Section 195 (NRI seller)
Threshold	Sale consideration of Rs 50 lakh or more
Rate (resident seller)	1% on the full consideration / stamp duty value, whichever is higher
Rate (NRI seller)	12.5% plus surcharge and cess (effective ~14.95%) on long-term capital gains under Section 195, for transfers on or after 23 July 2024
Who deducts	The buyer (purchaser)
TAN needed	No — PAN of buyer and seller is used
Form to file	Form 26QB (challan-cum-statement)
Filing deadline	Within 30 days from the end of the month in which payment is made
Certificate to seller	Form 16B, downloaded after Form 26QB is processed

Premium homes in west Hyderabad almost always cross the Rs 50 lakh mark, so the 1% rule is the default rather than the exception. Confirm the exact rates and surcharge slabs on the income tax portal, because the figures for NRI sellers in particular depend on the holding period and the gain.

Filing Form 26QB Step by Step

Form 26QB is a combined challan and statement — it both reports the deduction and pays it in one go. You file it online through the TIN-NSDL or income tax e-filing portal. The steps are:

• Log in to the income tax e-filing portal or the TIN-NSDL site and open the e-Pay Tax section, then select Form 26QB.
• Enter the buyer and seller PAN details, the property particulars, the total consideration and the amount paid in this instalment.
• The portal auto-computes the 1% TDS; verify it, then pay by net banking or generate a challan for bank payment.
• After the deduction is processed, register on TRACES and download Form 16B, which you must hand to the seller as the certificate of TDS.

Keep the acknowledgement and the Form 16B safely — the seller needs them to claim credit, and you will want them on file should any query arise later. If you are weighing the wider statutory bill on your purchase, our breakdown of stamp duty and registration charges in Hyderabad sits alongside this one-time deduction, while our note on GHMC property tax covers the recurring civic levy that follows once you move in.

Joint Buyers and NRI Sellers

Where a property is bought jointly — a common arrangement for spouses pooling income — each buyer is treated as a separate deductor for their share. So if two co-buyers split a Rs 2.10 crore flat equally, each files a Form 26QB for their half of the consideration and the corresponding TDS. The total deducted still adds up to 1% of the whole, but the paperwork is per buyer.

The rules change sharply when the seller is a non-resident. Section 194-IA and its tidy 1% do not apply; instead the buyer deducts under Section 195 at the rate applicable to the seller's capital gains. For a long-term holding transferred on or after 23 July 2024 that is 12.5% plus surcharge and cess (an effective rate of about 14.95%), computed on the gain — substantially higher than 1% and on a different base. Short-term gains are deducted at the seller's slab rate. (Property acquired before 23 July 2024 may, if the seller elects, instead use the older 20%-with-indexation route.) A TAN is needed in that case, and the seller can apply for a lower-deduction certificate to ease the cash impact. If you are selling rather than buying, our guide to capital gains tax on a property sale explains how that gain is finally taxed.

Penalty and Interest for Getting It Wrong

The deadlines have teeth. If you fail to deduct the TDS at all, interest runs at 1% per month from the date the tax was deductible until it is actually deducted. If you deduct it but deposit it late, the interest rises to 1.5% per month from the date of deduction to the date of deposit. On top of that, filing Form 26QB late attracts a fee under Section 234E of Rs 200 per day, capped at the TDS amount, plus the risk of a further penalty under Section 271H. Because the 30-day window is generous, the simplest discipline is to file the moment the relevant instalment is paid rather than letting it drift.

What a Godrej Brooklyn Avenue Buyer Should Note

Godrej Brooklyn Avenue is an under-construction development by Godrej Properties in Kukatpally, west Hyderabad, RERA approved by Telangana under No. P02200010981, offering 3 BHK and 4 BHK homes priced from Rs 2.10 crore up to Rs 4.40 crore, with possession scheduled for June 2031. Because the consideration sits well above Rs 50 lakh, you will deduct 1% TDS on the payments you make to the developer and file Form 26QB for each. For an under-construction purchase where the price is paid in stages, deduct and report against each significant instalment so you stay inside the 30-day rule throughout the construction period rather than scrambling at the end.

Frequently Asked Questions about TDS on Property Purchase