Money & Tax · Part 8 · Tax · 12 min read · October 2026
Form 26QB is gone. The 1% TDS on the flat you buy now goes through Form 141.
A flat is agreed at ₹82 lakh and the circle rate puts it at ₹88 lakh. Before the keys change hands, ₹88,000 of that deal belongs to the government, and the person responsible for getting it there is the buyer. Not the seller, not the builder, not the bank that is paying most of the price. It goes from the buyer's own PAN login, within thirty days of the month-end, on a form that replaced Form 26QB this April. Get it wrong and the seller's tax credit goes missing while the buyer's interest meter starts running.
- The deduction is the buyer's job. When a resident sells you property worth ₹50 lakh or more, you deduct 1% of the higher of the agreed price and the stamp duty value from what you pay, and deposit it yourself. A home loan does not change that.
- Every payment counts, the token included. You deduct when you pay or credit each amount, and each month's deductions go on a Form 141 due within 30 days of that month's end.
- No TAN, one form per buyer. Each co-buyer files for their own share from their own PAN, and one form can now list several sellers of the same kind.
- An NRI seller changes the arithmetic. There is no ₹50 lakh threshold, the rate follows the seller's capital gains tax rather than 1%, and from 1 October 2026 a new Schedule E lets you report it without a TAN as well.
Who deducts, and when the 1% applies
The rule sits in section 393(1) of the Income-tax Act, 2025, in the table entry that until March 2026 was section 194-IA. It applies whenever someone pays a resident for the transfer of immovable property other than agricultural land, and the consideration is ₹50 lakh or more. The payer, which means the buyer, deducts the tax.
It does not matter what kind of buyer you are. An individual buying a resale flat, a couple buying an under-construction one from a builder, a company buying an office: all deduct. It does not matter what kind of seller it is either, as long as the seller is resident in India. A builder is a seller like any other.
Two details catch people at the threshold.
- The ₹50 lakh is tested on the whole property, not on your share. The law adds up what every buyer pays every seller. A couple buying a ₹96 lakh flat in equal shares each pays ₹48 lakh, and both still have to deduct. Splitting a purchase across names does not take it below the line.
- The stamp duty value can matter even when the price is lower. If the agreed price is below ₹50 lakh but the stamp duty value is above it, check with a chartered accountant before deciding nothing is due. Under the last version of the old Act, the deduction applied unless both figures were below ₹50 lakh.
1% of which number
The rate is 1% of the agreed consideration or the stamp duty value of the property, whichever is higher. The stamp duty value is the figure the state uses for registration, the circle rate or ready reckoner rate applied to your property.
Two things follow from that example. First, the tax comes out of the seller's money, not on top of the price: the seller receives ₹81,12,000 and gets ₹88,000 of credit against their own tax. Agree this in the sale agreement, in writing, so nobody is surprised on the day the balance is paid.
Second, there is no tolerance band here. When capital gains are worked out, a stamp duty value within 110% of the price is ignored. That cushion does not exist for the deduction. A circle rate even one rupee above the price moves the 1% onto the circle rate.
And watch what counts as consideration. Builder demand letters carry lines for car parking, club membership, electricity and water connections and similar charges. Under the old Act these were expressly part of the consideration for this deduction. Treat them the same way unless a chartered accountant tells you otherwise.
When you deduct, and the thirty-day clock
Tax is deducted at the time you pay the seller or credit the amount to the seller's account, whichever comes first. Not at registration, not at possession. The token amount paid when the agreement is signed is a payment, and if the deal crosses the threshold, the 1% is due on it too. This is the payment people forget, because it happens weeks or months before anyone thinks about tax.
Once deducted, the tax has to be deposited and reported within 30 days from the end of the month in which you deducted it. Form 141 is a challan-cum-statement, which means payment and filing are a single step: you fill the form, pay online at the end of it, and the challan number is linked to the acknowledgement automatically.
Every stage of a construction-linked plan works the same way: the demand letter arrives, you pay it less 1%, and that month gets its own Form 141. Several payments to the same seller in the same month can go on one form.
Two buyers, two sellers: who files what
Each buyer is a separate deductor and files a separate Form 141 for their own share. A husband and wife buying 50:50 file one form each, every month in which they pay, each deducting on half of the payment.
On the seller side, Form 141 is kinder than the form it replaced. One form can list several sellers, each with their share, provided they are all of the same kind: all companies, or all non-companies. If one seller is a company and another is an individual, the buyer files one form for each group.
Under Form 26QB, every buyer-and-seller pair needed its own form. A couple buying from two brothers filed four forms for every payment. Under Form 141 the same couple files two, one each, with both brothers listed on it.
Filing Form 141, step by step
- Log in to the income tax e-filing portal with your own PAN. No TAN is needed; the form is filed against the buyer's PAN.
- Go to e-File, then e-Pay Tax, choose the Income Tax Act, 2025 option and start a New Payment, then pick Form 141.
- Choose Schedule B, purchase of immovable property, for a resident seller. Schedule E is for a non-resident seller, covered further down.
- Enter the property details, then every buyer and every seller with PAN, contact details and percentage share.
- Enter the amount paid or credited, the date of deduction, the rate and the tax.
- Pay electronically at the end. A Challan Identification Number is generated and tied to the acknowledgement. Download and keep both.
The seller's certificate is now Form 132
Once Form 141 is processed, the buyer registers on the TRACES portal as a taxpayer, downloads the TDS certificate and hands it to the seller. That certificate used to be Form 16B. It is now Form 132, which merged Forms 16B, 16C, 16D and 16E.
It has to reach the seller within 15 days from the due date of the Form 141 it relates to. For a deduction on 20 October, the form is due by 30 November and the certificate by 15 December. A certificate prepared any other way than by download from TRACES is not a valid TDS certificate, however official it looks.
When it goes wrong: corrections, interest and the late fee
Corrections are made on TRACES, not on the e-filing portal. A wrong PAN, a wrong amount, a wrong share or the wrong date can be fixed by filing a correction statement, within two years from the end of the tax year in which the statement was due. Wrong figures are fixable. Missing the deduction altogether is the expensive mistake.
The cost of being late comes in two parts, under sections 398 and 427.
- Interest, at 1% for every month or part of a month if you did not deduct at all, counted until you do; and 1.5% for every month or part of a month if you deducted but paid late, counted from the date you deducted, not from the due date. The department's own computation counts each calendar month the delay touches.
- A late fee of ₹200 for every day the statement is late, capped at the amount of the tax. It has to be paid before the statement is accepted.
Beyond the money, a buyer who fails to deduct or deposit is treated as an assessee in default for that tax. There is one route back if you never deducted at all: if the seller has already filed a return that includes the sale and paid the tax on it, a chartered accountant's certificate to that effect takes you out of default. Interest still runs until the date of the seller's return.
When the seller is an NRI
Everything above assumes a resident seller. When the seller is a non-resident, a different entry applies, section 393(2), the one that was section 195. The differences are large.
- There is no ₹50 lakh threshold. A ₹30 lakh flat bought from an NRI still carries a deduction.
- The rate is not 1%. Tax is deducted at the rates in force on the seller's income from the sale, which is a capital gain. In practice buyers deduct on the full price, because they cannot verify the seller's cost and the shortfall becomes theirs if they guess low.
- The seller can bring the rate down by applying for a lower or nil deduction certificate in Form 128 under section 395(1), the old Form 13. If a certificate is produced, you deduct at the rate it states. Applications take weeks, so this belongs before the agreement, not after.
| Seller's gain | Up to ₹50 lakh | ₹50 lakh to ₹1 crore | ₹1 crore to ₹2 crore |
|---|---|---|---|
| Long-term, held over 24 months: 12.5% + surcharge + 4% cess | 13.00% | 14.30% | 14.95% |
| Short-term, held 24 months or less: 30% + surcharge + 4% cess | 31.20% | 34.32% | 35.88% |
The bands follow the amount payable to each seller. Above ₹2 crore the surcharge on a short-term gain rises further; that case needs a rate worked out by a chartered accountant, not a table.
Residential status is decided by the number of days a person spent in India, and only the seller knows their travel. Ask for a written declaration of residential status with the agreement, and if the seller is non-resident, ask whether a Form 128 certificate has been applied for.
What changed on 1 October 2026. Until then, a buyer deducting from an NRI seller had to obtain a TAN and file quarterly TDS statements, a burden most individual buyers had never met before. From 1 October 2026, a resident individual or HUF buying from a non-resident can deposit and report the tax through Schedule E of Form 141, from their own PAN, with no TAN. The deduction itself and the rate did not change. Schedule E asks for more than Schedule B: the seller's overseas address, Tax Residency Certificate and foreign tax number where applicable, whether the gain is long-term or short-term, and any lower deduction certificate. The tax entered must include the surcharge and cess. Each buyer still files separately, the same 30-day due date applies, and the certificate is again Form 132. A company buying from an NRI stays on the TAN route.
If a home loan is paying most of the price
The lender disburses to the seller or the builder against the sale agreement and the demand letter. The disbursement does not deduct anything on your behalf, and the lender is not the deductor. The deduction, the deposit and the form stay with you, however much of the price the loan covers.
The practical way through is to take the 1% out of the part you pay yourself. If the loan pays ₹65 lakh of an ₹82 lakh price and your own contribution is ₹17 lakh, you pay the seller ₹16,12,000 and deposit ₹88,000, so the seller's total receipt is ₹81,12,000 as the agreement says. On a construction-linked plan, where the bank pays each stage, settle with the builder in writing how the 1% will be withheld before the first demand letter is paid. Keep the Form 141 acknowledgements and the Form 132 copies with your property papers.
The tool for this
Enter the price, the stamp duty value, your share and each payment date. It works out the deduction on every instalment, the Form 141 due date and the Form 132 deadline for each, which schedule to use, the NRI rate where the seller is non-resident, and the interest and late fee if a payment has slipped.
The section numbers changed this year too
A great deal of published material still carries the old references. The rules did not change in substance on 1 April 2026; the numbers and forms did.
| What it does | Old | Now |
|---|---|---|
| 1% on property bought from a resident | Section 194-IA | Section 393(1), table entry 3(i) |
| Deduction on payments to a non-resident | Section 195 | Section 393(2), table entry 17 |
| The buyer's challan and statement | Form 26QB | Form 141, Schedule B (Schedule E for an NRI seller) |
| Certificate to the seller | Form 16B | Form 132 |
| Lower or nil deduction certificate | Section 197, Form 13 | Section 395(1), Form 128 |
| Higher rate without PAN | Section 206AA | Section 397(2) |
| Interest for late deduction or payment | Section 201(1A) | Section 398(3)(a) |
| Late fee for the statement | Section 234E | Section 427 |
A purchase where the deduction fell in the year ended March 2026 stays on the old form and the old numbers. Anything deducted from April 2026 goes on Form 141.
Before you pay the seller a rupee
- Settle residential status in writing. Resident means 1% and Schedule B; non-resident means a capital-gains rate, Schedule E and probably a Form 128 conversation.
- Note the stamp duty value next to the price. The higher of the two is your base.
- Verify every seller's PAN and its status. Your deduction is only as good as the PAN it is reported against.
- Write the TDS into the agreement. The price is paid net of the deduction, with the seller's credit coming through Form 132.
- Calendar each month's due date. Thirty days from the month-end, one form per buyer per month, the token included.
- Download Form 132 and hand it over within 15 days of each due date, and keep the acknowledgements with the sale deed.
The one-line summary
Whoever writes the cheque files the form. On a property bought from a resident, that is 1% of the price or the circle rate, whichever is higher, on every payment, within thirty days of each month-end, from your own PAN. On a property bought from an NRI it is the seller's capital gains tax, now through Schedule E instead of a TAN. Both are simple when they are planned before the agreement is signed, and expensive when they are discovered after the money has moved.
Written at the MoneyClarityTech desk — by a working retail-credit professional in Indian banking who reads loan files, credit reports and bank statements every working day. Patterns from hundreds of real cases; every identifying detail removed. More about MoneyClarityTech →