TDS under 194-IA: the buyer's job, not the seller's
On a property above the threshold the buyer must deduct tax at source. Get the PAN, the share split or the instalments wrong and registration stalls.
Section 194-IA puts the obligation to deduct tax at source on the buyer. You deduct from what you pay the seller, deposit it with the government, and issue the certificate. If you do not, the liability is yours — not the seller’s — along with interest.
Nearly every buyer we meet assumes this is the seller’s tax and therefore the seller’s problem. The section says otherwise, and the consequences land on the person who paid.
What the section requires
Section 194-IA provides that where consideration for a property exceeds the prescribed threshold, the buyer must deduct tax at source at the prescribed rate, deposit it against the seller’s PAN, and issue the seller a certificate for the amount deducted.
The seller then claims credit for it in their return. From their side it is a prepayment of their own tax. From yours it is a statutory duty attached to the act of paying.
Confirm the current threshold and rate at incometax.gov.in before your transaction. These figures change, and this is not the kind of number to take from a blog post.
The four ways people get it wrong
The seller’s PAN. Everything hinges on it. Deposit against a wrong PAN and the credit lands in someone else’s account, the seller does not get relief, and the correction is a genuinely painful process. Verify the PAN against the card itself before you pay. Not a photocopy in a WhatsApp thread — the card.
Joint parties. Each buyer-seller pair is treated separately. Two buyers purchasing from a husband and wife is four deductions, not one, each against the correct pair of PANs in the correct proportion. This is the single most common error in Bengaluru flat purchases, where joint ownership between spouses is the norm on both sides.
Instalments. The obligation attaches to each payment. If you pay a token amount in March and the balance in June, deduction is due on both. Buyers who treat the token as informal and start deducting only at completion have already under-deducted.
Timing. Deduction and deposit are time-bound. Late deposit attracts interest, and a challan that has not been deposited by registration day can stall the appointment at the Sub-Registrar’s office.
Why it delays registrations
Sub-Registrar offices under Kaveri routinely ask to see proof of TDS deposit as part of completing the registration. A buyer who arrives with the demand draft, the deed and no TDS challan can find the appointment does not proceed.
That is an expensive morning. Everyone has taken leave, the seller has travelled, the loan disbursement is timed to the day, and the whole chain moves because a form was not filed.
What a seller should watch
If you are selling, do not treat this as entirely the buyer’s business. The deed itself is registered through Kaveri, and the transfer it effects is governed by the Transfer of Property Act, 1882.
Give your PAN in a form that cannot be mistranscribed, and check the certificate when it comes. If the buyer deducted against a wrong PAN, the money is gone from your sale proceeds and not credited to your account, and you will be arguing about it long after completion.
Where the proceeds are subject to capital gains, the interaction with your own planning matters too — the deduction is a prepayment, not the final tax, and the two need reconciling in your return.
That reconciliation is a question for your own tax adviser on your actual numbers. What this page can tell you is whose job the deduction is: the person writing the cheque.
Frequently asked questions
Who is responsible for deducting TDS on a property purchase?
The buyer. Section 194-IA places the obligation to deduct tax at source and deposit it with the government on the person paying the consideration, not on the seller receiving it. A buyer who does not deduct remains liable for the amount plus interest.
How is TDS handled when there are joint buyers or joint sellers?
Each buyer-seller combination is treated separately, so joint parties mean multiple filings rather than one. Two buyers purchasing from two sellers produces four separate deductions, each reported against the correct pair of PANs.
What happens if the seller's PAN is wrong?
The credit will not reach the seller's account, and the deduction may be treated as made at a higher rate. Verify the PAN against the seller's card before the payment, not afterwards, because correcting a filed challan is considerably harder than getting it right once.
Does TDS apply when payment is made in instalments?
Yes. The obligation attaches to each payment, so deduction is made on every instalment rather than once at the end. Buyers who pay a token amount and then the balance frequently miss the deduction on the first payment.