Buyers must deduct a 1% Tax Deducted at Source (TDS) on any property purchase priced above ₹50 lakhs under Section 194-IA of the Income Tax Act. This legal rule applies to all residential as well as commercial real estate transactions across the country. The entire responsibility to deduct and pay this tax falls on the person buying the home, not the builder or the seller.
The 1% tax is calculated on either the total deal value or the government stamp duty value, whichever amount is higher. You do not need a Tax Deduction Account Number (TAN) to complete this transaction; your regular PAN card is enough. If you buy an ongoing or under-construction apartment and pay the seller through a lot series of monthly instalments, you must subtract the 1% from every single payment other than waiting until the final handover.
You must include mandatory costs like car parking, club membership fees, electricity deposits, as well as the maintenance advances when checking if your property price crosses the ₹50 lakh limit. The Income Tax Department consider these additional fees as part of the total digital footprint of the real estate deal. For example, if a flat has a base price of ₹49 lakhs but the builder adds a ₹2 lakh club fee, the total value becomes ₹51 lakhs, which makes the 1% tax mandatory on the full amount.
Buyers purchasing any apartment at Prestige Falcon City Luxe must deduct this 1% tax because all configurations start well above the ₹50 lakh threshold. Located on Kanakapura Road in Konanakunte, South Bangalore, this new 41-acre township has 2,520 premium apartments across 7 high-rise towers. The starting pre-launch price is ₹1.4 Crore for a 2 BHK unit, but the 3 BHK units start at ₹2 Crore and 4 BHK homes reach ₹3 Crore onwards.
With the pre-launch window open on March 31, 2026, and the official launch on April 15, 2026, early buyers must subtract the 1% tax from their Expression of Interest (EOI) amounts as well as all future construction-linked installments before making payments. Since the project is approved by the BDA as well as BBMP, keeping your tax paperwork clean gives a seamless registration process down the line.
You can pay the deducted tax online through the official income tax e-filing portal by filling out Form 26QB. The process is fully digital and requires the PAN details of both buyer and the seller. After logging in, you fill out the transaction details, calculate the 1% amount, as well as clear the payment instantly using net banking, UPI, or a credit card.
You must file Form 26QB and deposit the tax money within 30 days from the end of the month in which you made the deduction. Once the government portal processes your payment, you must download Form 16B from the TRACES website. You are legally required to give this Form 16B certificate to your seller within 15 days of filing so they can claim credit for the tax in their annual returns.
The main benefit of this system is that it stops tax evasion by tracking large real estate deals, while the main downside is the heavy interest penalty if you file late.
No, buyers do not need a TAN to deduct this tax and can use their standard permanent account number (PAN) instead.
The tax deduction rate automatically increases from 1% to 20% if the seller fails to give you a valid PAN.
Yes, you must deduct the tax from the initial booking or EOI payment if the overall deal value exceeds ₹50 lakhs.
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