TDS on property purchase and rent under the new Income-tax Act, 2025

From 1 April 2026 the Income-tax Act, 2025 has replaced the 1961 Act. The familiar Sections 194-IA (property), 194-IB (rent) and 194M (payments to contractors and professionals by individuals) are now entries in the Table under Section 393(1), and the old Forms 26QB, 26QC and 26QD have been merged into one form – Form 141.

The rules mostly look the same, but the forms, section numbers and certificate have changed. If you bought property or paid rent in October 2026, your first Form 141 under the new law is due by 30 November 2026.

At a glance

TDS on purchase of property

A resident buyer of immovable property (other than agricultural land) must deduct TDS at 1% when the amount is ₹50 lakh or more. Points to note:

• Higher of consideration and stamp duty value – TDS is calculated on the agreement value or the stamp duty value, whichever is higher. The professional reading is that the ₹50 lakh threshold is tested the same way, so check the circle-rate value before you assume you are below the limit.
• Joint buyers or sellers – the threshold is tested on the total amount paid by all buyers to all sellers, not each person's share. Form 141 asks for each buyer's and seller's PAN and percentage share.
• Instalments – for under-construction flats, deduct 1% from each instalment at the time it is paid or credited, once the total consideration is ₹50 lakh or more.
• NRI seller – this route does not apply. Payments to a non-resident fall under Section 393(2) (the old Section 195 route), with a different rate and paperwork. See our NRI services page.

TDS on rent paid by individuals and HUFs

This entry applies to individuals and HUFs who are not covered by the business deduction entry – typically salaried tenants paying high rent. Rules:

• Threshold – rent of more than ₹50,000 for a month or part of a month.
• Rate – 2%, with no surcharge or cess.
• When to deduct – only once, from the rent for the last month of the tax year (March), or the last month of the tenancy if you vacate earlier, at the time of payment or credit, whichever is earlier.
• What counts as rent – rent for land, building or land appurtenant to a building. Rent for furniture or machinery alone is not covered.
• No PAN from landlord – TDS at 20%, but capped at the last month's rent.

Worked examples

Example 1 – flat purchase. Mr and Mrs Sharma buy a flat in Rohini for an agreed price of ₹75,00,000; the stamp duty value is ₹80,00,000. TDS = 1% × ₹80,00,000 = ₹80,000. As 50:50 co-buyers, each deducts ₹40,000 from their share of the payment. If the payment is made on 10 October 2026, Form 141 is due by 30 November 2026 and Form 132 by 15 December 2026.

Example 2 – rent. A tenant pays ₹60,000 a month from April 2026 to March 2027. Annual rent = ₹7,20,000. TDS = 2% × ₹7,20,000 = ₹14,400, deducted from the March 2027 rent. The tenant pays the landlord ₹45,600 for March and deposits ₹14,400 through Form 141 by 30 April 2027.

Example 3 – landlord without PAN. Same rent, but no PAN. 20% × ₹7,20,000 = ₹1,44,000, which is more than the March rent of ₹60,000, so TDS is limited to ₹60,000.

Step-by-step: filing Form 141 and issuing Form 132

• Collect the seller's or landlord's PAN, address and the agreement / rent details before paying.
• Log in to the e-filing portal with your own PAN and open Form 141; pick the schedule (A rent, B property, C contract/professional).
• Pay the TDS through the challan generated with the form, using net banking or another permitted mode.
• Keep the acknowledgement and challan details.
• After the due date of Form 141, register on TRACES with your PAN and download Form 132; give it to the seller or landlord within 15 days from the due date of Form 141.
• Ask the payee to check that the credit appears in their Form 26AS / AIS.

Interest, late fee and penalty

Example: in Example 1, if each buyer deducted ₹40,000 on 10 October 2026 but deposited it with Form 141 on 5 December 2026, interest = 1.5% × 2 months (or part) × ₹40,000 = ₹1,200 each, and the late fee for 5 days after 30 November = 5 × ₹200 = ₹1,000 each. Small amounts, but they lead to notices if ignored.

Common mistakes

• Calculating TDS on the agreement value when the stamp duty value is higher.
• Using the old Form 26QB / 26QC for payments made after 1 April 2026.
• Not deducting on part payments made before registration of the sale deed.
• Entering the wrong PAN or share percentage – the seller then does not get credit.
• Forgetting to issue Form 132, which the payee needs for their return.

How we help

CA Dilbagh Singh helps home buyers, tenants and landlords in Delhi with TDS on property and rent – computing the amount, filing Form 141, downloading Form 132 and correcting mistakes. Sellers can also plan the capital gains tax on the sale with our tax planning and capital gains service. For regular TDS compliance see accounting, TDS and payroll services, and for your own return see income tax return filing.

General information as on 9 November 2026, based on Sections 393, 397, 398, 427 and 461 of the Income-tax Act, 2025, the Income-tax Rules, 2026 and CBDT FAQs on TDS on rent and Form 132. Facts of each case differ; take professional advice before acting.

Frequently asked questions