TDS on Property Purchase in 2026: 1% Rule, Form 141 and Buying From an NRI

Quick answer: when you buy a flat worth ₹50 lakh or more from a resident seller – including a developer – you must deduct 1% TDS from every payment and deposit it with the Income Tax Department. From 1 April 2026 this is done under section 393(1) of the Income-tax Act, 2025 (the old section 194-IA), using the new Form 141, which replaces Form 26QB. On a home priced at ₹29 Cr*, that is about ₹29 lakh of TDS spread over your payments. Buying a resale flat from an NRI follows different, stricter rules.

Last updated: 28 October 2026. A general guide for homebuyers in Mumbai, based on the Income Tax Department’s Form 141 help page. Not tax advice – confirm your case with a chartered accountant.

Many buyers of luxury homes focus on price, stamp duty and GST, and only learn about TDS when the developer’s cost sheet asks for “99% payable”. If TDS is missed, the seller does not get credit, interest starts to run, and the problem surfaces again at registration or when you sell. Here is how it works, step by step.

What Is TDS on Property Purchase?

TDS means tax deducted at source. When you buy immovable property (other than agricultural land) from a resident, the law makes you, the buyer, collect part of the seller’s tax. You pay the seller 99%, deposit 1% with the government in the seller’s name, and give the seller proof. The seller later adjusts it against their own tax.

What Changed in 2026: Section 393 and Form 141

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. The 1% TDS on property moved from section 194-IA to section 393(1). The rule itself is the same, but the forms changed:

• Form 141 is now the single challan-cum-statement for TDS paid by individuals on property, rent, contractors and virtual digital assets. It merges the old Forms 26QB, 26QC, 26QD and 26QE.
• Schedule B of Form 141 covers buying property from a resident seller, such as a developer.
• Schedule E covers buying property from a non-resident seller by a resident individual or HUF, from 1 October 2026.
• Form 141 is filed through the PAN login on the income tax e-filing portal. The TDS certificate for the seller is downloaded from the TRACES portal after filing.

If you paid an instalment before 1 April 2026, that payment followed the old Form 26QB process. Keep both sets of records together.

How TDS Works for an Under-Construction Flat

With a new project you pay in stages – booking amount, instalments linked to construction, and a final payment at possession. TDS applies to each payment, not just the first. Our guide to payment plans for under-construction flats explains how the stages usually work.

A simple example

Say the agreed price is ₹29 crore and a demand letter asks for an instalment of ₹2.9 crore. You pay the developer ₹2.871 crore, deposit ₹2.9 lakh as TDS through Form 141, and send the developer the challan details. The figures are only to show the method; your cost sheet decides the real amounts.

What counts as the “price”

Since 2024 the law has said that the amount for TDS includes linked charges such as club membership, car parking, electricity or water connection fees and similar payments that go with the flat. Whether GST shown separately is included is a point to settle with your CA and the developer before the first payment. Our guide to stamp duty, GST and registration on a luxury flat shows how the full cost adds up.

Home loan payments

If a bank pays part of an instalment directly to the developer, TDS is still your responsibility. Deduct it from your own funds and adjust the payment, or agree a process with the developer. See our home loan guide for a luxury flat.

Step by Step: Filing Form 141 for a Flat

1. Collect the seller’s PAN, legal name and address. For a project, the developer usually gives these in the cost sheet or demand letter.
2. Check that your own PAN is active and linked to Aadhaar.
3. Log in to the income tax e-filing portal with your PAN and open Form 141, Schedule B.
4. Enter the property details, the total value, the stamp duty value, and the amount and date of this payment.
5. Pay the TDS online and save the challan-cum-statement acknowledgement.
6. Share the acknowledgement with the developer, and download the TDS certificate from TRACES for the seller when it is available.
7. Repeat for every payment. Joint buyers each file for their own share.

Joint Buyers: Who Files What?

If you buy with a spouse or family member, the ₹50 lakh limit is checked on the whole property value. Each co-owner deducts TDS on the part of each payment they make and files their own Form 141. Agree the ownership shares in advance – our guide to joint ownership of a luxury flat covers this.

Buying a Resale Flat From an NRI

This is where buyers in Bandra West most often go wrong. When the seller is a non-resident, the 1% rule does not apply. Instead:

• TDS is deducted at the capital gains tax rate, plus surcharge and cess – far more than 1%.
• There is no ₹50 lakh limit.
• The seller can apply to the Income Tax Department for a lower or nil deduction certificate. If they give you one, deduct at the rate shown.
• From 1 October 2026, a resident individual or HUF buyer can report it in Schedule E of Form 141 with their PAN.

Always confirm the seller’s residential status in writing before you pay anything. If you are an NRI selling to fund a new home here, read our guide to capital gains and Section 54 and the NRI guide to buying in Bandra West.

Common TDS Mistakes to Avoid

• Deducting TDS only on the final payment instead of on every instalment.
• Using the agreement price when the stamp duty value is higher.
• Leaving out parking, club or other linked charges.
• Assuming the bank or developer will file it for you.
• Treating an NRI seller like a resident seller.
• Losing challans – you will need them at registration, for loan papers and when you sell.

Put TDS on the same checklist as your other paperwork. Our documents checklist for buying a flat in Mumbai and agreement for sale checklist help you keep everything in order.

TDS and Godrej Bandra Bay

Godrej Bandra Bay at Bandra Reclamation is planned as one tower of approx. 26 storeys* with 4 BHK homes only of approx. 2,900–3,500 sq ft* carpet, starting from ₹29 Cr*. As the seller is the developer, a resident buyer would follow the 1% rule under Schedule B of Form 141 for every payment. MahaRERA registration is awaited, and no official price list or payment plan has been published, so do not pay any amount until the project is registered. Read our guide to verifying the MahaRERA number and the complete Godrej Bandra Reclamation guide.

You can also read about Adani Bandra Reclamation nearby, or see another summary on the Godrej Bandra Reclamation property page. Visit the Godrej Bandra Reclamation project page, or send an enquiry for updates on the project.

Frequently Asked Questions

*Prices, sizes and other details are indicative and subject to change. Please verify all details with the developer and on the MahaRERA website before making any decision.