A complete guide to TDS on flat purchases in Mumbai in 2026
Buying a flat in Mumbai for ₹50 lakh or more comes with a compliance requirement that many buyers learn about only at the time of registration. The buyer must deduct 1% TDS from every payment made towards the property. If this is missed, the buyer faces interest, penalties, and possibly legal action. For premium projects payments are made under a construction-linked plan, this obligation applies to each installment.
This Piramal Realty guide explains who pays TDS on flat purchases in Mumbai, how it is calculated, how it applies to CLP payments and home loan disbursals, the implications if the seller is an NRI or if there are joint buyers, and what Form 26QB, now Form 141 under the Income Tax Act 2025, means for your compliance record.
What is TDS on a flat purchase and when does it apply?
TDS on property purchases is controlled by Section 194IA of the Income Tax Act, which was introduced in 2013. It applies to all transfers of immovable property, including flats, plots, or commercial spaces, where the sale price is ₹50 lakh or more. The buyer deducts 1% of the total consideration when making payments and deposits this amount with the government on behalf of the seller.
Three factors often catch Mumbai buyers off guard.
The ₹50 lakh threshold is based on the total property value, not individual payments. For a flat priced at ₹2 crore, TDS applies to every payment, including the initial ₹10 lakh booking amount.
TDS on property purchases above ₹50 lakh applies to both new bookings and resale. It covers new bookings with developers as well as resale transactions with private sellers.
There's no TDS exemption for first-time buyers, women buyers, or home loan borrowers. Once the threshold is exceeded, the obligation is absolute.
The TDS rate is 1% if the seller has a valid PAN. If the seller does not provide a PAN, the rate jumps to 20% under Section 206AA. This is a penalty designed to encourage PAN disclosure. This is consistent with the rate cited in the FAQ below.
What is TDS calculated on, and how does it work on a CLP?
TDS is calculated on the total sale price in the agreement, including the base price. For resale properties, it applies to whichever is higher, the actual price or the stamp duty value. Since the Finance (No. 2) Act 2024, effective 1 October 2024, there is no 10% tolerance limit. TDS is calculated on the higher of the two amounts, no matter the difference between them.
For projects sold under a construction-linked plan (CLP), the standard in Mumbai's premium market, TDS on under-construction properties is paid in installments. A 1% TDS is deducted from each payment to the developer. The buyer must file Form 26QB (or Form 141 starting April 2026) within 30 days after the month in which each deduction occurs. For a ₹2 crore flat with payments of ₹30 lakh at booking, ₹50 lakh at a slab, and ₹40 lakh at possession, the buyer deducts ₹30,000, ₹50,000, and ₹40,000, respectively and files three separate forms.
Who pays TDS when a home loan is disbursed, and what about joint buyers?
When a home loan is involved, the bank releases funds directly to the developer. However, this does not change the TDS responsibility, which remains with the buyer. The buyer must deduct and deposit the TDS, even on amounts they never physically manage. In practice, the buyer needs to work with the bank. They have to ensure either that TDS is deposited separately before each tranche is released or that the bank's disbursement includes TDS.
For joint buyers, the rule is simple. Each buyer is responsible for their share of the TDS. If two buyers co-purchase a flat, each must file for their share of each payment. If Buyer A owns 60% and Buyer B owns 40%, Buyer A deducts 1% on their 60% share, and Buyer B deducts 1% on their 40% share. Both must file within 30 days of each installment.
For FY 2025-26, each buyer files a separate Form 26QB for their share. Starting in FY 2026-27 (April 2026), Form 141 changes how filings are done. Each buyer will file a single consolidated form covering all sellers in the transaction, rather than a separate form for each buyer-seller pair, as with Form 26QB. As a result, the number of forms filed per buyer may change from the current practice. The seller will receive a TDS certificate from each buyer, Form 16B for FY 2025-26 transactions and Form 132 for FY 2026-27 and beyond.
What happens to TDS when the seller of a Mumbai flat is an NRI?
If the seller is a Non-Resident Indian (NRI), Section 194IA does not apply. Instead, Section 195 takes over at a higher rate. For long-term gains (assets held for more than 24 months), the buyer must deduct about 12.5% plus a surcharge and a 4% cess on the total amount.
At a sale value of ₹3 crore, this amounts to roughly 14.96% at the 15% surcharge slab applicable to this amount, which is around ₹44.9 lakh. Keep in mind that the effective rate depends on the slab; the 15% surcharge cap applies here. Buyers and their CAs should confirm the exact effective rate for the actual consideration. Short-term gains are taxed at a rate of 30% plus surcharge and cess. The NRI seller can request a lower deduction certificate (Form 13) if their actual tax liability is lower. The buyer must file Form 27Q, not Form 26QB or Form 141, and should obtain a TAN, which is not required for transactions with resident sellers.
Scenario
TDS Rate
Applicable Form
Resident seller, PAN provided
1% of consideration
Form 26QB / Form 141
Resident seller, no PAN
20% of consideration
Form 26QB / Form 141
NRI seller (LTCG)
12.5% of consideration (+ surcharge + cess)
Form 27Q
NRI seller (STCG)
30% of consideration (+ surcharge + cess)
Form 27Q
Purchase price below ₹50 lakh
TDS not applicable
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What do Form 26QB, Form 141 and Form 16B mean for a flat buyer?
Form 26QB is the challan-cum-statement for TDS on property purchases under Section 194IA. It is filed online on the TIN-NSDL or Income Tax portal and serves as both the TDS payment record and the compliance certificate. For FY 2025-26 transactions, buyers will continue to use Form 26QB.
From FY 2026-27 (April 2026), Form 26QB is replaced by Form 141 under the Income Tax Act, 2025. Form 141 is not a simple renumbering, it is a substantive consolidation of four forms (Form 26QB, Form 26QC, Form 26QD, and Form 26QE) into a single unified form with a redesigned four-schedule structure. The multi-party filing logic also changes, each buyer files a single Form 141 covering all sellers, rather than one per buyer-seller combination. This is a substantive reform, not a mere administrative relabelling.
Form 16B, the TDS certificate the buyer gives to the seller after filing Form 26QB, applies to FY 2025-26 and earlier transactions. Starting on 1 April 2026, for FY 2026-27 and later, Form 16B will be replaced by Form 132 under the new Act. Buyers who complete transactions from April 2026 must provide Form 132 to the seller as the TDS certificate, not Form 16B.
How to pay TDS on property purchase using Form 26QB or Form 141.
File on the TIN-NSDL portal (tin.tin.nsdl.com) or the Income Tax e-filing portal. Enter the PAN of the buyer and seller, property address, total consideration, and instalment amount.
Pay online using net banking. A challan is generated immediately with an acknowledgement number.
File within 30 days after the month in which the deduction was made. Late filings incur a fee of ₹200 per day under Section 234E, capped at the TDS amount.
Download Form 16B (FY 2025-26) or Form 132 (FY 2026-27 onwards) from TRACES (traces.gov.in) after 10 to 15 working days. Provide it to the seller as the TDS certificate.
No TAN is needed for transactions with resident sellers. The seller verifies credit through Form 26AS or their Annual Information Statement (AIS).
What has the Income Tax Act 2025 changed for flat buyers in Mumbai?
The New Income Tax Act 2025, effective from FY 2026-27 (April 2026), introduces two key changes that affect flat buyers.
Form 26QB is replaced by Form 141, a consolidated form for TDS on property transfers, rent, contractors, and some other payments. This includes what were previously Forms 26QB, 26QC, 26QD, and 26QE. The original Section 194IA requirement, including 1% TDS, a ₹50 lakh threshold, and a 30-day filing period, remains the same. However, the four-schedule structure and the per-buyer filing system have been redesigned. Buyers engaging in transactions from April 2026 must use Form 141 on the portal.
Form 16B is replaced by Form 132 from 1 April 2026 as the seller's TDS certificate.
Regarding the scope of consideration, the inclusion of floor rise, preferred location charges (PLC), infrastructure charges, and other fees connected to the property transfer within the TDS base is not a new change from the 2025 Act. This has been established since the Finance Act 2019 and related announcements, which took effect in September 2019. The 2025 Act does not change this, it has already been established law. Buyers should keep in mind that all amounts due under the sale agreement, including these additional charges, have been part of the TDS base for several years.
What hasn't changed, the 1% rate for resident sellers, the ₹50 lakh threshold, the 30-day filing period, and the Section 195 rules for NRI sellers. Buyers completing purchases in FY 2025-26 will continue to file under Form 26QB. From April 2026, Form 141 will be available on the portal.
TDS on property purchases is a legal requirement that occurs with every payment, it is not just a one-time registration formality. Set up a compliance calendar from the booking date, confirm the seller's PAN and resident status early, and file Form 26QB (or Form 141 after April 2026) within 30 days of each payment. For anyone buying a premium home in Mumbai, such as at Piramal Mahalaxmi in South Mumbai, Piramal Aranya in Byculla, Piramal Revanta in Mulund, or Piramal Vaikunth in Thane, getting the compliance flow right protects both you and the seller.
Frequently Asked Questions
I paid my builder without deducting TDS. What should I do now?➕
File Form 26QB immediately and pay the outstanding TDS with interest under Section 201(1A). The interest is currently 1.5% per month from the due date. You also need to pay late filing fees of ₹200 per day under Section 234E. The responsibility is entirely yours. The builder cannot be penalised for your failure to deduct.
Does TDS apply to car parking and club membership charges in a luxury flat?➕
This depends on how the charges are organised in your agreements, but the difference is not as clear as it seems. TDS on property purchase is based on the total 'consideration' for the transfer of the immovable property. If car parking and club membership charges are included in the sale agreement with the flat, they are usually considered part of the consideration, and TDS applies. If these charges are in a separate agreement, they may be outside Section 194IA, but tax authorities often take a substance-over-form approach and may disregard separate documents if the charges are obviously related to the same transfer. Due to this uncertainty, do not depend on how the agreements are structured as a planning method without guidance. Check with your chartered accountant based on your specific transaction.
The seller will not share their PAN before registration. What TDS rate applies?➕
Section 206AA requires TDS at 20% if the seller's PAN is not available, not 1%. This applies regardless of why the PAN is not disclosed. File Form 26QB at the higher rate. If the seller later provides their PAN, they can claim a refund for the excess TDS. Do not agree to take on the extra deduction for the seller.
My flat is jointly owned with my spouse, who has no income. Who files the TDS?➕
Both owners must file TDS based on their ownership share, regardless of their income. For FY 2025-26, each person files a separate Form 26QB for their portion of each payment within 30 days. Your spouse needs a valid PAN and files their share independently. Starting in FY 2026-27, each co-buyer will file one combined Form 141. TDS obligations apply even if a co-owner does not have taxable income.
Does buying a flat through a power of attorney change who is responsible for TDS?➕
The TDS obligation lies with the principal buyer, the person in whose name the property is bought, not the attorney. The attorney carries out the transaction, but the principal's PAN must be on Form 26QB, and the principal is legally responsible for the deduction and deposit. The power of attorney does not transfer the TDS obligation.
How does the seller claim credit for the TDS I have deducted from their payment?➕
Once you file Form 26QB and deposit the TDS, it will show up in the seller's Form 26AS and Annual Information Statement (AIS) within 10 to 15 working days. The seller will claim it as advance tax paid against their final ITR liability. For FY 2025-26 transactions, provide the seller with Form 16B, which you can download from TRACES after your filing is processed. This is their official TDS certificate. For FY 2026-27 transactions (from April 2026 onwards), the equivalent certificate is Form 132, which replaces Form 16B under the Income Tax Act, 2025.
Disclaimer - This article is based on the information publicly available for general use as well as reference links mentioned herein. The views expressed above are for informational purposes only based on industry reports and related news stories. Piramal Realty does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information. Piramal Realty expressly disclaims/disowns any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided here in.
