TDS on Property Purchase in Kolkata: Section 194-IA (Now 393) — Full Guide With Examples for Resident & NRI Sellers

Every year, thousands of Kolkata homebuyers sign a builder agreement, transfer money in instalments, and only find out at the registration office — or worse, from an income tax notice months later — that they were supposed to deduct tax before every payment they made to the seller.

This isn’t the seller’s job. It’s yours, as the buyer, the moment your property crosses ₹50 lakh. Get it wrong, and the penalty and interest land on you, not the seller.

This guide walks through exactly when TDS applies, how much to deduct, how to file it, what changes if the seller is an NRI, and what the recent Income-tax Act, 2025 transition means for the forms you’ll actually use in 2026.

1When does TDS apply on a Kolkata property purchase?

Under Section 393(1) of the Income-tax Act, 2025 [Table Sl. No. 3(i)] — the direct successor to the old, more familiar Section 194-IA — a buyer must deduct 1% TDS when all of the following are true:

• The property is immovable — a flat, an independent house, a plot, or commercial space (rural agricultural land is excluded)
• The seller is a resident Indian
• The total sale consideration, or the stamp duty value (SDV) of the property — whichever is higher — is ₹50 lakh or more

That last point trips up a lot of Kolkata buyers. It isn’t just the agreement value that matters. If your agreement price is ₹48 lakh but the government’s stamp duty valuation — the same guideline value used to compute your registration stamp duty — comes to ₹55 lakh, TDS still applies, on the higher figure.

If there are multiple buyers or sellers: since 1 October 2024, the ₹50 lakh threshold is tested on the aggregate consideration across all buyers and sellers, not on each buyer’s individual share. Two people jointly buying a ₹90 lakh flat at ₹45 lakh each can no longer argue neither of them crossed ₹50 lakh — the deal as a whole has, so TDS applies.

2How much TDS, and when do you deduct it

Say Ananya is buying a 3BHK on EM Bypass for ₹1.6 crore, plus ₹8 lakh in club membership and car parking — a total consideration of ₹1.68 crore. The stamp duty value matches the agreement price, so TDS applies on the full ₹1.68 crore.

Here’s the part most first-time buyers miss: you don’t deduct TDS once, at the end. You deduct 1% on every instalment, as and when you pay it — booking amount, agreement-linked payments, possession-linked payments, everything.

Ananya pays the seller ₹1,66,32,000 net across these instalments, and separately deposits ₹1,68,000 with the government against the seller’s PAN. The seller gets full credit for this amount when filing their own income tax return — it isn’t an extra cost to them, it’s an advance against their eventual tax liability.

If the seller doesn’t provide a PAN, the rate jumps from 1% to 20% — a steep penalty that exists specifically to force PAN disclosure. Always collect the seller’s PAN before the first rupee changes hands.

3Filing the TDS — Form 141, not Form 26QB anymore

If you bought property before 1 April 2026, you’d have filed the familiar Form 26QB and issued Form 16B to the seller. From 1 April 2026 onward, under the Income-tax Act, 2025, this has been consolidated into a new unified form:

• Form 141 (Schedule B) — the challan-cum-statement you file to report and pay the TDS. It’s still PAN-based; you don’t need a TAN as a resident-to-resident buyer.
• Form 132 — the certificate you download from TRACES and hand to the seller, replacing the old Form 16B.

Step by step

• Collect the seller’s PAN and confirm it’s valid — a mismatched or inactive PAN pushes you to the 20% rate
• Log in to the income tax e-filing portal with your own PAN
• Select Form 141, choose Schedule B (property), and enter the property, buyer, seller, and payment details, including the stamp duty value
• Pay the TDS via net banking or the integrated payment gateway
• After a few days, download Form 132 from TRACES and share it with the seller

4Common mistakes Kolkata buyers make

• Deducting TDS only on the final instalment instead of on every payment — this triggers interest for late deduction on the earlier ones, even if the total is eventually correct
• Ignoring club membership, parking and maintenance charges when calculating the consideration, and under-deducting as a result
• Ignoring the stamp duty value when it’s higher than the agreement price
• Assuming the developer or seller will handle it — under this section, the buyer is solely responsible; skip it, and you personally face interest and penalty, not the seller
• Missing the 30-day filing deadline, which quietly accrues interest at 1%–1.5% per month on the shortfall

5What if the seller is an NRI?

This is where most guides stop — and where Kolkata’s ₹1.4 crore-plus segment actually needs the detail, because a meaningful share of sellers in this bracket are NRIs settling family property or exiting an old investment.

If your seller is a Non-Resident Indian, Section 194-IA does not apply. Instead, Section 393(2) of the Income-tax Act, 2025 (the successor to the old Section 195) governs the transaction, and the differences are significant:

• There is no ₹50 lakh threshold. TDS applies from the first rupee, regardless of deal size.
• The rate isn’t a flat 1%. Long-term (property held over 24 months): 12.5% flat, with no indexation benefit available to NRIs, plus surcharge and 4% cess. Short-term (held 24 months or less): taxed at the seller’s income slab rate — buyers conservatively withhold up to 30%, plus surcharge and cess.
• Surcharge on capital gains is tiered: nil up to ₹50 lakh gain, 10% between ₹50 lakh and ₹1 crore, capped at 15% beyond ₹1 crore.
• By default, TDS is calculated on the entire sale consideration — not just the seller’s profit — unless the NRI seller has proactively obtained a Lower or Nil Deduction Certificate before the sale.
• The buyer needs a TAN to deduct and deposit this TDS — until 30 September 2026. From 1 October 2026, this shifts to a simpler PAN-based process for individual and HUF buyers.
• Deposit deadline is tighter: within 7 days from the end of the month of deduction, not the 30-day window for resident sellers.
• Filing form: Form 144 (replacing the old quarterly Form 27Q). Certificate to the seller: Form 131 (replacing Form 16A).
• If the NRI seller has no PAN, the rate is pushed to the higher of the applicable rate or 20%.

Worked example: an NRI-owned Alipore flat

Rohan, based in Dubai, bought a flat in Alipore in 2015 for ₹90 lakh. He’s selling it in 2026 for ₹2.2 crore to Vikram, a Kolkata-based buyer. Rohan has held the property for 11 years, so this is a long-term capital gain. He hasn’t applied for a Lower Deduction Certificate.

Now compare this to what Rohan’s actual tax liability on the gain works out to:

Had Rohan applied for a Lower Deduction Certificate under Section 395 (the renumbered Section 197) before the sale, Vikram could have deducted TDS on the ₹1.3 crore gain instead of the full ₹2.2 crore sale price — releasing that ₹13.45 lakh to Rohan at settlement instead of tying it up for a year. For any NRI seller in Kolkata’s higher-value segment, this single step is usually worth doing.

Vikram, as the buyer, still needs a TAN for this transaction (since it falls before 1 October 2026), deposits the TDS within 7 days of month-end, files Form 144 for the quarter, and issues Form 131 to Rohan. If Rohan wants to remit the sale proceeds to his Dubai account, that’s a separate step requiring Form 145 (the remittance declaration, replacing the old Form 15CA) and a chartered accountant’s certificate on Form 146 (replacing Form 15CB).

6Resident vs NRI seller — quick reference

7What the Income-tax Act, 2025 renamed

If you’ve bought property before and are wondering why none of these form numbers sound familiar, here’s the mapping:

8What happens if you get it wrong

If you fail to deduct, deduct at the wrong rate, or miss the filing deadline, you — the buyer — become an “assessee in default.” That means you’re personally liable for the shortfall, interest of roughly 1%–1.5% per month on the unpaid amount, and potentially a penalty equal to the shortfall if the assessing officer pursues it. This isn’t the seller’s problem to fix; it sits entirely with you, which is exactly why builders and channel partners flag it before the first payment goes out.

Frequently asked questions