Most Gurugram buyers budget carefully for stamp duty, registration, GST, and brokerage — and then get blindsided at the registry by a tax they did not know was their responsibility: TDS. Tax Deducted at Source on a property purchase is paid by the buyer, not the seller, and getting it wrong can leave you with penalty notices from the Income Tax Department years after you have moved in. In a market where a typical 3BHK in Sector 65 or on Golf Course Extension Road crosses ₹2.5–4 crore, the 1% TDS alone runs to ₹2.5–4 lakh — a sum no buyer should mishandle. This guide explains exactly what TDS you pay, when, how to file it, and the traps that catch Gurugram buyers most often.
Last updated: 11 June 2026
What is TDS on property purchase in India?
TDS on property purchase is a 1% tax that the buyer must deduct from the sale consideration and deposit with the Income Tax Department on behalf of the seller, under Section 194-IA of the Income Tax Act, 1961. It applies to any transfer of immovable property (other than agricultural land) where the sale consideration or the stamp duty value — whichever is higher — is ₹50 lakh or more.
In plain terms: if you are buying a flat, builder floor, plot, or commercial unit in Gurugram for ₹50 lakh or more, you do not pay the full amount to the seller. You pay them 99% of the consideration and deposit the remaining 1% directly to the government using Form 26QB, then hand the seller a TDS certificate (Form 16B) as proof.
TDS on property purchase in Gurugram is the buyer's legal responsibility, not the seller's — the buyer deducts 1% of the sale price and deposits it with the Income Tax Department, even if the seller never asks for it.
Because almost every primary and resale transaction in Gurugram comfortably exceeds the ₹50 lakh threshold, Section 194-IA effectively applies to the entire market. The all-Gurugram average flat ticket size sits well above ₹1.5 crore (based on PropReport's review of registry and listing data across prime sectors, 2025–26), so for practical purposes, if you are buying in Gurugram, this tax applies to you.
How much TDS do you pay when buying property in Gurugram?
The standard TDS rate under Section 194-IA is 1% of the higher of the sale consideration or the stamp duty (circle rate) value, provided the seller is a resident Indian and has furnished their PAN.
Here is how the numbers work for typical Gurugram price points in 2026:
- A ₹1.2 crore 2BHK on Sohna Road → TDS of ₹1,20,000
- A ₹2.6 crore 3BHK in Sector 65 → TDS of ₹2,60,000
- A ₹4.5 crore 4BHK on Golf Course Road → TDS of ₹4,50,000
- A ₹85 lakh builder floor in Sector 57 → TDS of ₹85,000
Two important rate exceptions apply:
- No PAN furnished by the seller: If the seller does not provide a valid PAN, TDS shoots up to 20% under Section 206AA. Always collect and verify the seller's PAN before closing.
- Stamp duty value higher than sale price: Since a 2022 amendment, TDS is calculated on the higher of the actual consideration or the stamp duty value. If your agreed price is ₹1.1 crore but the circle-rate-based stamp duty value is ₹1.25 crore, you deduct 1% on ₹1.25 crore (₹1,25,000), not ₹1.1 crore. Gurugram's circle rates were last revised upward across most sectors, so this gap catches buyers in older or undervalued resale deals.
Note that the 1% TDS is separate from and in addition to stamp duty and registration charges. For a full breakdown of those, see our guide on stamp duty in Haryana for Gurugram buyers and the hidden charges when buying a flat in Gurgaon.
When and how do you pay TDS on a Gurugram property?
TDS must be deducted at the time of payment to the seller — either when you credit the amount to their account or when you actually pay it, whichever is earlier. It is then deposited with the government and reported using Form 26QB.
The filing process, step by step:
- Deduct 1% at the time of payment. If you are paying the seller in instalments (common in under-construction deals), you deduct 1% on each instalment as you pay it.
- File Form 26QB within 30 days from the end of the month in which the deduction was made. Form 26QB is both the challan and the return — it is filed online on the TIN-NSDL / Income Tax e-filing portal.
- Pay the TDS online via net banking or generate a challan to pay at an authorised bank.
- Download Form 16B (the TDS certificate) from the TRACES portal, usually available 5–7 days after Form 26QB is processed, and give it to the seller.
For example, if you make a payment on 12 July 2026, the Form 26QB and TDS deposit are due by 30 August 2026 (30 days from the end of July).
Form 26QB must be filed within 30 days from the end of the month in which TDS was deducted, and a late filing attracts a fee of ₹200 per day until it is filed.
You will need: the PAN of both buyer and seller, the property address, the date of agreement and payment, the total consideration, the amount paid in that instalment, and the TDS amount. No TAN (Tax Deduction Account Number) is required for individual buyers under Section 194-IA — your PAN is sufficient.
How does TDS work on an under-construction flat in Gurugram?
For an under-construction property bought directly from a builder, TDS is deducted on every instalment paid against the construction-linked or time-linked payment plan, with 1% deducted each time a payment of any size is made once the total agreed consideration is ₹50 lakh or more.
This is one of the most common points of confusion in Gurugram's primary market, where construction-linked plans (CLP) and "10:90" or subvention-style structures are widespread. The key rules:
- The ₹50 lakh threshold is judged on the total agreed consideration, not the individual instalment. So even a small ₹3 lakh instalment on a ₹2 crore flat attracts 1% TDS.
- You file a separate Form 26QB for each instalment, or many buyers file periodically as instalments are paid. Either way, each deduction has its own 30-day clock.
- GST is charged separately by the builder on under-construction units and is not part of the consideration on which TDS is calculated — TDS is on the property value, GST is on top. See our explainer on GST on under-construction property in Gurugram.
If you are evaluating a subvention or "no EMI till possession" scheme — popular again across New Gurgaon and Dwarka Expressway projects — read our breakdown of subvention scheme risks in Gurugram before you sign, because TDS obligations continue even when the bank is servicing your loan.
What are the penalties for not deducting or depositing TDS?
The penalties for TDS failures fall entirely on the buyer and can stack up quickly, making non-compliance far more expensive than the tax itself.
- Late deduction: Interest at 1% per month (or part thereof) on the TDS amount, from the date it should have been deducted until the date it actually is.
- Late deposit: Interest at 1.5% per month (or part thereof) on the TDS amount, from the date of deduction until the date of deposit.
- Late filing of Form 26QB: A fee of ₹200 per day under Section 234E, capped at the TDS amount.
- Penalty for failure to file: Under Section 271H, a penalty ranging from ₹10,000 to ₹1,00,000 in addition to the late-filing fee.
Because TDS defaults are tracked against the buyer's PAN, an unpaid or wrongly filed TDS can surface as a Form 26AS mismatch or an income-tax notice years later — and it can complicate any future sale of the same property. This is exactly the kind of latent liability a proper due-diligence review surfaces; our Gurugram property due diligence guide walks through the full document checklist buyers should run before payment.
Failing to deduct or deposit TDS on a Gurugram property purchase exposes the buyer to interest of 1–1.5% per month plus a penalty of up to ₹1,00,000 under Section 271H — the seller faces no consequence.
What special TDS rules apply to NRI sellers in Gurugram?
When the seller is a Non-Resident Indian (NRI), Section 194-IA does not apply. Instead, TDS is governed by Section 195, and the rate is far higher — generally 20% (plus surcharge and cess) on long-term capital gains, or up to around 30% effective on short-term gains, calculated on the sale consideration unless the seller obtains a lower-deduction certificate.
This matters in Gurugram more than in most Indian cities because a meaningful share of premium inventory in Golf Course Road, Golf Course Extension Road, and DLF phases is held by NRI investors. Key differences for buyers purchasing from an NRI seller:
- Higher rate: Default TDS can be 20–28.5% (with surcharge/cess) on the gain or consideration, not 1%.
- TAN required: The buyer must obtain a TAN (Tax Deduction Account Number) — unlike resident purchases, where PAN suffices.
- Form 27Q, not 26QB: The buyer files Form 27Q and issues Form 16A.
- Lower / NIL deduction certificate: The NRI seller can apply to the Assessing Officer under Section 197 for a lower-TDS certificate based on their actual capital gain. Without it, the buyer must deduct on the gross sale price.
Getting NRI TDS wrong is one of the costliest mistakes in the resale market — over-deduction strands the seller's funds, while under-deduction makes the buyer liable for the shortfall plus interest. Always confirm the seller's residential status in writing before closing, and engage a CA for any NRI transaction.
How does TDS work for joint buyers and joint sellers?
For jointly purchased property, TDS is shared in proportion to each buyer's ownership share, and each co-buyer must file their own Form 26QB for their portion of the consideration paid to each seller.
In practice, for a couple buying a ₹2 crore flat in equal shares from a single seller, two separate Form 26QB filings are required — each for ₹1 crore consideration with ₹1,00,000 TDS. If there are two buyers and two sellers, four Form 26QB filings are technically required (each buyer-seller combination). This trips up many Gurugram buyers who assume one filing covers the whole deal; a single consolidated 26QB for multiple buyers or sellers is not the correct procedure and can create reconciliation problems in Form 26AS.
The ₹50 lakh threshold here is assessed on the total property value, not each buyer's share — so even if each co-buyer's portion is below ₹50 lakh, TDS still applies if the property as a whole crosses the threshold.
How is TDS different from stamp duty and registration charges?
TDS, stamp duty, and registration are three separate payments a Gurugram buyer makes — TDS (1%) goes to the Income Tax Department, while stamp duty and registration charges go to the Haryana state government and are collected at the sub-registrar's office.
A quick comparison for a ₹2 crore Gurugram flat:
- TDS (Section 194-IA): 1% = ₹2,00,000 — deducted from the seller's payment, deposited by the buyer to the centre.
- Stamp duty (Haryana): typically 5–7% depending on buyer gender and municipal limits — roughly ₹10–14 lakh, paid by the buyer to the state.
- Registration charges: capped at ₹50,000 in Haryana for most transactions, paid to the sub-registrar.
So the buyer's full transaction cost stack — TDS + stamp duty + registration + GST (if under construction) + brokerage — can add 8–12% or more on top of the headline price. Budgeting for only stamp duty is the single most common costing error we see. Before you commit, run the numbers using our stamp duty Haryana 2026 guide and the property registration process in Gurugram, and search your property on PropReport to verify the seller's title, RERA status, and circle-rate valuation before any money changes hands.
Frequently Asked Questions
How much TDS do I pay when buying property in Gurugram in 2026?
You pay 1% TDS on the higher of the sale consideration or the stamp duty (circle rate) value when the property is worth ₹50 lakh or more, under Section 194-IA. For example, on a ₹2.6 crore flat in Sector 65, the TDS is ₹2,60,000. If the seller does not provide a PAN, the rate rises to 20%, and if the seller is an NRI, TDS is governed by Section 195 at much higher rates (typically 20% plus surcharge and cess).
Who pays TDS on property purchase — the buyer or the seller?
The buyer pays (deducts and deposits) TDS on a property purchase, not the seller. The buyer withholds 1% from the amount due to the seller, deposits it with the Income Tax Department using Form 26QB within 30 days from the end of the month of deduction, and issues Form 16B to the seller as proof. All penalties for non-compliance fall on the buyer.
What is Form 26QB and when is it due?
Form 26QB is the combined challan-cum-statement that a property buyer files to report and pay 1% TDS under Section 194-IA. It must be filed within 30 days from the end of the month in which the TDS was deducted. Late filing attracts a fee of ₹200 per day under Section 234E, capped at the TDS amount, plus possible penalties under Section 271H.
Do I have to deduct TDS on every instalment of an under-construction flat?
Yes. For an under-construction property in Gurugram, you deduct 1% TDS on each instalment as it is paid, provided the total agreed consideration is ₹50 lakh or more. Each deduction has its own 30-day window to file Form 26QB. GST charged by the builder is separate and is not included in the value on which TDS is calculated.
What TDS rate applies when buying from an NRI seller in Gurugram?
When the seller is an NRI, Section 194-IA does not apply; TDS falls under Section 195 at roughly 20% (plus surcharge and cess) on long-term capital gains, or up to about 30% effective on short-term gains, often calculated on the full sale price unless the seller obtains a lower-deduction certificate under Section 197. The buyer also needs a TAN and files Form 27Q instead of Form 26QB.
Before you transfer a single rupee to a seller or builder, make sure you know the property's true circle-rate valuation, title status, and RERA registration — these directly affect how much TDS and stamp duty you owe and whether the deal is clean. Run a full due-diligence report on PropReport to check your Gurugram property before you pay, or verify whether your rent is fair if you are renting instead. A few minutes of verification can save lakhs in penalties and disputes.
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