TDS on flats bought in instalments: do you deduct 1% on every payment?

When you buy a flat from a resident seller, tax is deducted at 1% of the consideration on transfer of immovable property (other than rural agricultural land). The deduction is made at the earlier of credit or payment. So where the price is paid in instalments, 1% comes off every instalment. There is no option to wait and deduct the whole amount at possession.

Is the Rs 50 lakh limit tested on each instalment or the whole deal?

On the whole deal. No deduction is required only where the consideration and the stamp duty value are both below Rs 50,00,000. Once that threshold is met, 1% applies to the entire amount, not merely the excess over Rs 50 lakh. A flat of Rs 1.4 crore paid in eight instalments is not eight small transactions — it is one transaction above the threshold, so each instalment carries 1%.

Two further points buyers often miss:

• The base is the higher of the actual sale consideration or the stamp duty value. If the agreement value is below the ready reckoner figure, your deduction is worked out on the higher one.
• From 1 October 2024, where there is more than one transferor or transferee, the Rs 50 lakh test uses the aggregate paid by all buyers to all sellers. Splitting a purchase between co-buyers no longer avoids TDS.

Our TDS on property purchase calculator works out the amount instalment by instalment.

When must each deduction be filed?

The clock runs from each deduction, not from possession. For transactions from 1 April 2026, the current law is Section 393(1), Table Sl. No. 3(i): the merged challan-cum-statement is Form 141 (Schedule B), filed through the buyer's PAN login within 30 days from the end of the month of deduction, with certificate Form 132 to the seller within 15 days of that due date. For transactions up to 31 March 2026, the equivalents were Form 26QB and Form 16B on the same timelines. Ten instalments mean ten filings. You do not need a TAN — your PAN is enough. Further background sits in our note on TDS on property purchase.

What happens if you missed the early instalments?

This is the common trouble. Buyers pay booking and slab-linked instalments in full, then discover the obligation late. The liability is the buyer's, not the builder's, and interest and fee consequences follow the buyer even where the seller has paid its own tax. Practice varies on how people regularise this — some deduct the shortfall from later instalments, others deposit it separately — and departmental treatment is not uniform, so do not assume one approach is safe. Also check whether the seller has furnished a PAN: without it, the rate is 20 per cent, not 1 per cent. And if the seller is an NRI, Section 194-IA does not apply at all — a different provision governs, with no Rs 50 lakh threshold and a TAN required. Please have your own chartered accountant review the payment schedule before your next instalment.