Under the old Income-tax Act, 1961, section 194-IA required a buyer to deduct 1% TDS when buying property worth ₹50 lakh or more from a resident seller, and section 195 governed TDS on payments to a non-resident seller, on the gain at much higher rates. From 1 April 2026 the Income-tax Act, 2025 replaced both, but the split remains: a resident seller and a non-resident seller are treated differently.
Side by side
Factor
Section 194-IA
Section 195
Seller
Resident
Non-resident
Rate
1% of the consideration or stamp duty value, whichever is higher
Rates linked to capital gains tax, with surcharge and cess
Threshold
₹50 lakh or more
No such threshold
Buyer's TAN
Not needed; PAN is used
Needed
Lower deduction
Not applicable
Seller can apply for a lower or nil deduction certificate
Agricultural land
Rural agricultural land excluded
Depends on the facts
From 1 April 2026
Covered by the TDS provisions of the 2025 Act
Covered by the TDS provisions of the 2025 Act
When Section 194-IA matters
If the seller is resident and the price or stamp duty value is ₹50 lakh or more, the buyer deducts, deposits and files, then gives the seller the certificate.
When Section 195 matters
If the seller is a non-resident, take professional advice before the first payment; get a TAN, and ask whether the seller has a lower deduction certificate.
In more detail
The Income-tax Act, 2025 consolidated the TDS sections, so "194-IA" and "195" no longer exist as such for payments from 1 April 2026; the forms and return names changed too. The obligations themselves continue, and the duty to deduct remains with the buyer.
If the buyer fails to deduct or deposit, interest and fees are demanded from the buyer. Check the current threshold, rate, forms and due dates on the income tax portal before you transact.
For payments from 1 April 2026, the Income-tax Act, 2025 applies and the provision has a new number. The 1% TDS on purchases from resident sellers at ₹50 lakh or more continues.
How much TDS is deducted when buying from an NRI?
Tax on the seller's capital gain at the applicable rate, with surcharge and cess, unless the seller has a lower deduction certificate. Take professional advice.
Who deducts TDS on property, the buyer or the seller?
The buyer, from the payment to the seller.
Sources
Income-tax Act, 1961, sections 194-IA and 195 (for payments before 1 April 2026)
Income-tax Act, 2025 (in force from 1 April 2026, replacing the Income-tax Act, 1961)
Income tax e-filing portal for current forms, rates and due dates
Confirm with a chartered accountant before you act; tax rules are amended by each Finance Act.
A plain-language summary, not legal or tax advice. Rules set by states differ and change; check the current position for your property.