Selling property: tax, the 1% TDS and the papers buyers ask for

What you'll pay, how to pay less, and what to have ready. Updated 22 October 2026.

This guide is general information, not tax or legal advice. Since 1 April 2026 India's new Income-tax Act, 2025 applies: the rules below carry on, but many section numbers and form names have changed. Always confirm your own figures with a chartered accountant before you sell. ⁸

The 3 things to know first

You pay tax only on the gain, not on the whole price: what you sold for, less what the property cost you (including stamp duty, registration and improvements) and the costs of selling. ¹
Held more than 2 years? The gain is “long-term” and taxed at 12.5%. If you bought before 23 July 2024, you can choose 20% with inflation indexation instead, whichever is lower. ^2,3
If the price is ₹50 lakh or more, the buyer keeps back 1% and pays it to the Income Tax Department in your name. It isn't an extra tax: it counts towards the tax you owe. ⁶

Part 1: Capital gains tax

Short-term or long-term?

Held 24 months or less: a short-term gain. It is added to your income for the year and taxed at your normal slab rate. ¹
Held more than 24 months: a long-term gain, taxed at 12.5% without indexation (plus surcharge and cess). ²
Bought before 23 July 2024? Individuals and HUFs resident in India can work out the tax both ways and pay the lower: 12.5% without indexation, or 20% with indexation (the purchase cost raised for inflation). For property held many years, indexation often wins. ³
Inherited or gifted property: the time the previous owner held it counts too, and the cost is what they paid. ¹

Working out the gain

Sale price	The price in the sale deed. If the government's stamp duty value (the circle rate) is more than 110% of it, the stamp duty value is used instead. ¹
less: costs of selling	Brokerage, legal fees and the like, with receipts.
less: cost of buying	The price you paid, plus stamp duty and registration, plus improvements (an extra floor, a boundary wall), with receipts.
= Capital gain	The amount the tax is worked out on.

Our calculators help with prices and stamp duty; for the tax itself, ask your CA to work out both options if you bought before 23 July 2024.

Ways to pay less tax (long-term gains)

Sold a house, buying another house: the gain can be exempt if you buy a house in India within 1 year before or 2 years after the sale, or build one within 3 years. The exemption is capped at ₹10 crore. (Section 54 under the old Act.) ⁴
Sold a plot, land or a shop, buying a house: a similar exemption applies, but you must reinvest the whole sale amount (not just the gain) for full relief. (Section 54F under the old Act.) ⁴
Capital gain bonds: put up to ₹50 lakh of the gain into specified bonds (REC, PFC, IRFC and others) within 6 months of the sale. They are locked in for 5 years. (Section 54EC under the old Act.) ^4,5
Not reinvested by the tax-return date? Park the money in a Capital Gains Account Scheme account at a public sector bank before the return is due, and use it within the time allowed. ⁴
Farm land in a rural area: agricultural land outside municipal limits (and beyond a set distance from them) is not treated as a “capital asset”, so selling it usually brings no capital gains tax. Orchards and fields in J&K and Himachal villages often fall here; ask your CA to confirm the distance test for your village. ¹

Report the sale in your income tax return for the year, and pay advance tax on a large gain during the year to avoid interest. ^1,11

Part 2: The buyer's 1% TDS

When: the price, or the stamp duty value if higher, is ₹50 lakh or more, and the seller lives in India. ⁶
Who does it: the buyer. They keep back 1% of each payment (token, instalments and the final payment) and pay it online with your PAN. They don't need a TAN of their own. ⁶
The form: it was Form 26QB until March 2026; under the new Act it is Form 141, filed within 30 days of the end of the month of payment. ^6,7
Your proof: the buyer gives you a TDS certificate. Check that the amount appears in your Form 26AS / AIS on the income tax portal, and claim it in your return. ^6,7,11
Give the buyer your PAN, linked to your Aadhaar. With no PAN, or an inoperative one, the buyer must deduct 20% instead of 1%. ⁹
Selling as an NRI? Different rules: the buyer needs a TAN and deducts tax at a much higher rate on the gain. You can apply to the Income Tax Department for a lower-deduction certificate before the sale. Talk to a CA early. ^9,10

Part 3: The papers buyers will ask for

Get these ready before you list. A buyer's lawyer will ask for them, and having them early speeds up the sale.

For every property

The registered sale deed (or gift deed, will or partition deed) that made you the owner, and the earlier deeds in the chain if you have them.
Your PAN and an ID, and those of every co-owner. Every co-owner must sign the sale.
The latest property tax, electricity and water bills, paid up, with no dues.
If there is a loan on it: a letter from the bank with the amount to close it, and its no-objection once paid.
A power of attorney, registered, if someone is signing for you.

Land, plots and orchards in J&K

The latest jamabandi / fard (record of rights) showing your name, with the khasra and khewat numbers. ¹²
The mutation in your name, attested by the Tehsildar.
The girdawari (crop record) for farm land, and the land's class in the records (agricultural or not).
For building on farm land: the District Collector's conversion permission, if it was given.
A site plan or demarcation report showing the boundaries.

Flats and houses in a project

The allotment letter and builder-buyer agreement; the RERA registration number of the project.
The approved building plan and the completion or occupancy certificate.
The society or association's no-objection and a no-dues letter for maintenance.

Not sure what your land records say? Our guide to land records and title checks explains each one.

Selling with Clayyard

You can list your property directly with Clayyard: our team checks your ownership papers, lists the property and handles buyer enquiries. Your papers stay private and are never shown to buyers. Contact us to start.