TDS on a Bank Auction Purchase: The 1%, Whose PAN, Form 141 and Joint Buyers

What TDS is in an auction purchase, and why it is not an extra cost

TDS — tax deducted at source — is a way of collecting tax from the person who receives money by having the payer hold part of it back. On a property sale, the buyer holds back 1% of the price and pays it to the government on the seller’s account. The seller later claims credit for it against their own tax.

So the 1% is not something you pay on top of your bid. If you win at ₹1 crore and TDS applies, ₹99 lakh goes to the bank and ₹1 lakh goes to the government; together they make up the ₹1 crore sale price. What it does change is the route the money takes, which is why the timing has to be agreed with the bank before you pay (see below). Bank sale notices commonly tell the buyer to deduct it.

The ₹50 lakh threshold, the stamp-duty value and agricultural land

From 1 April 2026 the Income-tax Act, 2025 has replaced the 1961 Act. Its Table of payments to residents, at Sl. No. 3(i), covers “any consideration for transfer of any immovable property (other than agricultural land)”. The rate is 1% of the consideration or the stamp-duty value of the property, whichever is higher. The threshold is ₹50 lakh: tax is deducted where the consideration or the stamp-duty value is ₹50 lakh or more (s.393(1), Table Sl. No. 3, Note 3).

• Stamp-duty value means the value adopted or assessable by a State authority for stamp duty — in practice the guidance value in Karnataka or the market value in Telangana (s.2(105)).
• If that value is higher than your winning bid, the 1% is worked on that value, not on the bid.
• Agricultural land outside the urban limits the Act describes is excluded (s.402(2)). In any case SARFAESI does not apply to a security interest in agricultural land (SARFAESI Act s.31(i)), so this exclusion rarely arises in a bank auction.

The old names and the new ones

Sale notices, bank staff and most web pages still use the 1961 references. They point to the same obligations under new numbers.

Who is the seller on the form, and whose PAN is needed

In a SARFAESI sale the bank sells the property as secured creditor; it does not own it. The Act says a transfer by the secured creditor vests the property in the buyer as if the transfer had been made by the owner (SARFAESI Act s.13(6)). For TDS, that makes the owner whose property is being sold the seller — the “deductee” on Form 141 — and the 1% is credited against that person’s PAN.

• Your PAN, as the buyer and deductor. Each co-buyer needs their own.
• The owner’s PAN, and the PAN of each co-owner if the property is held jointly. The bank usually holds these in its loan file; ask the Authorised Officer for them in writing.
• If the owner’s valid PAN cannot be given, the Act requires deduction at the higher of the normal rate and 20% (s.397(2)(b)). Raise this with the Authorised Officer before the auction, not after.

Some notices or branches may suggest the bank’s own name or PAN. Do not file on that basis without written confirmation from the Authorised Officer of how the seller is to be shown.

Joint buyers and joint owners: the aggregate test

Spouses or family members often bid together. For the threshold, the consideration is the total paid by all buyers to all owners for the property (s.393(1), Table Sl. No. 3, Note 1, carrying forward the rule that applied under s.194-IA from 1 October 2024). Two buyers each paying ₹40 lakh for an ₹80 lakh property are both inside the provision, even though neither share reaches ₹50 lakh.

• Each buyer deducts 1% on their own share of the payment and files their own Form 141 from their own PAN login.
• Form 141, Schedule B records every buyer’s and every owner’s share, which must add up to 100%.
• Where there are several owners, one form can cover them if they are in the same category and the deduction falls in the same month; otherwise file separately.

Timing the 1% into the 25% and the balance

The Act requires the deduction at the time the consideration is paid or credited, whichever is earlier (s.393(1)(c)). An auction purchase is paid in stages — the 25% deposit (including the EMD) by the next working day after the win (Rule 9(3)), and the balance by the fifteenth day of confirmation of sale (Rule 9(4)) — so the 1% can fall on each payment.

Sale notices handle this in different ways. Some take the 1% out of the balance; some ask for the full bid and a separate challan. Read the notice, then confirm in writing with the Authorised Officer how much goes to the bank at each stage and how the challan will be credited. A shortfall at either stage can be treated as non-payment under Rule 9, so the arithmetic should be agreed before money moves.

The deduction does not change where the money comes from. The 25%, including the EMD, is always your own money. If part of the balance comes from a home loan, it is sanctioned only after you win, once the lender has reviewed and valued the property, and the lender usually pays the bank directly. The TDS is still yours to deduct and deposit, so agree with the lender and the Authorised Officer which of you pays the 1% and when.

Depositing the tax and the certificate to keep

1. 1

   File Form 141, Schedule B

   Log in to the income-tax e-filing portal with your own PAN. A buyer under Sl. No. 3(i) does not need a TAN (s.397(1)(c)). Enter the property, the stamp-duty value, the consideration, and each buyer’s and owner’s PAN and share.

   s.393(1); s.397(1)(c)

2. 2

   Pay within the due date

   The Income Tax Department’s Form 141 page sets payment within 30 days from the end of the month in which the tax was deducted. Check the due date shown on the form when you file.

   Form 141 help page

3. 3

   Download the certificate from TRACES

   Once the statement is processed, download the TDS certificate, which replaced Form 16B, from the TRACES portal and issue it within the time the Rules set.

   s.395(4)

4. 4

   Give copies to the Authorised Officer

   The bank usually asks for the challan, and later the certificate, as proof that the 1% was paid. Keep the originals with your sale papers.

Late deduction carries interest of 1% a month, and late payment after deduction 1.5% a month, each for any part of a month (s.398(3)). A late statement attracts a fee of ₹200 a day, capped at the tax amount (s.427).

When the owner is a non-resident

The 1% entry covers payments to a resident. If the owner whose property is being sold is a non-resident, tax is deducted instead under s.393(2), Table Sl. No. 17 (formerly s.195), at the rates in force on the part of the payment that is chargeable to tax — in a property sale, broadly the capital gain. The amount is usually well above 1%. The owner may hold a certificate for a lower or nil rate (s.395(1)), or the buyer may ask the Assessing Officer to determine the chargeable portion (s.395(2)).

A resident individual or HUF buyer reports this deduction in Form 141, Schedule E, which the Income Tax Department provides for a non-resident’s property sold to a resident individual or HUF. Ask the Authorised Officer early whether the owner is resident; the bank’s file usually shows it. If you are a non-resident buying from a resident owner, the ordinary 1% rules above apply to you. Because the rate and the chargeable amount depend on the facts, take advice from a tax professional for your own case.

Questions buyers ask

Sources

Statutes, rules and judgments first. Checked as of 17 October 2026; the law and portal practice change, so confirm against the source before relying on a detail.

1. StatuteThe Income-tax Act, 2025 (Act 30 of 2025), Gazette of India, 21 Aug 2025 — ss.2(105), 393, 395, 397, 398, 402, 427
2. Official portalIncome Tax Department — Form 141, challan-cum-statement under s.393(1) and 393(2) (Schedules B and E)
3. Official portalIncome Tax Department — Form 141 user manual (Schedule B fields, multiple buyers and sellers)
4. RulesSecurity Interest (Enforcement) Rules, 2002 — Rule 9
5. StatuteSARFAESI Act, 2002 — full text (s.13(6))