How the money actually moves when you buy land.

Checked on 8 August 2026. Rates, rules and portals in Karnataka change, sometimes at short notice. Treat this as an orientation, not as advice on your own transaction, and have your advocate confirm anything that decides money.

Token, advance and the agreement

The usual sequence is a small token to take the property off the market, then an advance against a written sale agreement, then the balance at registration.

Never pay an advance without a written sale agreement. It should state the parties, the survey number and extent, the total consideration, what has been paid, the time allowed to complete, who bears which cost, and what happens to the advance if either side fails to perform. An advance paid on an understanding is an advance you may spend years recovering.

Keep the token small until your advocate has seen the documents. The pressure to pay quickly on a property that is supposedly about to go to somebody else is the oldest technique there is.

Pay through the banking system

Use RTGS, NEFT or a banker's cheque so that every rupee is traceable to a bank record with a date. This protects both sides and it is what your advocate will want to see if anything is ever disputed.

The law places hard limits on cash. Under section 269SS a person may not accept ₹20,000 or more in cash in connection with the transfer of immovable property, and section 269ST bars receiving ₹2 lakh or more in cash in a single transaction. The penalties fall on the person receiving the cash and they are severe. Anyone proposing a large cash component is proposing your problem as much as theirs.

TDS, and the exemption that matters here

Under section 194-IA, a buyer of immovable property worth ₹50 lakh or more must deduct 1 per cent TDS from the payment to a resident seller, calculated on the consideration or the stamp duty value, whichever is higher, and deposit it using Form 26QB within thirty days of the end of that month.

There is an exception that matters a great deal in this district. Section 194-IA applies to immovable property other than rural agricultural land. Rural agricultural land is not a capital asset for these purposes, so the TDS obligation does not arise on it, irrespective of value.

Whether a specific holding is rural agricultural land turns on its classification and its distance from municipal limits, which is a question of fact for that survey number, not a general rule. Land inside municipal limits, or within a specified distance of them, does not qualify even if coffee is growing on it. Have your advocate and a chartered accountant confirm the position on your property before you assume either way, because deducting when you should not and failing to deduct when you should both create work.

If the seller is an NRI

The position changes entirely. Payments to a non-resident seller fall under section 195 rather than 194-IA, the rates are far higher, and the rural agricultural land exemption does not read across. This is specialist territory and needs a chartered accountant from the outset, not at the end.