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.
Common questions
How much advance should I pay for land in Chikkamagaluru?
Keep the token small until your advocate has seen the documents, and pay a meaningful advance only against a written sale agreement that states the consideration, the time to complete and what happens to the advance if either side fails to perform. The pressure to pay quickly because somebody else is interested is the oldest technique in the business.
Can I pay for land in cash?
Not in any meaningful amount. Section 269SS prohibits accepting ₹20,000 or more in cash in connection with a transfer of immovable property, and section 269ST bars receiving ₹2 lakh or more in cash in a single transaction. The penalties fall on the recipient and are severe. Use RTGS, NEFT or a banker's cheque so every payment is traceable.
Do I have to deduct TDS when buying a coffee estate?
Section 194-IA requires a buyer to deduct 1 per cent where the consideration or stamp duty value is ₹50 lakh or more, but it applies to immovable property other than rural agricultural land, and rural agricultural land is outside it regardless of value. Whether a particular estate qualifies depends on its classification and its distance from municipal limits, so confirm it for that survey number with an advocate and a chartered accountant rather than assuming.
What is Form 26QB?
The challan-cum-statement used to deposit TDS deducted under section 194-IA on a property purchase. It is due within thirty days from the end of the month in which the deduction was made.
What if the seller is an NRI?
Different law applies. Payments to a non-resident seller fall under section 195, not 194-IA, the rates are considerably higher, and the rural agricultural land exemption does not carry across. Involve a chartered accountant from the beginning rather than at the end.
Should the sale agreement be registered?
Discuss it with your advocate. A registered agreement carries more weight and appears on the encumbrance certificate, which protects a buyer who has paid a substantial advance, but it attracts duty. The right answer depends on how much you are paying up front and how long completion will take.
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