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If you're buying a property in India that's worth ₹50 lakhs or more, the law requires you to deduct 1% TDS (Tax Deducted at Source) from the payment you make to the seller and deposit it with the Income Tax Department. This rule, introduced under Section 194-IA of the Income Tax Act, applies to both residential and commercial property purchases, and is mandatory even if the seller doesn’t have any tax liability or if the transaction is between relatives. The buyer is responsible for deducting the TDS, submitting Form 26QB, and issuing a TDS certificate (Form 16B) to the seller.
This process, commonly referred to as TDS on Property Transactions, may seem like a minor step in a large purchase, but it holds significant legal and financial importance. Failing to deduct or deposit the TDS on time can result in interest, penalties, and notices from the Income Tax Department — all of which can delay registration, home loan disbursement, or future resale. Many buyers are unaware that even if the property is jointly purchased, TDS needs to be deducted in proportion to each buyer’s share, and payment must be made for each PAN separately if there are multiple sellers.
More importantly, the TDS deposited reflects in the seller’s Form 26AS, acting as proof of transaction for their capital gain computation. Incorrect TDS filing or skipped payments may impact the seller’s ITR, affect their refund eligibility, or trigger mismatch notices from CPC. So, whether you're a first-time homebuyer or an investor closing a high-value deal, getting the TDS process right is not optional — it’s essential.
As per Indian law, if you’re buying a property worth ₹50 lakhs or more, you must deduct and pay 1% TDS. Doing this properly saves you from legal trouble later.
Failing to deduct or delay TDS can result in penalties and interest from the Income Tax Department. Timely compliance helps you avoid these extra costs.
Deducting and paying TDS ensures that both buyer and seller have proper records of the transaction. This helps if any issues arise in the future.
When the buyer pays TDS and files Form 26QB, they get a TDS certificate (Form 16B). This certificate serves as proof that tax has been paid — useful in legal and financial matters.
The seller can view the TDS in their Form 26AS and claim credit for it while filing their income tax return, which reduces their final tax burden.
Most banks and financial institutions require proof of TDS payment before releasing the home loan amount. Filing TDS correctly ensures a smooth loan processing experience.
Some sub-registrar offices ask for Form 26QB or proof of TDS before completing registration. Filing TDS ensures your registration process doesn’t get stuck.
If you ever want to sell the property in future, having complete and compliant records (like TDS and registration) makes the resale process smoother.
When TDS is deducted and filed properly, it shows both parties are honest and following the rules, reducing the chances of disputes or mistrust.
TDS (Tax Deducted at Source) on property transactions refers to the tax deducted by the buyer while purchasing property. According to Section 194IA of the Income Tax Act, TDS is deducted at the rate of 1% on the transaction value if the property value is above Rs.50 lakh. CallmyCA helps buyers and sellers understand their TDS obligations and ensures the correct amount is deducted and paid.
The buyer of the property is responsible for deducting TDS while making the payment to the seller. CallmyCA helps buyers understand the process of deduction and filing the TDS return to ensure compliance with tax laws.
The TDS rate on property transactions is 1% of the sale consideration, provided the transaction value is above Rs.50 lakh. If the buyer fails to deduct TDS, they may be held liable for the penalty and interest. CallmyCA ensures that TDS is deducted correctly and on time.
The TDS amount must be deposited within 30 days from the end of the month in which the payment for the property is made. CallmyCA guides you through the timely deposit process, ensuring no penalties for late submission.
If the buyer fails to deduct or deposit TDS, they may face penalties and interest for non-compliance. CallmyCA ensures that the buyer is aware of their TDS obligations and helps prevent such issues by guiding them through every step of the process.
If excess TDS is deducted, the seller can claim a refund by filing their Income Tax Return (ITR). CallmyCA assists the seller in claiming the refund by filing the ITR correctly and ensuring all excess TDS is refunded.
Form 16B is the TDS certificate issued by the buyer to the seller after the TDS has been deducted and deposited with the government. It serves as proof of TDS deduction. CallmyCA helps the buyer issue this form and ensures the seller receives it promptly.
TDS is deducted only on the sale of property and not on rentals or lease agreements. The sale price must exceed Rs 50 lakh for the TDS to apply. CallmyCA ensures that only applicable property transactions are subject to TDS, helping you avoid unnecessary deductions.
The seller cannot avoid TDS deduction on property sales above Rs.50 lakh unless the property is exempt from capital gains tax, such as under Section 54 for reinvestment in a new property. CallmyCA guides both buyers and sellers on available exemptions and ensures proper documentation for claiming exemptions.
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