How TDS on property works
Section 194-IA of the Income Tax Act makes the buyer responsible for deducting tax at source on most property purchases. It is a way for the government to track high-value property transactions.
- Applies when the property value is Rs 50 lakh or more (agricultural land is excluded).
- The rate is 1% of the higher of the agreement value or the stamp duty value, with no extra cess or surcharge.
- The buyer deducts it from the seller's payment, not in addition to the price.
The buyer's responsibility
The buyer deposits the deducted TDS with the government using Form 26QB within 30 days from the end of the month of deduction, then issues Form 16B to the seller as proof. PAN of both buyer and seller is mandatory. If the seller does not provide a PAN, TDS jumps to 20%.
Below Rs 50 lakh
If the total sale value is below Rs 50 lakh, no TDS is required under this section. Note the threshold is on the property value, not the instalment, so part-payments on a Rs 50 lakh-plus property still attract TDS.
Indicative estimate for Section 194-IA on resident sellers. Different rules apply when the seller is a non-resident (Section 195). Confirm with a chartered accountant or tax professional before deducting and depositing.