TDS on Property Purchase in India: A Comprehensive Guide

TDS on Property Purchase in India: A Comprehensive Guide

TDS, or Tax Deducted at Source, is a mechanism used by the Indian government to collect income tax. In property transactions, it mandates that the buyer deduct a certain percentage of the sale amount and pay it to the government. This ensures that tax is paid on the transaction.

Key Points on TDS on Property Purchase

  • Applicability: TDS is applicable when the property's sale consideration exceeds ₹50 lakh.
  • Rate: The buyer must deduct TDS at 1% of the total sale consideration.
  • Buyer's Responsibility: The buyer is responsible for deducting the TDS and paying it to the government.
  • Seller's Responsibility: The seller is responsible for providing their PAN to the buyer.
  • Property Types: TDS applies to various properties, including residential, commercial, and land (excluding agricultural land).

Process of TDS Deduction and Payment

  1. Deduct TDS: The buyer deducts 1% of the sale consideration at the time of payment to the seller.
  2. Obtain Seller's PAN: The buyer must obtain the Permanent Account Number (PAN) of the seller. If the seller doesn't provide PAN, TDS may be deducted at a higher rate (20%).
  3. Pay TDS to the Government: The buyer pays the TDS to the government using Form 26QB. This form contains details of the transaction, the buyer, and the seller.
  4. Issue TDS Certificate: The buyer issues Form 16B to the seller. This certificate serves as proof that TDS has been deducted and paid to the government.

Visual Representation of the TDS Process

Image of TDS deduction and payment process in a property transaction 

Important Forms

  • Form 26QB: This form is used to pay TDS to the government.
  • Form 16B: This is the TDS certificate issued by the buyer to the seller.

Threshold Limit

 A clean, professional blog header image with subtle visual elements representing both individual and business services, using a complementary color palette to the collection images

TDS is applicable only if the sale consideration of the property is more than ₹50 lakh.

Consequences of Non-Compliance

  • Interest: The buyer may be liable to pay interest on the TDS amount not deducted or paid.
  • Penalty: The tax authorities may impose a penalty on the buyer for non-compliance.

By understanding and adhering to the TDS regulations, both buyers and sellers can ensure a smooth and legally compliant property transaction.


Solutions We Provide:

In case of delay how to manage the compliances, we file it with due care.

Generating Form 16B is also crucial which we are expert in

Back to blog