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What is the TDS rate on sale of property?

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Section - 194IA, T.D.S rate on sale of property?

(1.) 194-IA. (1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one percent T.D.S of such sum  [or the stamp duty value of such property, whichever is higher,] as income-tax thereon.

(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an  [immovable property and the stamp duty value of such property, are both,] less than fifty lakh rupees.

 (3) The provisions of section 203A shall not apply to a person required to deduct tax by the provisions of this section.

Explanation.—For this section,—

"agricultural land" means agricultural land in India, not being land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

  "consideration for transfer of any immovable property" shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee, or any other charges of similar nature, which are incidental to the transfer of the immovable property;

 "immovable property" means any land (other than agricultural land) or any building or part of a building;

  "stamp duty value" shall have the same meaning as assigned to it in clause (f) of the Explanation to clause (vii) of sub-section (2) of section 56.



Requirements under Section 194IA (T.D.S)of Income Tax :

The Section 194 IA of the income tax stipulates that-

1.     TDS on the property is always being deducted by the buyer and never by the seller.

2.    There are no applicable TDS under section 194IA in case the transaction is worth less than Rs. 50 lakhs.

3.  TDS on any property must always be paid in the full amount of the sale and not the sum which is above Rs. 50 lakhs. For instance, if you purchase a property that is of a value of  Rs. 80 lakhs, TDS would be calculated on Rs. 80 lakhs and not on the extra Rs. 30 lakhs.


4.    The payments are made in installments; TDS would be deducted on every installment.

5.    Since September’19, the payments like the club membership, advance fees, car parking,  electricity fees, and maintenance fees have also been compromised under consideration for immovable property. This implies that such charges which are attached to a property will also be added to the cumulative taxable total.

6.    PAN cards of both buyer and seller are mandatory for the TDS on the property deduction that is under Section 194IA.

7.   In case a buyer is unable to obtain a seller’s PAN details, then, that case, the TDS fairly rises to 20%.

8.    The TDS on an immovable property must be paid using Form 26QB in 30 days from the month-end when the TDS was deducted.

9.    The buyer of the property is required to obtain Form 16B and issue the form to a seller.

TDS is charged for purchasing a property :

With the initiative of the Government to keep a check on the extensive usage of black money in numerous immovable property transactions, the government of India has also introduced a law that any purchaser of the property would have to deduct tax at the source, i.e. TDS on the property at the time of paying the seller for the concerned property.



Under Section 194IA of the Income Tax Act, a buyer is necessarily required to deduct a TDS at a rate of 1% of the sales. This is indeed applicable in case the value of the payment is either Rs. 50 lakh or exceeding Rs. 50 lakhs.

The Section covers commercial property, residential property, and land as well.

You must note that the transactions that relate to the buying of agricultural land are not covered under this particular provision. The buyer is supposed to deduct the TDS on the concerned property at the time of crediting the agreed amount to the seller’s account or the time of payment, which one appears to be earlier.

How is TDS interest paid on sale of property?

You can pay the TDS, interest amount, and late payment cost as soon as you get a tax notice to avoid penalties. If no tax was deducted, you must pay interest at the rate of 1% per month, and if tax was deducted but not paid to the government, you must pay interest at the rate of 1.5% per month. According to Section 234E, there is a Rs. late filing fee.

How do I avoid TDS when selling a house?

It's also vital to remember that 1% TDS only applies if the seller is an Indian resident. The rate of TDS will change if the seller is an NRI, or a non-resident of India.

TDS on Sale of Property by NRI would be levied even if the Transaction Value was less than Rs. 50 lakhs. TDS on Sale of Property by NRI would be 20% + Surcharge + Cess.

Reduce TDS Liability by submitting the Form 13 Application. To reduce TDS on a property sale, an NRI must submit an application in Form 13 to the income tax department, which will then issue a certificate for Nil/Lower TDS Deduction.


Tax deducted on Property to be deposited with Govt

Form 26QB, which must be presented at the time of payment, must contain all information pertaining to the transaction and TDS on Property.


How to Deposit TDS on Property?

The purchaser of property must deduct TDS from the purchase price and deposit the remaining TDS with the income tax department. Form 26QB must be submitted with all necessary information, including:-

  1. PAN Number of Buyers.
  2. Postal Code for the Buyer Number of Sellers Residential Status of Sellers Sellers' Addresses of. Transferred Property.
  3. Payment Date Payment Amount.
  4. Date of the Accord.
  5. Value of the entire transaction.

The form will ask for your selection for depositing TDS on property with the income tax authority once all the necessary information has been provided. If you choose to pay the TDS on Property online through net banking, this Form 26QB will automatically be generated.

Uttam Bisht

Mr. Uttam Bisht is a partner with the Delhi Branch of the firm. He has more than 8 years of experience and specializes in Statutory Audit. Expertise in Tax audit of various enterprises. Extpertise internal audit of Private enterprises. Audit planning through business understanding, preliminary analytical procedures, determining materiality levels, and preparation of audit program and pre-audit checklist . He is well conversant with the auditing standards issued by ICAI. .

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