Buying a property is one of the biggest financial decisions most people make. Whether it’s a house, plot, or commercial building, it is important to verify all documents carefully before making the purchase.
Checking documents such as the sale deed, ownership records, and title clearance can help you avoid legal problems in the future. Along with legal checks, buyers must also follow tax rules related to property transactions.
TDS Is Mandatory on Property Deals Above ₹50 Lakh
If you purchase an immovable property worth ₹50 lakh or more from a resident Indian, you are required to deduct Tax Deducted at Source (TDS).
Under Section 194-IA of the Income Tax Act, the buyer must deduct 1% TDS on the total sale value and deposit it with the government. The tax has to be deducted at the time of payment or credit, whichever happens first.
Many buyers are unaware that this responsibility lies with them, and failing to comply can lead to penalties and legal issues.
Important Rules Buyers Should Know
A TAN (Tax Deduction and Collection Account Number) is not required for deducting TDS on property purchases. However, both buyer and seller must provide their PAN details.
If the seller does not have a PAN card, the TDS rate increases from 1% to 20%, according to Income Tax Department rules.
Another important point is that TDS is calculated on the entire property value, not just the amount above ₹50 lakh.
If the property payment is made in installments, 1% TDS must be deducted from each installment at the time of payment.
How to Deposit TDS
To complete the process, buyers must fill and submit Form 26QB online through the TIN-NSDL portal.
These TDS rules apply to residential properties, commercial buildings, and land. However, agricultural land is exempt from this requirement and no TDS needs to be deducted on such purchases.
Following these rules can help buyers avoid penalties and ensure a smooth property transaction.
