TDS on Sale of Property
Understanding the Tax Deducted at Source under
Section 194-IA for property transactions is crucial
for buyers to ensure compliance and avoid
penalties.
Applicability of Section 194-IA
Effective Date Buyers Subject
Section 194-IA became active from The provision applies to buyers of
June 1, 2013, outlining the immovable property excluding
responsibilities for TDS on property agricultural land.
sales.
Sale Threshold Definition of Property
TDS is applicable when the sale Property includes buildings, parts of
consideration is ₹50 lakh or more. buildings, or land but excludes
agricultural land.
Responsibility and TDS Rate
1 Deduction 2 Rate of Deduction 3 Multiple Parties
Responsibility The TDS rate is fixed Even if multiple
TDS is to be deducted at 1% of the total sale parties are involved, if
by the buyer before consideration. the total exceeds ₹50
payment to the seller, lakh, TDS applies.
not by the seller.
TDS on Installment Payments
Deduction Timing
2 TDS is deducted at the
time of payment or
Installment Payments credit, whichever occurs
1 first.
TDS must be
deducted on each
installment payment Consistent Compliance
to the seller. 3
This requirement ensures
that TDS obligations are
fulfilled for the entire
property transaction.
Consideration for Additional Charges in TDS
Inclusion of Charges Total Consideration Comprehensive
TDS applies to For TDS calculation, Deduction
additional charges like the total consideration Buyers need to
club fees, parking fees, includes both the sale account for all
and utility charges as price and additional components to ensure
per the 2019 charges. accurate TDS
amendment. deduction.
Example – How TDS is Calculated
TDS Amount
2
The applicable TDS will
Example Calculation be 1% of ₹59 lakh, which
equals ₹59,000.
For a property sold at 1
₹55 lakh with
additional charges Deposit Requirement
totaling ₹4 lakh, the
total consideration is 3 This TDS amount must
₹59 lakh. be deducted and
deposited with the
Income Tax Department.
PAN and TAN Requirements
TAN Not Required Using PAN for Deposit Seller's PAN Mandatory
Buyers do not need a The TDS can be Failure to obtain the
Tax Deduction Account deposited using the seller's PAN leads to a
Number (TAN) to buyer's PAN. higher TDS deduction of
deposit TDS under 20% as per Section
Section 194-IA. 206AA.
Filing Form 26QB
Due Date
2
Filing is due within 30
days after TDS
Filing Requirement 1 deduction.
TDS must be
deposited using Form
26QB. Online Filing
3 Form 26QB can be filed
online via TIN NSDL or
TRACES.
Issuance of Form 16B
Form 16B serves as the TDS certificate provided by the buyer to the seller after
TDS has been deposited. Buyers must ensure this is done within the specified
timeline to maintain compliance.
1 2 3
TDS Certificate Issuance Availability Timeline Responsibility
Buyers must issue Form The certificate is usually It is the buyer’s
16B (TDS Certificate) to available 10-15 days responsibility to issue
sellers after depositing after filing Form 26QB. this certificate as proof
TDS. of TDS deduction to the
seller.
