TDS on Purchase of Immovable Property

TDS (Tax Deducted at Source) is applicable on the purchase of property. In the context of property transactions in India, TDS is primarily governed by Section 194-IA of the Income Tax Act, 1961.

Here are the key points to understand about TDS on the purchase of property in India:

  1. Applicability: TDS is applicable when an individual or a Hindu Undivided Family (HUF) purchases immovable property (other than agricultural land) from a resident seller. The buyer is responsible for deducting TDS at the time of making the payment to the seller.
  2. Threshold Limit: TDS is applicable if the transaction value of the property is Rs. 50 lakhs or more. The TDS rate is 1% of the total sale consideration.
  3. Time of Deduction: The buyer is required to deduct TDS at the time of credit of the amount to the seller or at the time of payment, whichever is earlier.
  4. PAN of Buyer and Seller: Both the buyer and the seller should have a PAN (Permanent Account Number). If the seller does not have a PAN, TDS will be deducted at a higher rate of 20%.
  5. Filing TDS Return: The buyer is required to deposit the deducted TDS amount to the government and file a TDS return using Form 26QB within the specified time frame.
  6. Challan Payment: The buyer can make TDS payment using Form 26QB through online or offline modes. Online payment can be made through the TIN-NSDL website.
  7. TDS Certificate: The buyer should issue a TDS certificate (Form 16B) to the seller. The TDS certificate can be downloaded from the TRACES website.

It’s important to note that TDS on the purchase of property is just one aspect of the overall tax implications related to real estate transactions. Both the buyer and the seller should be aware of other tax implications such as capital gains tax, stamp duty, and registration charges.

It’s advisable to consult with a tax professional or chartered accountant for accurate and up-to-date information based on the latest amendments to the tax laws. You can also consult us for any query related to TDS on purchase of property transaction.

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