TDS on Purchase of Property

TDS on Property

TDS (Tax Deducted at Source) on the purchase of property is a mechanism implemented by tax authorities to ensure the deduction of taxes at the time of property transactions. When an individual or entity buys immovable property, the buyer is required to deduct a specified percentage of the property’s value as TDS and remit it to the government. This TDS serves as an advance tax payment on the capital gains that the seller may incur upon the sale of the property.

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.

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