TDS on Sale of a Property (SEC 194IA)

TDS to be paid on proceeds from a Sale of a Property

About TDS on Sale of Property

  • Applicable on Transactions taking place after 1st June 2013.
  • A person who is purchasing non-agricultural property from a resident is required to deduct TDS @ 1% from the amount payable in this behalf. If the property value is less than Rs. 50 lakhs then TDS is not required to be deducted. Irrespective of the type of property, whether house property or commercial property all are covered under this section except agricultural land.
  • TDS should be deducted on the total amount paid to the seller excluding taxes.
  • For Example:

    ParticularsRupees
    Transaction value of the property purchased60,00,000/-
    Service Tax on property2,00,000/-
    Vat on property60,000/-
    Total amount payable62,60,000/-

    In the above example TDS should be deducted on the transaction value of property. That is on Rs. 60,00,000 and not on Rs.10,00,000 that is the amount exceeding Rs.50,00,000. Therefore, The amount of TDS will be 1% of Rs. 60,00,000 that is Rs.60,000.


TAN registration

Tan registration for the buyer of property deducting tax under section 194IA is not mandatory. A buyer can directly pay TDS using his Pan number and form 16B is to be given to seller which can be generated from TDS traces site.


Due date for payments of tax deducted

Due dates are same as applicable to all other sections of TDS. It means TDS should be deducted by the buyer at the time of making payment and has to be deposited within 7 days from the end of the month.


Form 26QB

A Challan cum form namely 26QB is to be submitted to the government at the time of payment. This form should contain all the details of transaction, Such as details of property, Pan Numbers of parties and the amount of TDS deducted.

  • Pan Card of both buyer and seller is mandatory for filing of 26QB.
  • In case of seller do not have the pan card then TDS should be deducted @ 20%.

TDS on installments

  • In case, any loan taken to purchase the property, TDS should be deducted on the amount paid to seller and not on installments paid to the lender.
  • If any advance payments are made to the seller of the property, TDS should be deducted on those advance payments as well.
  • If the amount is paid in installments to the seller then on each installment TDS should be deducted if the purchase value of property exceeds 50 Lakhs.

More than 1 buyer and 1 seller

  • In case of more than one buyer and one seller form 26QB is to be filed for each buyer seller combination.

  • For Example:

    In case of 2 buyers and 2 sellers, four forms have to be submitted.