Buying a property is one of the biggest financial decisions most people make. Whether it is a house, flat, plot, or commercial property, buyers should carefully verify all documents before completing the purchase.
Checking documents such as the sale deed, ownership records, and title clearance can help avoid legal problems later. Apart from paperwork, buyers also need to follow certain tax rules to stay compliant and avoid penalties.
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TDS Applies on Property Deals Above ₹50 Lakh
If you buy an immovable property from a resident Indian for ₹50 lakh or more, TDS (Tax Deducted at Source) rules come into effect.
Under Section 194-IA of the Income Tax Act, the buyer must deduct 1% TDS from the property’s sale value and deposit it with the government.
This deduction must be made at the time of payment or when the amount is credited to the seller, whichever happens first.
Many buyers are unaware that this responsibility lies with them, not the seller.
Important Rules Buyers Must Know
According to tax rules, TDS is calculated on the entire sale amount and not just the amount above ₹50 lakh.
For example, if a property costs ₹60 lakh, the 1% TDS will be calculated on the full ₹60 lakh.
If the payment is being made in installments, the buyer must deduct 1% TDS from every installment at the time of payment.
Another important point is that a TAN (Tax Deduction and Collection Account Number) is not required for this process. However, the buyer and seller must provide their PAN details.
No PAN? TDS Can Jump to 20%
The Income Tax Department has clarified that if the seller does not provide a PAN, the TDS rate increases sharply from 1% to 20%.
Because of this, buyers should ensure that the seller’s PAN details are available before making any payment.
Form 26QB Must Be Filed Online
To complete the TDS process, buyers must submit Form 26QB online through the TIN-NSDL portal.
The rule applies to most immovable properties, including residential houses, commercial buildings, and plots of land. However, agricultural land is exempt and does not attract TDS under these provisions.
Failing to deduct or deposit TDS correctly can lead to penalties and additional tax liabilities, making it important for buyers to follow the rules carefully.