TDS on Property Purchase: What You Need to Know Before Buying one

TDS on Property Buying: What You Need to Know Before Buying one

Are you gearing up to buy a property? Exciting times ahead! Do you know that buying a property also means paying TDS to the Government depending upon the value and type of property? In this blog, we dive into what you need to know about TDS when it comes to buying a property.

Why Do You Need to Pay TDS Upon Buying a Property?

The purpose of TDS collection by the Government is to collect the tax when the income is generated and avoid tax evasion. It’s required to be deposited by the person making the payment. So, if you are buying the house, the TDS has to be deducted and filed by you.

You Need To Pay TDS On Property Purchase Above 50 Lakhs

Now, when does TDS come into play for property transactions? If you’re purchasing an immovable property (land or building) from an Indian tax resident and the value exceeds Rs. 50 lakhs, you’re required to deduct TDS. Also, if the payments are being done in installments, you have to deduct and deposit the TDS at the time of paying each installment.

What’s the rate of TDS? Currently (April 2024), it stands at 1% on the value of the property. The value of the property is not just the agreement value. You should also add various charges like parking fees, maintenance fees, and any other charges incidental to the sale to the property value while calculating the TDS.

The value of the property for TDS calculation should be higher than the agreement value or the stamp duty value of the property.

TDS provisions don’t apply to transactions below Rs. 50 lakhs or rural agricultural lands situated beyond certain municipal limits.

Pay TDS On Property Using Form 26QB

When do you need to deduct and pay TDS? You have to deduct the TDS at the time of making the payment to the seller. TDS has to be paid to the Government and Form 26QB should be filed within 30 days from the end of the month in which you deducted the TDS. For an under-construction property, TDS is applicable for each instalment. You can deposit the TDS online via the e-filing portal.

What if you fail to deposit the TDS or file 26QB? you’ll be liable to pay 1.5% interest per month for every month of delay for not depositing the TDS. Plus, if you’re late in filing Form-26QB, a penalty of Rs. 200 per day is applicable for each day of delay. This penalty will not exceed the total TDS payable.

In a nutshell, depositing TDS and filing 26QB if you are buying a property is crucial. Many a times buyers ignore this crucial concept and end up paying penalties which can burden their finances.


To Pay TDS On Property Purchase Above 50 Lakhs?

Answer: You need to pay TDS if the transaction exceeds Rs. 50 Lakhs. Go to the e filing portal on the website of the Income Tax Department of India and use form 26QB tro pay the TDS. Remember, you need to pay the TDS within 30 days from the end of the month in which you deducted the TDS to avoid incurring penalties.

Who Pays TDS While Buying a Property?

Answer: It is the buyer who has to pay the TDS. By law, it is the person who makes the payment who has to deduct and pay the TDS.

How much TDS To Be Deducted On Purchase of Property?

Answer: Currently, the purchaser needs to deduct 1% of the total value of the property, and deposit the same through the e-filing portal.


~Nischay Avichal

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