What Is TDS on Property?
TDS on property refers to tax deducted at source by the buyer at the time of purchasing immovable property (excluding agricultural land).
It is applicable under Section 194-IA of the Income Tax Act.
When Is TDS on Property Applicable?
TDS must be deducted when:
- Property value exceeds ₹50 lakh
- Buyer is a resident of India
- Seller is a resident Indian
- Transaction involves land, building, or both
TDS is not applicable on agricultural land.
Rate of TDS on Property
| Particulars | Rate |
|---|---|
| TDS Rate | 1% |
| Deduction Time | At payment or credit, whichever is earlier |
| PAN Not Provided | 20% |
TDS is calculated on the total sale consideration, not just the excess over ₹50 lakh.
Step-by-Step Process of TDS on Property
Step 1: Verify Property Value and Applicability
Confirm:
- Sale value exceeds ₹50 lakh
- Seller is resident Indian
- Property is not agricultural land
Only then does Section 194-IA apply.
Step 2: Collect Seller’s PAN
Ensure seller’s:
- Correct PAN is available
- PAN matches Income Tax records
Incorrect PAN leads to higher TDS and errors.
Step 3: Calculate TDS Amount
Compute:
- TDS = 1% × Sale Consideration
Example:
If property value is ₹80 lakh → TDS = ₹80,000
Step 4: Deduct TDS at Time of Payment
Deduct TDS:
- At the time of making payment
- On each installment, if payment is in parts
Buyer must deduct before releasing full payment.
Step 5: File Form 26QB Online
File Form 26QB (challan-cum-statement) on the Income Tax portal by providing:
- Buyer and seller details
- PAN of both parties
- Property details
- Sale consideration and TDS amount
No TAN is required for this filing.
Step 6: Pay TDS Amount
Pay the TDS online using:
- Net banking
- Debit card
Payment is linked directly with Form 26QB.
Step 7: Download TDS Certificate (Form 16B)
After payment:
- Download Form 16B from TRACES
- Issue Form 16B to seller within 15 days
This acts as proof of TDS deduction.
Due Date for TDS on Property
- Form 26QB must be filed within 30 days from the end of the month in which TDS is deducted
- Form 16B must be issued within 15 days from due date of Form 26QB
Late filing attracts interest and penalty.
Penalty and Interest for Non-Compliance
| Default | Consequence |
|---|---|
| Late deduction | Interest @ 1% per month |
| Late payment | Interest @ 1.5% per month |
| Late filing | Fee ₹200 per day (max TDS amount) |
Compliance on time avoids heavy costs.
Common Mistakes to Avoid
- Not deducting TDS on installments
- Incorrect PAN entry
- Delay in filing Form 26QB
- Forgetting to issue Form 16B
Professional handling reduces errors.
Conclusion
TDS on property is a buyer’s responsibility and applies even to individuals who are otherwise not tax filers. Following the correct step-by-step process ensures smooth property registration, avoids penalties, and keeps the transaction fully compliant under income tax laws.
Disclaimer
This article is for informational purposes only and does not constitute legal, tax, or professional advice. TDS provisions, rates, and procedures are subject to change as per applicable laws and notifications. Readers are advised to consult qualified professionals before making any tax or property-related decisions.