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What is TDS on property purchase above ₹50 lakh?
TDS (Tax Deducted at Source) on property purchase above ₹50 lakh is a mandatory deduction under Section 194IA of the Income Tax Act. When a buyer purchases an immovable property (other than agricultural land) for a consideration of ₹50 lakh or more, the buyer must deduct 1% TDS from the payment to the seller and deposit it with the government.
Key Details of Property Purchase TDS
- TDS Rate: 1% of the property sale consideration.
- Threshold: Applicable when total consideration ≥ ₹50 lakh.
- Who Deducts? The buyer of the property.
- Who Bears? Deducted from the seller's payment.
- Section: Section 194IA of Income Tax Act.
- Form: Form 26QB (for filing TDS return).
- Time to Pay: Within 30 days from the end of the month of payment.
How TDS Works in Practice
- Buyer agrees to purchase property at ₹80 lakh.
- Buyer deducts 1% TDS = ₹80,000.
- Buyer pays seller: ₹80,00,000 – ₹80,000 = ₹79,20,000.
- Buyer deposits ₹80,000 to government via Form 26QB within 30 days.
- Seller receives TDS certificate (Form 16B) and can claim TDS credit in ITR.
TDS on property purchases above ₹50 lakh is a straightforward but mandatory compliance requirement. Buyers who fail to deduct or deposit TDS can face penalties and interest, while sellers can easily claim TDS credit in their tax returns.
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