TDS On Sale Of Immovable Property In India: Rates, Rules, And Compliance Guide

TDS on the sale of property refers to the tax deducted at source by the buyer when purchasing immovable property such as land, residential flats, or commercial units. As per Section 194-IA of the Income Tax Act, buyers are required to deduct tax before making payment to the seller when the property value exceeds a specified threshold.

This provision was introduced to improve tax compliance in real estate transactions and ensure reporting of high-value property deals to the Income Tax Department.

According to income tax reporting trends, real estate transactions account for a large share of high-value disclosures, making TDS a critical compliance requirement.

Why Is TDS Deducted On Property Sales?

TDS for immovable property serves multiple regulatory purposes:

• Ensures transparency in real estate transactions

• Helps track capital gains arising from property sales

• Reduces tax evasion in high-value property deals

For buyers investing in flats in Aurangabad or flats in Paithan Road, TDS compliance is mandatory when the transaction value crosses the prescribed limit.

Why Is TDS Deducted On Property Sales?

Standard Rate Of TDS:

For resident Indian sellers:

• 1% TDS on property purchase is applicable if the property value exceeds INR 50 lakh

• The TDS is calculated on the total sale consideration, not only on the amount above INR 50 lakh

This provision is commonly referred to as property above 50 lakhs TDS under Section 194 IA.

Exception For Non-Resident Sellers

In cases involving non-resident sellers, TDS on the sale of property by NRI is governed by Section 195 TDS on sale of immovable property. Key points include:

• Higher TDS rates based on capital gains classification

• Applicability of surcharge and cess

• Use of a TDS calculator for the sale of property by nri for accurate estimation

As a result, TDS on immovable property for NRI transactions requires additional diligence.

Procedures For Deducting TDS On Sale Of Property

The responsibility of deducting and depositing TDS lies entirely with the buyer. The process involves:

• Deducting tax at the applicable rate at the time of payment

• Depositing the deducted amount with the government

• Filing the prescribed TDS statement

Non-compliance can result in penalties even if the seller reports the transaction on their tax return.

How To File TDS on the Sale Of Property?

Step-By-Step Filing Procedure:

1. Form 26QB: Buyers must file 26QB TDS, which is a challan-cum-statement specifically designed for TDS on property transactions.

2. Payment Of TDS: The deducted amount must be paid online through the authorised NSDL platform.

3. Generating Challan: Upon successful payment, a challan is generated as proof of deposit.

4. Filing Details And Certificate: After filing Form 26QB buyers can download Form 16B and provide it to the seller as TDS confirmation.

Key Dates For Filing TDS On Property Sale

• TDS Payment Deadline: Within 30 days from the end of the month in which TDS is deducted

• Form 26QB Submission: Within the same 30-day timeline

Tax compliance data indicates that delays in filing are among the most common issues in property transactions.

Penalty For Non-Deduction Or Late Deduction Of TDS

Failure to comply can attract:

• Interest under Section 234E for late filing

• Penalties under Section 271C for non-deduction

• Delays in property registration or future resale

This can be particularly disruptive for buyers dealing with Builders in Aurangabad or ongoing residential projects.

How To Claim TDS Deducted On Sale Of Property?

Sellers can claim TDS on the sale of property by:

• Verifying the credited amount in Form 26AS

• Using Form 16B while filing their income tax return

The credited TDS is adjusted against the seller’s final tax liability.

Key Documents For TDS On Sale Of Property

To ensure proper compliance, the following documents are required:

• PAN cards of both buyer and seller

• Sale agreement or registered sale deed

• Filed Form 26QB acknowledgement

Accurate PAN details are essential to avoid mismatches and excess deductions.

Conclusion

Understanding TDS for immovable property is a crucial part of any real estate transaction, particularly as property investments continue to grow in cities like Aurangabad. Awareness of applicable rates, procedures, and timelines helps buyers and sellers avoid penalties and complete transactions smoothly.

For homebuyers considering premium residential developments such as The Solitairee, clarity on tax obligations adds confidence to the decision-making process and supports a transparent property purchase experience.