Understanding TDS Implications on Purchase of Property
Buying a property in India is a momentous occasion. But amidst the excitement of finding your dream home or commercial premises, there is a crucial financial and legal responsibility you cannot overlook: Tax Deducted at Source (TDS) on the purchase of immovable property. For any property transaction above ₹50 lakhs, the buyer is legally required to deduct and deposit TDS.
The ₹50 Lakh Threshold
TDS on property purchase becomes applicable only when the value exceeds ₹50 lakhs. The rate is 1% of the total sale consideration. This threshold applies to each individual property transaction — so if you buy two properties worth ₹30 lakhs each, TDS is not applicable to either. But if one property is ₹60 lakhs, 1% TDS on the full ₹60 lakhs (i.e., ₹60,000) must be deducted.
The Buyer's Responsibility
Unlike many other TDS provisions where a company or employer deducts tax, in property transactions, the buyer shoulders the responsibility entirely. Before making payment to the seller, you must deduct 1% of the total sale consideration and pay the remaining amount to the seller. You then deposit this deducted TDS with the government within 30 days from the end of the month in which you made the deduction.
Form 26QB and Form 16B
TDS is deposited using Form 26QB — available on the NSDL-TIN website. This form requires details about both buyer and seller, the property, and the TDS amount. After depositing, you must issue a TDS certificate called Form 16B to the seller, which they need to claim credit when filing their income tax return. You can download Form 16B from the TRACES website roughly 7-10 days after depositing the TDS.
Critical Points to Remember
Both buyer and seller must have a valid PAN — if the seller does not provide a PAN, the TDS rate jumps to 20%. In joint purchases, each buyer must deduct and deposit their proportionate share. TDS applies to the entire sale consideration, not just the amount exceeding ₹50 lakhs. Failing to deduct or deposit TDS on time attracts penalties and interest. When in doubt, consult a tax professional before completing the transaction.
Need personalised guidance?
Our experts are available to walk you through your specific situation — free of charge, no obligation.
Book a Free Call →