What is TDS on property saleWhen you buy a property in India for ₹50 lakh or more, the law compels you to withhold 1% of the total sales price as Tax Deducted at Source (TDS) before paying it to the seller. This section, Section 194-IA of the Income Tax Act, is meant to tax the seller on what they receive from the sale. You need to do this even if you are a one-off buyer and do not file taxes returns regularly. It's your responsibility—not that of the seller—and not the registrars that you deduct and pay this tax.
Why it's necessary to remit TDS prior to registrationAll buyers are not aware that this TDS step is mandatory and has a direct link with property registration. Many states' sub-registrar offices now insist on proof of TDS payment before allowing high-value property registration. If you have not remitted the 1% TDS, your property registration is likely to be delayed or even rejected. Besides this, you can later get a tax notice for non-compliance with additional interest on delay or penalties. Advance payment of this TDS simplifies and eases the process of registration.
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Payment of TDS on propertyIn order to pay 1% TDS on property, you need to file an online form called Form 26QB. This form can be accessed from the TIN NSDL site or the Income Tax e-filing portal. You will be required to fill in basic information like the PAN numbers of the buyer and seller, the complete address of the property, the amount you are paying, and the payment date. After you have completed the form, you can pay the TDS online via net banking or can get a challan generated to deposit offline at a bank. Remember to download the receipt and keep a copy handy.
When to remit the TDSThe TDS should be remitted within 30 days after the end of the month in which payment is made to the seller. Therefore if you remitted payment to the seller on July 15, the TDS should be remitted by August 30. Not doing so can result in penalties, such as late payment interest and non-compliance penalty. These charges can accumulate quickly and put unwanted financial strain. That is why it is critical to be well-planned and do this payment much before registration.
What to do after TDS paymentOnce you successfully make the TDS using Form 26QB, your subsequent step is to provide a certificate for TDS, known as Form 16B, to the seller. This can be accessed on the TRACES portal after approximately seven days. The seller shall submit this report to the Income Tax Department to prove tax on the sale amount is already deducted. Keep a printed copy of both Form 26QB and Form 16B safely—both may be needed for registration purposes and in future tax returns.
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Don't skip this stepMany buyers don't know it is compulsory to pay TDS on property transactions. Skipping it can put your registration on hold, attract tax notices, and even influence your future ability to sell the property. It is not tedious if you are well-planned and have all necessary documents in place. You may also ask your property attorney or CA to guide you through the process so that you don't miss any critical steps. It's a minor task that makes sure a high-priced transaction is legally valid.
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