Why you need to comply with tax rules while buying a property If you are buying a property this year, particularly one worth above ₹50 lakh, there are vital tax compliance procedures that you must follow. The Income Tax Act mandates buyers to deduct TDS at the time of making payment and deposit the same to the government. Simultaneously, stamp duty and registration charges—in addition to the charges levied by state governments—must be calculated based on changed circle rates or guideline values. These charges can significantly escalate the acquisition cost, and the recent trend of calculating TDS makes it essential to keep oneself updated.
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How TDS is deducted on property transactions A buyer must deduct 1% TDS while buying property worth more than ₹50 lakh under Section 194-IA of the Income Tax Act. From April 1, 2025, the deduction must be made on the greater of either the transaction price or the circle rate (also the value for stamp duty). The withheld amount must be deposited with the government on Form 26QB within 30 days from the transaction date. The buyer must also provide Form 16B to the seller as proof. If PAN data is missing or not mapped to Aadhaar, 20% TDS can be levied. This paragraph now extends to joint buyers as well, for whom the aggregate value of the property is considered while determining TDS eligibility.
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New with stamp duty and registration fees Stamp duty is usually levied by states between 3% and 8%, and registration fees are usually 1% of the property value. These vary with regard to the state and even the buyer's gender in certain situations. For instance, in Delhi, women consumers are paying 4% stamp duty while men are paying 6%. Women consumers in Maharashtra get a 1% concession on the regular 6% to 7% rate. Uttar Pradesh is levying 7% stamp duty and 1% registration charges but is introducing a 1% discount for women consumers purchasing up to ₹1 crore value properties. Tamil Nadu also implemented a new guideline value structure in 2025 that takes into account the gross area value of land and built-up space so that rates get revised frequently.
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Why accurate valuation is needed This step to compute TDS on the upper value of sale consideration or circle rate aims to deter under-reporting. As circle rates rise—particularly in places experiencing fast development such as Ayodhya or peripheral regions of metros—buyers can be made liable for increased TDS and stamp duty even if the deal value is reduced. One should cross-verify latest circle rates from authentic municipal or revenue department websites before sealing a transaction. Payment of both TDS and stamp duty has to be made online in the majority of states and digital receipts have to be kept handy for future reference.
Plan in advance to remain compliant and escape penalties Buying property in 2025 requires not only financial planning but tax consciousness. Buyers need to deduct 1% TDS on high-value properties and also ensure that they are using the right value while calculating—particularly considering revised circle rates. Women customers shall be assisted by state-level concessions and reforms in valuation methods, but these must be understood and used correctly. Maintaining your PAN Aadhaar-linked, payment through online portals, and having all documents online would make it easy and legally compliant to do the transaction.
