Real Estate Compliance

TDS on Sale of Property

Buying a house? Calculate the mandatory 1% TDS you must deduct and pay to the government under Section 194-IA before paying the seller.

Property Valuation Details

The actual amount you agreed to pay the seller.

Government valuation for the property.

TDS is Mandatory (1%)

Because the value exceeds ₹50 Lakhs, you (the buyer) must deduct 1% TDS from the payment and deposit it using Form 26QB. If you fail to do this, the income tax department will penalize YOU, not the seller.

Payment Summary

TDS to be Deducted

₹60,000

To be deposited via Form 26QB.

Total Sale Value₹60,00,000
TDS Withheld-₹60,000
Net Payment to Seller₹59,40,000

Understanding Section 194-IA

  • The Buyer's Responsibility: Under Section 194-IA, the liability to deduct TDS falls entirely on the Buyer. If you pay the full amount to the seller without deducting TDS, the Income Tax Department will send a demand notice to you, along with a penalty of 1% per month for late deduction.
  • The 50 Lakh Rule: TDS is only applicable if the property value is ₹50 Lakhs or more. Note that agricultural land is exempt from this rule.
  • Sale Value vs Stamp Duty Value: To prevent tax evasion (using black money), the government recently amended the rule. TDS is now calculated on the Sale Consideration OR the Stamp Duty Value (Circle Rate), whichever is higher.
  • Form 26QB: You do not need a TAN (Tax Deduction Account Number) to deduct this TDS. You simply need the Seller's PAN card. The TDS must be deposited online using Form 26QB within 30 days from the end of the month in which the deduction is made.