TDS on Sale of Immovable Property

One of the utmost salient section of the INCOME TAX ACT 1961 -

SECTION 194-IA - It is applicable on sale of immovable properties such as land and buildings worth more than Rs. 50 Lakhs. In this section the Buyer is responsible to deduct 1% TDS on the entire value of the immovable property purchased before making the payment to the seller of the property.

Section 194-IA is not applicable to:

1. Rural Agricultural Land

2. Sale of Property with Stamp Duty Value below Rs. 50 Lakhs

3. Sale of Property with Consideration or Sale Value below Rs. 50 Lakhs

TDS Payment

The TDS deducted is to be paid to the government within 30 days from the end of the month in which the TDS deduction was made.

Filing of Return - Form 26QB

The section mandates the Buyer to furnish Form 26QB alongwith the above TDS payment Online through the Income Tax Portal to ensure transparency and compliance for immovable property transaction including the details of property, seller and tax deducted.

An Example to summarise the above:

Raju purchases a property worth Rs. 55 Lakhs from Shyam on 14th June 2025. Let us calculate the TDS Amount and TDS Payment due date alongwith Filing of Form 26QB .

TDS Amount - Rs. 55,000/- (1% of Rs. 55 Lakhs) (TDS to be calculated on entire property value and not on the value exceeding Rs. 50 Lakhs)

TDS Payment due date alongwith Filing of Form 26QB - 30 July 2025 - (30 days from the end of the month in which the TDS was deducted).

Other Important Points. 

• For Ease of Taxpayer - Buyer doesn’t need to acquire TAX DEDUCTION ACCOUNT NUMBER (TAN).

• Post deduction and payment of TDS, the buyer has to issue Form 16B (TDS Certificate) within 15 days to seller

• Form16B can be downloaded a few days after filing Form 26QB.

Cautious Approach for TDS and Filing Form 26QB for the following Transactions: - Expert Guidance Needed

• More than 1 Buyer of Property (Joint Buyers)

• More than 1 Seller of the Property (Joint Sellers)

• Payment made in Installments for the Property

• Parking and other various charges levied in the agreement

•  Stamp duty value of the property exceeding the consideration value.

• Consideration Value of the property below Rs. 50 Lakhs and Stamp Duty Value above Rs. 50 Lakhs 

• TDS Payments made after the due dates etc.

Conclusion

Section 194-IA of INCOME TAX ACT plays vital role in ensuring that the correct tax is paid to the government. Failure to comply may give rise to late charges including daily fines, additional charges and interest which can increase cost and litigation for the buyer.