TDS on Instalments for Property Purchase in Joint Names Where Only One Spouse Pays (Under-Construction Property)

Introduction – brief background + why it matters

Joint purchase of an under-construction apartment in the names of husband and wife is common for family planning and future security. In many cases, however, the entire financial contribution is made by only one spouse, and even the housing loan is in only one name, while the other spouse is included purely as a co-owner in the sale agreement.

This creates a recurring compliance question during construction-linked payments: Should TDS be deducted and deposited under both PANs because the property is jointly owned, or is it sufficient if the paying spouse alone deducts TDS under his PAN? Builders often insist on “both PANs” as a standard checklist item, but the legal responsibility for TDS is linked to who makes payment to the seller/builder, not merely whose name appears as co-owner.

Main Discussion

1) Conceptual rule: TDS obligation follows the payer

TDS on purchase of immovable property is fundamentally a buyer-side withholding obligation triggered at the time of credit/payment to the seller. The expert discussion takes the practical view that where only one spouse is actually making the payments, that spouse is the person responsible to deduct and deposit TDS.

This is why one professional answer states categorically: “Only you are liable to deduct and deposit TDS” and further clarifies that this does not concern the builder beyond receiving net payment and TDS evidence.

2) “Joint ownership” vs “financial contribution” – the technical vs practical split

The discussion also acknowledges a technical argument often raised:

• Technically, if the property is jointly owned, the TDS compliance can be structured PAN-wise and share-wise (i.e., split TDS in proportion to co-ownership).
• Practically, if 100% consideration is paid by one spouse, depositing TDS under that spouse’s PAN is accepted as a workable approach—but it may lead to queries later because the tax system sees a person acquiring an immovable property interest without a corresponding TDS trail under their PAN.

So the prevailing practice approach in 2025, as reflected in the discussion, is:

• Compliance can be done under the paying spouse’s PAN, but
• documentation and explanation must be kept ready to address any future questions.

3) Builder’s insistence: does it matter legally?

The expert view is clear: the builder’s internal policy or checklist does not decide legal liability. The builder wants clean records for their compliance comfort, but the statutory responsibility for deduction is on the deductor (payer). Therefore, the builder insisting on “both PANs” is not, by itself, a legal requirement where the non-paying spouse is not making any payment.

4) Risk points and possible downstream queries

The discussion flags practical risk areas:

• If TDS is deposited only under one PAN while the sale agreement shows two buyers, the non-paying spouse’s PAN may show property acquisition without matching TDS reporting, which can result in queries.
• At a later stage (especially at resale), mismatches in payment trail, ownership trail, and tax records can create explanatory burden, even if the underlying transaction was genuine and family-funded.

5) Penalty/interest implications (where relevant)

If TDS is not deposited correctly or within time, the paying buyer can face interest and procedural consequences. Even where TDS is paid, incomplete PAN-wise trail can lead to notices/queries, which is not a monetary penalty by itself but can become a compliance cost in time and professional effort.

Practical Impact / Expert View – practical timeline, common mistakes, compliance steps, and real-world cost/effort implications

Practical timeline (simple and defensible)

1. Before first instalment: decide the approach—single PAN (payer spouse) vs split PAN-wise.

2. If using single PAN: deduct and deposit TDS under the paying spouse’s PAN for each instalment and maintain full proof.

3. Preserve an explanation file: sale agreement, loan sanction documents (single borrower), bank statements showing payment source, and a short note that the co-owner did not contribute financially.

Common mistakes

• Agreeing to “both PAN TDS” mechanically and later struggling with split calculations and portal filings.
• Paying under one PAN but keeping no documentation to explain why the co-owner’s PAN has no TDS trail.
• Treating the builder’s demand as law and restructuring payments unnecessarily.

Real-world cost/effort

• Single PAN compliance is operationally easier.
• However, the “ease today” should be balanced with “explainability tomorrow.” The safer approach is whichever creates the cleanest, provable trail consistent with funding and ownership.

Conclusion – key takeaways

• Where one spouse alone pays all instalments, the practical position supported in the discussion is that only the paying spouse needs to deduct and deposit TDS.
• Builder’s insistence on both PANs is not determinative of legal liability.
• If the property is in joint names, be prepared for possible future queries for the non-paying spouse’s PAN—keep a clean documentation file showing the funding source and arrangement.
• If you prefer maximum system-alignment, PAN-wise split is “technical ideal”; single-PAN deposit is “practical workable” when backed by evidence.

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