INTRODUCTION

Real estate sector is the most recognized sector in India. It is estimated to grow to 65,000 crore from 12,000 crore in 2019. Imagine purchase and sale of transactions of immovable property is going to increase at a very rapid rate. Moreover the budget 2022 was also capital investment centric budget. It means government is also making investment for infrastructural development. Since purchase and sale of immovable property is very common transaction, tax implication on same is first ever questioning in minds of sellers/ buyers. This segment is also prone to high tax evasion area, therefore government has made liable buyer to deduct TDS at the rate 1% at the time of making payment of seller.

WHO IS REQUIRED TO DEDUCT TDS?

Buyer is required to deduct TDS at the rate 1% if sale consideration is 50 lakhs or above but from   01/04/ 2022, TDS is required to be deducted if stamp duty value of property is also 50 lakhs or more. This means TDS is required to be deducted if stamp duty value of property or sale consideration exceeds 50,00,000. TDS is to be deducted on all properties whether residential, commercial, industrial property or flat, building or vacant plot except agricultural land.

IMPLICATIONS OF BUDGET 2022? Buyer has to deduct TDS at the rate 1% even if sale consideration of property is less than stamp duty value.

Sale Consideration SDV Implications
Case-1 60lacs 70 lacs Upto 31/03/2022 TDS is required to be deducted @1% on 60lacs. From 01/04/2022 TDS is required to be deducted @ 1% on 70lacs. The difference of 10lacs will be taxable in hands of buyer u/s 56(2)(vii) under head Income from Other Sources and Seller is required to calculate capital gains taking sale consideration 70lacs.
Case-2 70lacs 60 lacs TDS is required to be deducted @1% on 70lacs.
Case-3 60lacs 60 lacs TDS is required to be deducted @1% on 60lacs
Case-4 45lacs 55 lacs Upto 31/03/2022 TDS is not required to be deducted as sale consideration does not exceeds 50lacs. From 01/04/2022, TDS is required to be deducted on 55lacs and other tax implications will also apply.
Case-5 45lacs 45 lacs TDS is not required to be deducted as sale consideration/SDV is less than 50lacs.

Note: In the above cases Registrars are required to report purchase/sale of immovable property to Income-tax as SDV of the property exceeds 30lacs. It will be considered as High value transaction.

HOW TO DEPOSIT TDS DEDUCTED ?

Buyer is not required to take TAN number. She can simply fill the form 26QB available in website https://www.tin-nsdl.com and deposit with government TDS deducted from seller. TDS deducted at time of making payment must be deposited within 30 days from the end of the month in which deduction is made. Buyer is required to furnish TDS certificate in form 16B to seller which is available around 10 to 15 days after depositing TDS.

WHEN TDS IS NOT REQUIRED TO BE DEDUCTED?

a) If sale consideration / SDV of property is less than 50lakhs.

b) If property into consideration is agriculture land.

c) If seller is non-resident in that case section 195 applies.

PRACTICAL ISSUES

a) TDS is required to be paid on total amount excluding GST.

b) You cannot apply for lower deduction of TDS in the section.

c) TDS is required to be deducted irrespective a fact that deduction is that exemption is claimed.

d) In case of home loan, TDS is deducted at the time of making payment to seller and not when EMI is paid to bank.

e) In case there is more than one buyer and individual purchase price of each buyer is less than 50 lakhs but aggregate consideration exceeds 50 lakhs then TDS is required to be deducted.

TDS on Purchase-Sale of Property

f) This section is also applicable when buyer is non-resident.

g) TDS is required to be deducted on advance payment.

h) No surcharge or cess is levied on TDS.

i) If seller does not provide PAN, then TDS is required to be deducted @20%.

CONCLUSION

TDS deducted which will be reflected in Form-26AS of Buyer and he can take refund or adjust against his tax liability at the time of filing return. Govt. has imposed liability to deduct on buyer to trace high value transaction so that circulation of black money can be prevented. The amendment vide budget 2022 is made to bring parity between sec 50C, 43CA and 194IA. This will lead to higher collection of tax but will be required to be refunded if exemptions are claimed by buyer.

The above comments do not constitute professional advice. The Author can be reached at companyfinancialtree@gmail.com or visit website www.financialtreecompany.com. My name is CA Divya Agrawal and I am Practising Chartered Accountant, CEO and Founder of FINANCIAL TREE COMPANY (An online return filing and Tax Consultancy Company). We also upload educational videos in You tube and name of our channel is FINANCIAL TREE COMPANY. Our aim is to help people in improving their financial health by spreading knowledge and love. Stay Financially Fit and Healthy.

Author Bio

Qualification: CA in Practice
Company: www.financialtreecompany.com
Location: Bhilai, Chhattisgarh, India
Member Since: 30 May 2019 | Total Posts: 63
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55 Comments

  1. Ravikumar says:

    I can sell my property in Dec-23 and purchaser paid 1% TDs and paid to deportment.But at the time of registration my PAN was not linked with adaar. And purchase received notice to deduct the tds @ 20% So any Solutions for the above mistake.

  2. Nagaraj G K says:

    Hello Madam,
    If we (myself and my wife) are buying an immovable property from a NRI then do, we need TAN to process TDS ? If yes, then whose TAN (Buyer’s or Seller’s) ?
    Thanks in advance.
    Regards,
    Nagaraj

  3. kanwaljeet says:

    Hi
    I am Canadian citizen and recently sold my property in India. Buyer deducted the TDS (at the required rate 18/20%?) and provided me with 27Q form for me as well as my wife (joint owners / sellers of the property sold).

    Is that sufficient for me to claim this TDS? Do I need anything else from the buyer? What is the process of claiming this TDS back as I have no other income in India so expect it to be refunded. Kindly advise. Thank you

  4. MVP says:

    hello, in this article in conclusion it is said, ‘TDS deducted which will be reflected in Form-26AS of Buyer and he can take refund or adjust against his tax liability at the time of filing return.’ Does this mean what buyer has deposited as TDS in form 26qb, the entire amount can be claimed back by the buyer? I paid TDS in July 2023 for property payment made in June 2022, shall I get this as refund in ITR filing of AY 2024-2025?

  5. Pranay J. Luthia says:

    Suppose there are 4 Joint Owner of the Property and the Total value exceeds the 50 lakhs. Ratio of ownership is not mentioned in the property agreement, than whether person whose name stands first in the agreement is liable to pay TDS or all the joint holders have to pay the TDS equally. Kindly clarify it.

  6. LEELA BABU says:

    We are buying a flat in Chennai for 70 Lakhs jointly in the name of myself and my wife. The seller is US citizen and buyers are Indian residents.
    Do we have to deduct TDS?

  7. JITENDRA SURESH DHAKE says:

    Hii, I have book a flat on 30.06.2023 and paid 5.5% as booking amount on agreement value i.e. 73 lacks. Actually I wanted to know that how TDS have to pay?

    If I made next 10 % payment to the builder from my account then TDS have to pay from my tax account and If I paid another 10% from spouse account then TDS have to pay form my suppose account..

    Whether it is right or wrong?

  8. Vitthal says:

    Please clarify my doubt
    1. a property sold on jan 2023 (fy 22-23) on which ltcg arised
    2. a purshase agreement executed for new property for section 54 exemption on march 23.
    part amount made in that year and tds deducted and paid in march 23
    3. registry done in april 23 (fy 23-24) and balance payment made at that time.

    question
    1.what will be date of transfer?
    2.when will be capital gain booked?
    3.property sold in 22-23, but new purchase agreement made in 22-23 on which tds deducted and paid on part payment and property registered in 23-24 and balance payment made so when to book capital gain and what will be impact on tds already paid

  9. Ajay More says:

    Hi.
    We had buy under construction flat in 2018 Rs.1.10cr & registration also done in 2018. we had paid part, part.amount till 2020 & balance 9 lakh amt at the time of possession.still we have not recd any possession.

    builder say we will get possession in next month but we have not deducted any TDS till date.

    Please advise what to do and how can i save the Interest & penalty on that.

  10. Swati Kumari says:

    Hi. My house is under construction and my 3 installments are still pending. i have not paid any TDS amount yet. can i pay the whole tds at the time of registry?

  11. amol chaturvedi says:

    hi Team,
    I am buying a property with three buyers ,me ,my mom and my brother. from seller side, there are two seller. Pls confirm how many tds we need to file

  12. Meenakshi says:

    I have purchased a flat on 9th march 2021and tds is 56,000 but i haven’t paid the tds yet . Will I be liable to pay penalty ? and how much will it be ? please suggest

  13. Meenakshi says:

    I have purchased a flat on 9th march 2021and tds is 56,000 but i haven’t paid the tds yet . Will I be liable to pay penalty ? and how much will it be ? please suggest

  14. Pravin says:

    Sir
    I have purchased property agreement value 60Lac from a Builder. I am joint owner with my wife. As I understand from your previous comment that we need to deduct TDS at 1% and each one of us need to file separate 26QB form .
    My question is-
    Do we need to input agreement value as 30 Lac when filing form 26QB for each.

  15. Ahmer Akhlaq says:

    I have purchased a property worth 81lac on which i need to deduct TDS of 81000 but there are two sellers so do i need to fill two forms and for each do i need to make payment of 40500??

  16. Krishnamohan says:

    Good info sir. But, I have small query. If there is one (1) seller os selling farm land worth 1.00 Cr to four (4) buyers having equal shares. In this case, whether the clause of TDS / TCS is applicable as each individual share will come to 25.00 lakh only which is below limit required.
    Request to clarify the same.

  17. RAJENDRAN K says:

    sir i am purchased 4 Plots from single owner for Rs15 lac each so total amount Rs 60 lac. and registered every one in single day. TDS ll applicable or not

    1. Divya Agrawal says:

      If registry of plots are done separately, then it will be treated as separate property and TDS would not be leviable and if 4 sale deeds are not maintained and all plots are treated as single property, then TDS will be deducted.

  18. Santhosh says:

    My two sons are purchasing one property each from seller A. The total sale consideration payable to seller by two of my sons for those two properties is above RS.50 lacs – cost of individual property being 26 lacs each. Should TDS be deducted as the seller is getting more than 50 lacs.??
    Who has to deduct TDS, whether individually or jointly??

  19. SUNIL KUMAR JAIN says:

    Please Intimate, if There are more than One Seller, and all other Sellers have forgone their share in favour of One Seller (This will also be written in the Registration Deed) and Payment is being made to the One Seller , than whether TDS U/s 194IA is to be deducted from One Seller who is getting full money or all other sellers also, who didn’t get any share from this sale, because of their internal agreement?

  20. r k gupta says:

    We are three owners of a flat each having equal share. The total sale consideration will be 105 lacs i.e. each share will be Rs 35 lacs which is less than 50 lacs for each. Will buyer has to deduct TDS or not in this case

    1. Divya Agrawal says:

      Sir you need to deduct TDS because sale consideration exceeds 50lacs though each share is below 50lakhs. Also mailed you the details, kindly check

      1. Shreya says:

        Hi Divya,

        Please let me know if you need to deduct TDS because sale consideration exceeds 50lacs though each share is below 50lakhs invase of Joint ownership of a property.

  21. Sanjay says:

    We have bought a property between two owners as 50:50. The value of property is 1.5cr. The property is under construction and due for possession by end 2023. We have paid so far Rs 1 cr including GST of 5% on 29th Nov, 2022. Is TDS to be deducted at this stage or later. Please advise as per owner the effective payment so far excluding GST is below 50 lakh.

    1. Divya Agrawal says:

      As I answered you sir you have to deduct TDS because sale consideration exceed 50lacs. You have to see chargeability including GST but deduct TDS excluding GST

  22. Ashish Kumar says:

    I made the purchase of the property and all payments were done before 2017 but registration was not completed. I am planning to complete the registration of the property now. The value of the purchase is 34 Lac while the stamp duty is collected at 51 lac. What should I do in this case? Since no payment is being made now how can I deduct TDS?

  23. Prateek says:

    If the property value is 70lakh and we are having agreement first payment of 10lakh did we need to deduct at the time of agreement or can we deduct whole TDS at the time of registry day.

  24. Rohit says:

    If Stamp Duty Value is more than consideration , 1% Tds has to be deducted on Stamp Duty Value. My question is , for calculation of TDS , we should take stamp Duty Value on date of Agreement or Date of Registry of Property??

  25. Vijayakumar says:

    If apartment purchased for 2.70 crores by three of us and the Indus value is 59 lakhs and cost of construction is 2.11 crore then how is tds and under what which section?

    1. Divya Agrawal says:

      Seller is required to deduct TDS u/s 194IA in PAN of each three of you because individual share is exceeding 50lacs. TDS is charged on purchase/sale of immovable property. Cost of land and cost of construction will be aggregated to form cost of immovable property. If seller is non-resident then TDS will be deducted u/s.195.

  26. PRABODH says:

    THERE ARE 3 SELLERS THEY MADE COMBINED AGREEMENT 30 LAKSH EACH, SALES CONSIDERATION IS RS,90 LAKSH, IF BUYERS LIABILITY IS 30 LAKHS WHICH IS NOT LIABLE FOR TDS ON SALE OF PROPERTY, IN THIS CASE WHAT TO DO

    1. Divya Agrawal says:

      You have two options-
      1. Pay TDS now with Interest and penalty and take TDS deducted amount back from builder.
      2. Pay at the time of registry. It will also work.
      For detailed guidance on this issue mail us on companyfinancialtree@gmail.com. I will explain in better way how practically things work this scenrio.

  27. JITENDRA AGGARWAL says:

    I purchase a property of Rs 68 Lakhs by name of Me and my wife. 01% TDS to be deduct from seller. In this case how i can deduct TDS 50-50% from buyer PAN number?

  28. Sneha San says:

    I paid the seller 69 lac 30 thousand after deducting the tds from the sale consideration amount of 70 lac but when I am filling form 26QB, I am entering the amount paid to the seller i.e. the deducted amount, so i should pay the tds on the deducted i.e. sold amount?

  29. Anay Singh says:

    Mr. X purchased a property of Rs 1 CR from Mr. Y and made 50% payment after deducting 1% TDS on 50lakhs rs. Before paying balance 50 lakhs Mr. X asked Mr Y that Mr.Z will buy the property and he will pay you balance 50 lakhs and 50 lakhs to me. Now is Mr. Z liable to deduct TDS on payment made to Mr. X?

    1. Divya Agrawal says:

      The first transaction will stand cancelled and Mr. Y can adjust TDS deducted while filing income tax returns .Mr. Y have to return money to Mr.X. Mr. X will enter into new agreement with Mr. Z and deduct TDS while making payment to Mr.Z.
      The crisscross transactions as specified in query cannot be entertained for levy of TDS because TDS is also required to be shown in Form 26AS of Seller.

  30. madhav says:

    TDS deducted which will be reflected in Form-26AS of Buyer and he can take refund or adjust against his tax liability at the time of filing return.
    i think seller can take refund or adjust against his tax liability not buyer… pl correct me if i am wrong

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