TDS on Sale of Property – Section 194IA

In this article, I am going to explain TDS liability on sale of property, when you become liable to deduct TDS and after deduction how to deposit TDS to Government.

Applicable Provision-

Section 194IA of Income Tax 1961 specify the TDS on sale of Immovable property other than agriculture land if it exceeds or equal to 50 Lacs.

When you are liable to deduct TDS-

When a buyer buys Immovable property (any building or part of a building or land other than agriculture land) exceed Rs. 50 Lacs, Buyer has to deduct TDS at 1% on the entire amount paid to seller.

Note that buyer is required to deduct TDS, not the seller.

Explanation & Clarification-

Q 1. On which amount TDS to be deducted?

Ans. TDS @ 1% to de deducted on the full amount paid to seller if more than 50 Lacs. I.e. if buyer buys a property at 55 lacs then in case TDS to be deducted on full 55 Lacs by 1 % = 55 lacs*1%= 55000 Rs.

If sales consideration is 49 Lacs then in such case no TDS will be deducted.

Q 2. How to determine sales consideration for deduction of TDS?

Ans. While determining the sales consideration you have to include all charges related to such property. For ex. Club membership fees, parking fees, maintenance fees and similar nature of charges related to such property.

If property value is 55 Lacs, 3 Lacs for parking fees, 2 lacs for maintenance fees so now TDS to be deducted on (55+3+2=60 Lacs) @ 1% = 60000 Rs.

Q 3. What if GST amount is also included in sales consideration?

Ans. If Sales consideration amount includes GST amount then in such case TDS will be deducted excluding GST amount.

For Ex. Sales Consideration is 90 Lacs and this includes 10 Lacs GST amount in such case TDS will be deducted on (90-10 = 80 Lacs) @1% = 80000 Rs.

For Ex. Sales Consideration is 55 Lacs and this includes 6 Lacs GST amount in such no TDS would be deducted because (55-6= 49 Lacs) this sales consideration is less than 50 Lacs.

Q 4. What type of property TDS is required to deduct?

Ans. TDS is required to deduct irrespective of type of property whether it is land or building or vacant plot, residential and commercial or industry property except Agriculture land.

Q 5. TDS liability when payment made in installment?

Ans. If the payment is made by installments, then TDS has to be deducted on each instalment paid where the total sales consideration is more than or equal to 50 Lacs.

Q 6. When to deposit the TDS to Govt.?

Ans. TDS is to deposit to Govt. within a period of 30 days from the end of the month in which deduction is made.

Also Form 26QB to be filled within a period of 30 days from the end of the month in which deduction is made.