You must be aware of 1% TDS when buying property deals worth ₹50 lakh or more. Section 194IA of the Income Tax Act requires buyers to deduct this tax before paying sellers for high-value property transactions (excluding agricultural land). To simplify, we explain the who, when, and how of this rule to help you navigate it smoothly and avoid penalties.
In Section 194IA, TDS is applied when the property transaction exceeds ₹50 lakh. Buyers must deduct 1% TDS for properties of ₹50 lakh or more before paying the seller, regardless of whether it is a direct payment or a credit transaction.
Buyers must deposit deducted TDS using Form 26QB within 30 days. They should provide sellers with a TDS certificate using Form 16B within 15 days of depositing the TDS. This ensures both parties comply with tax laws and have proper documentation.
Some property transactions, like those involving agricultural land, are exempt from TDS under this section. For multiple payments, if each is less than ₹50 lakh but the total exceeds, Section 194IA applies, requiring the buyer to deduct TDS.
Buyers should confirm the property value before transactions to comply with Section 194IA and avoid issues. Keeping property valuation documents ready helps for future references with tax authorities. Knowing to correctly fill Form 26QB saves time and reduces submission errors.
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