1% TDS on Sale of Property in 2022

TDS on Property Sales is levied at 1% on all property transactions with a total transaction value of more than Rs. 50 lakhs. This article goes through the process of levying TDS on property in great detail.

Rate of TDS on Sale of Property

If the property value exceeds Rs. 50 lakhs, TDS on sale is needed to be deducted at the rate of 1%. If the property transaction value exceeds Rs. 50 lakhs, this TDS is needed to be deducted for all transactions after June 1, 2013. This applies to the sale of all properties, except for agricultural land.

It’s also worth noting that a 1% TDS is only applicable if the vendor is a resident of India. The rate of TDS will change if the seller is a non-resident of India or an NRI.

In the case of a non-resident selling a property, the TDS rate is 20% + Surcharge + Cess. Even if the transaction value is less than Rs. 50 lakhs, TDS will be paid on the sale of a property by an NRI.

TDS on Sale of Property by NRI gives a detailed explanation of how it applies in this case – TDS on Sale of Property by NRI.

Amount on which the TDS is to be deducted

On all property transactions over Rs. 50 lakhs, TDS of 1% must be deducted. Regardless of whether the property in question is a flat, a building, or vacant land, this TDS must be deducted on all forms of property transactions. TDS must be deducted regardless of whether the property is residential, commercial, or industrial. Except for agricultural land, TDS must be deducted on all forms of property transfers.

Regardless of whether there are any Capital Gains or Capital Losses on the sale of property, this TDS is to be deducted at a flat rate of 1%. Even if the seller intends to claim any Capital Gains Exemptions on the sale of the property, the TDS must be deducted at the rate of 1%.

TDS is calculated on the total amount paid to the Seller minus GST.

It should be noted that in the above-mentioned instance, the buyer/seller cannot seek a reduced TDS deduction, and the TDS will be deducted at 1% of the whole property transaction value.

TDS is deducted when the payment is made to the Seller, not when the EMI is paid to the Bank, in the case of a Home Loan.

Tax deducted on Property to be deposited with Govt

Any TDS deducted must be deposited with the government on or before the stated TDS deposit due date, according to the Income Tax Act. Furthermore, everyone who deducts TDS must apply for a TAN number under Section 203A. This TAN number is required to be provided for deducting any TDS, as well as when filing returns and depositing TDS with the government.

The addition of this new section 194IA for the deduction of TDS on the property would have placed an undue burden on the property buyer, who would have had to apply for a TAN number before purchasing any property. To alleviate this difficulty, the government has added a new sub-section(3) to Section 194IA, which specifies that a person deducting TDS on the property is not necessary to have a TAN number.

TDS deducted by the buyer at the time of making the payment to the seller must be deposited within 30 days after the end of the month in which the deduction was made, according to Notification No. 30/2016 dated April 29, 2016. For example, if TDS was deducted in April, it must be remitted to the government by the 30th of May. The same is true for all of the other months.

Form 26QB is required to be filled out with all transaction data and TDS on Property, and this Form 26QB must be presented at the time of payment.

TDS payments, on the other hand, can be made both online and in-person at a bank. Following the filing of Form 26QB, the payer will be offered the option of depositing the TDS online or printing the Form 26QB and depositing the TDS in the bank.

The buyer of the property would be required to issue Form 16B to the seller of the property in respect of the TDS deducted and deposited with the government after depositing the TDS. After 15 days from the end of the month in which the payment was made, Form 16B can be downloaded from the website of the centralised processing cell of TDS (CPC-TDS).

Other Relevant Points regarding TDS on Sale of Property

1. Form 26QB must be filled out separately for each buyer-seller combination if there is more than one buyer/seller. For example, if there is one buyer and two sellers, two forms must be submitted, and if there are two buyers and two sellers, four forms must be submitted for their respective property portions.
2. To provide information on the TDS on the property and the sale transaction, the Seller’s and Buyer’s PAN cards must be provided in Form 26QB. If the seller does not have a PAN card, TDS of 20% of the whole transaction value would be deducted.
3. Only TDS on Property Purchase is subject to the foregoing requirements. These provisions will not apply to payments paid in the form of rent for the property. TDS on rent is subject to the provisions of Section 194I, and TDS at a rate of 10% is deducted.
4. In the year of acquisition, it is critical for both the buyer and the seller to file an income tax return. Although it is not required, failure to file a return may result in the income tax department issuing an auto-generated enquiry.
5. It is always a good idea to include the TDS Deduction details in both the Sale Agreement and the Sale Deed.
6. If you make a mistake when filling out Form 26QB, you can correct it online.