Buying house property of Rs. 50 lakhs or more? Don’t forget to deduct TDS on payment!

(Last Updated On: June 1, 2017)

Out of all the basic necessities of life – clothes, food and shelter, the biggest aim of every person in today’s world is to live in his own shelter. Be it small or big, we all dream of becoming an houseowner someday. And as other financial transactions are complemented by TDS rules, buying house property is also attached by TDS provisions.

Yes, if you purchase any immovable property (land or building or house property) from a resident Indian for Rs. 50 lakhs or more, you are mandatorily required to deduct TDS @ 1% on every credit or payment whichever is earlier. The TDS is to be deducted in accordance with provisions of section 194-IA.


For the purpose of this section, you are not required to obtain Tax-Deduction Account Number (TAN). Hence if you possess PAN, you shall deduct and deposit TDS under this section on purchase of house property of Rs. 50 Lakhs or more.

Cases where these provisions don’t apply:
  • In case of purchase of any rural agricultural land

  • Where sale consideration of the property is less than Rs 50 Lakh

  • Where purchase is made from non-resident person.

Mark a note of these points as well:
  1. If the seller doesn’t have PAN then TDS will have to be deducted @ 20% instead of 1%;

  2. If price of property is more than Rs. 50 lakhs, TDS is to be deducted on whole amount, only not on the amount in excess of Rs. 50 Lakhs. (For e.g. if total price of property is 60 lakhs, TDS to be deducted = 1% of 60 lakhs i.e. 60,000)

  3. If payment is made in different instalments, TDS @ 1% is to be deducted on each instalment. (For e.g. if total price of property is Rs. 60 lakhs, but it is payable in 6 instalments of 10 lakhs each, TDS to be deducted = 1% of 10 lakhs i.e. 10,000 on each payment of instalment);

  4. TDS is to be deposited to Government within 7 days (30 days from 1st June 2016) from the end of the month in which TDS is deducted;

  5. Payment can be made online through TIN-NSDL website;

  6. Return is to be filed in Return-cum-challan form 26QB wherein details of both seller and buyer, details of property, total consideration, amount of TDS deducted & deposited, amount and date of payment etc. details are to be mentioned;

  7. Form 16-B is to be downloaded within 15 days after submitting 26QB and it is to be provided to seller for his records.

Consequences in case TDS is not deducted or deposited on time:

If you don’t deduct TDS at time of payment/ credit whichever is earlier or don’t deposit TDS within 7 days (30 days from 1st June 2016) from the end of the month in which TDS is deducted, then you have to pay interest on amount of TDS.

In case of non-deduction of TDS, interest @ 1% of TDS amount is to be paid from the date on which TDS should have been deducted to the date on which TDS has been deducted;

In case of non-timely deposition of TDS, interest @ 1.5% of TDS amount is to be paid from date of deduction of TDS to date on which TDS has been deposited.

Failure to file/Late filing of Form 26QB:

If the buyer fails to file Form 26QB or in the case of late filing of Form 26QB, the buyer will have to pay a fees of Rs 200 for each day till such failure continues subject to maximum of TDS amount.

Tax Credit to Seller

The seller will be eligible to claim tax credit for the TDS deducted by the buyer at the time of filing of his Income Tax Return. This amount will also be reflected in 26AS of the seller as well as buyer.

So before buying house property, ensure that you are well versed with the relevant tax provisions. Write to us in case of any query/ feedback and we’ll ensure that you duly comply with all provisions so that you can enjoy your dream house without any worry!

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.