TDS on property sale and purchase!


An individual’s income is subject to an indirect tax known as TDS. The TDS is withheld at source from both recurring and one-time income at the time of payment. For instance, if someone wins the lottery, their proceeds will be distributed to them after the appropriate withholding tax has been subtracted. The same holds for recurring earnings like salary payments. Employers are required by TDS laws to withhold a specific amount of tax before disbursing earnings.

According to experts, TDS assures that none of the authorized income streams are tax evaders while also providing the government with a reliable revenue stream. By including income like lottery winnings, which increase tax revenue for the government, it also aids in extending the tax base. However, because the burden of tax collection is divided between the payer and the collectors, taxpayers also gain from this arrangement.

Although the TDS applies to several forms of income, let’s focus on how it affects real estate transactions:

TDS on real estate sales and purchases

According to Vaibhav Sankla, managing director of H&R Block India, when a person purchases a property from a local seller, the cost exceeds Rs 50 lakh. When making payments to the vendor, the buyer must deduct 1% tax following Section 194IA of the Income Tax Act of 1961. Keep in mind that the TDS must be determined using the whole cost of sales.

Rule changes for TDS

Some TDS provisions for real estate have been altered by the government. This guarantees that when paying for the property, the tax amount will be calculated with the cost of the property already applied to it. This covers fees for club dues, parking, utilities, water, power, maintenance, and other deposits. For instance, if a house costs Rs 60 lakh, the buyer must deduct TDS at the rate of 1% from Rs 60,000 rather than on the portion of the price that exceeds the Rs 50,000 barrier. The deduction must be paid with each payment, even if payments are made in several installments, as could be the case for the purchase of a property that is still under construction. For an Indian Non-Resident (NRI) vendor, the rules could be different.

Factors to think about while calculating TDS

-If the sale price is less than Rs. 50 lakh, TDS should not be taken into account.

-For TDS deduction, buyers do not need to get a Tax Account Number (TAN).

-In the absence of a permanent Seller’s Permanent Account (PAN), the TDS deducted 20%

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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