Buying a property is a huge commitment and decision. Not only is it about finding a place that fits your vision, but it is also about navigating a legal process that can often feel overwhelming. Certain aspects of real estate transactions can be confusing, especially for first-time buyers. One such aspect is the TDS on the sale of property.
In this blog, we will explain everything you need to know about TDS; what it is, how to pay it on the purchase of property, and when to pay it.
TDS on the sale of property refers to Tax Deducted at Source under the Income Tax Act of India. As per this act, a fixed percentage of tax must be deducted during certain financial transactions, including those involving property such as rent, interest, or commission.
In the context of a property sale, the buyer is responsible for deducting the TDS amount from the total consideration before paying the seller. This amount must be calculated, withheld at the time of payment, and deposited with the government. The remaining balance is then paid to the seller.
Earlier, the process to pay TDS was slightly complex and time-consuming. However, with digital integration, how to pay TDS on the purchase of property online has become much more convenient.
To begin, ensure your bank account is enabled for net banking and that your bank is authorised for this transaction. You can verify your bank’s eligibility on the TIN-NSDL website.
Here is a detailed guide on how to pay TDS on the purchase of property online:
Here, you can check the status of your payment and even download the Challan. You can also track your payment through your bank’s website if you used net banking.
Paying TDS is a mandatory tax compliance requirement in India. As per Section 194-IA of the Income Tax Act, how to pay TDS on the purchase of property is not just about legality but also financial discipline
TDS on the sale of property helps the government track real estate transactions and prevent tax evasion. If you fail to pay the appropriate TDS amount while buying property in India, you may face penalties, interest, and even legal notices. To avoid such actions, it is advisable to calculate and deposit TDS correctly and on time.
To summarise, Tax Deducted at Source (TDS) is a crucial part of high-value property transactions in India. It is the responsibility of the buyer to deduct and ensure timely deposit of 1% TDS while purchasing a property worth over ₹50 lakh with the Income Tax Department.
If you're buying a home anywhere else in India, understanding and complying with TDS rules ensures a smooth, penalty-free transaction and better legal clarity for both parties involved. And now, thanks to digital platforms like TIN-NSDL and Protean, the process of how to pay TDS on the purchase of property has become much simpler and faster
Whether you're purchasing your first home or investing in a new asset, choosing a developer who supports you through every legal and financial step makes a big difference. Developers like Mana are known for their quality homes, transparency, and process-driven approach, helping buyers navigate steps like TDS payment with ease and confidence.
The buyer must pay the TDS while purchasing a property over Rs 50 Lakh.
Form 26QB is an online form used to pay TDS on property.
TDS is due within 30 days after the sale amount is paid.
Yes, but late payment can attract interest and a penalty. It is highly recommended to pay TDS before or at the time of registration.
A delay in deducting TDS attracts interest at 1% per month, while a delay in depositing the deducted TDS results in interest at 1.5% per month. A penalty of up to ₹1 lakh may also be imposed under Section 271H of the Income Tax Act.
You could receive notices from the Income Tax Department, which may cause complications in future transactions or property registrations. To avoid these issues, it is advisable to deduct and deposit TDS within the specified time frame.
