By Admin | 
In India, the real estate sector is not only a significant contributor to the economy but also a focal point for tax regulations aimed at ensuring transparency and accountability. One such critical regulation is the Tax Deducted at Source (TDS) on property transactions. Introduced to curb tax evasion and streamline tax collection, TDS on property sales mandates buyers to deduct a specified percentage of the transaction value as tax before making the payment to the seller. As we navigate through 2025, understanding the nuances of TDS in property transactions becomes imperative for both buyers and sellers to ensure compliance and avoid potential legal complications.
TDS (Tax Deducted at Source) is a mechanism whereby the buyer deducts a percentage of the property’s value as an advance tax on behalf of the seller. The amount is then deposited with the Income Tax Department. For property sales, TDS effectively ensures tax compliance while maintaining transparency in transactions.
The purpose of TDS on property transactions is to:
TDS on property transactions falls under Section 194-IA of the Income Tax Act, 1961. As per this section:
The process for NRIs is similar but requires additional documentation, such as:
Sellers can claim a refund if TDS was deducted more than their actual tax liability.
Refunds are typically processed within 3-6 months after ITR filing and verification by the Income Tax Department.
Navigating TDS regulations can be complex. Consulting an expert ensures compliance and prevents costly errors.
The TDS mechanism simplifies tax compliance for property transactions in India. By understanding key regulations, eligibility, and processes, buyers and sellers can avoid pitfalls and ensure a seamless experience. Whether you’re buying a 2 BHK flat for sale in Punawale or exploring new residential projects in Pune, being aware of TDS on real estate is essential.
At Pharande Spaces, one of the leading real estate developers in Pune, we prioritize transparency and guide our customers through every step of the property-buying journey. Explore our projects to discover your dream home with ease and compliance.
TDS calculation on the sale of the property is done by deducting 1% of the total sale value if the property value exceeds ₹50 lakh for resident sellers. For NRIs, the TDS rate ranges between 20% to 30%, depending on the nature of capital gains (short-term or long-term).
As per the latest regulations for TDS on property, buyers must deduct 1% TDS on the sale amount for properties valued above ₹50 lakh under Section 194-IA. For NRI sellers, Section 195 applies with higher TDS rates based on income and capital gains.
The deducted TDS on property must be deposited with the Income Tax Department within 30 days from the end of the month in which the TDS was deducted. Buyers need to submit Form 26QB while making the payment.
The interest on delayed payment of TDS on sale of property is calculated at 1% per month for late deduction and 1.5% per month for late deposit of TDS. This interest is charged from the due date until the date of actual deduction or payment.
To legally avoid TDS on the sale of property, the transaction amount must be below ₹50 lakh, as TDS is required to be deducted only if the total purchase value is ₹50 lakh or more under Section 194-IA of the Income Tax Act.
The responsibility to deduct and deposit TDS on property lies with the buyer of the property. However, the tax liability is on the seller’s PAN account, meaning the deducted TDS reflects against the seller’s tax records.
By Admin