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Sale of immovable property – 1% TDS u/s 194IA

Updated on: 23 Nov, 2023 01:22 AM

From 1st June 2013 through section 194IA of Income Tax Act a provision was rolled out by Mr. P Chidambaram to deduct 1% TDS on sale of the property to a resident Indian. The property here includes every immovable property like

  • House Property
  • Commercial Property
  • Plot or unconstructed land

And all such other properties except agricultural land. To the relief of citizens, TDS needs to be done only on the transactions where sale proceeds are of ? 50,00,000 (Fifty Lakhs) or more.

When and how much shall be the TDS on sale of the property?

The tax @1% needs to be deducted by the buyer at the time of making payment to the seller. And, the seller shall be entitled to receive only the net amount. For eg say the property is sold by Mr. A to Mr. B for ? 60,00,000. In this case, Section 194IA shall apply as under

Particulars Amount
Sale Value of Property ? 60,00,000
Less: Tax Deducted at Source by B u/s 194IA (@ 1% of ? 60,00,000) ? 60,000
Net Amount Payable to Mr A ? 59,40,000

What is Form 26QB and how deducted tax shall be deposited with the government?

The amount of ? 60,000 (Sixty Thousand) deducted as TDS by Mr.B shall be deposited to the government within 7days of next month in challan Form 26QB (TDS on Property).

What is the process to make payment of TDS or generate Form 26QB online?

To generate Form 26QB or make an online payment follow this process

  • Click on to access e payment of income tax. A screen as shown under will open up access e payment of income tax
  • Scroll down and select last left the most option of TDS on Property (Form 26QB) TDS on Property
  • A Screen as an image below will appear. You would be required to fill in the details relating to
    • Taxpayer Info
    • Address
    • Property Details
    • Payment Info
    Taxpayer Info
    • Some of the details on home page i.e. taxpayer info will be auto-populated like
    • Financial Year
    • Assessment Year
    • Name & Status of Transferee
    • Name & Status of Transferor

Where is TDS deducted on property seen by the seller?

TDS so deducted will reflect in Form 26AS Part F, as shown in the image below

Where is TDS deducted on property seen by the seller?

What is TDS form 16B?

The Buyer Mr. B in our case shall also give Certificate of TDS so Deducted in Form 16B to the seller Mr. A. To generate Form 16B certificate follow these steps

On which amount TDS shall be deducted for sale of the property covered u/s 194IA?

TDS under Section 194IA needs to be deducted on transaction value and not on value inclusive of applicable taxes. Say, the property is sold at ? 60,00,000 and GST applicable on it is ? 6,00,000. In this case the TDS u/s 194IA would be deducted on ? 60,00,000 and not on ? 66,00,000.

TDS rule was brought to effect so as to keep a track of transactions of sale and purchase in real estate. As it is a highly speculative market where transactions are done a party in cash and partly through baking channels.

To know more about TDS on sale of the property to NRI and all FAQ's on TDS on sale of property read our series of blogs.

CA Abhishek Soni
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.