Section 194IA – TDS on Purchase of Immovable Property from Resident Sellers
Section 194IA of the Income Tax Act, 1961 applies when a resident sells immovable property (land/building, excluding agricultural land) for ₹50 lakh or more. In such cases, the buyer must deduct TDS at 1% of the total consideration and deposit it with the government.
Key Provisions of Section 194IA
When is TDS Deducted?
- If the property value exceeds ₹50 lakh.
- Deducted at the time of payment (including installment payments).
- No need for the buyer to have a TAN (Tax Deduction Account Number).
TDS Rate Under Section 194IA
Exemptions – When TDS is Not Required?
- When the sale value is less than ₹50 lakh.
- If the property is rural agricultural land.
- When property is compulsorily acquired by the government.
Procedure for TDS Deduction & Payment Under Section 194IA
Step 1: Deduct 1% TDS at the time of making the payment to the seller. Step 2: Fill and submit Form 26QB (online) within 30 days from the end of the month in which TDS is deducted. Step 3: Use PAN of both buyer & seller while filing Form 26QB. Step 4: Pay the TDS online through net banking/debit card or at an authorized bank branch. Step 5: After TDS payment, download Form 16B (TDS Certificate) from the TRACES portal and provide it to the seller. Step 6: Verify the TDS deduction in Form 26AS of the seller.
Example Calculation of TDS Under Section 194IA
🔹 Note: If additional charges (like club membership, parking, or maintenance fees) are included in the agreement, TDS is calculated on the total amount.
Penalty for Non-Compliance
| Nature of Default | Penalty |
|---|---|
| Late TDS Payment | 1.5% interest per month |
| Late TDS Deduction | 1% interest per month |
| Late Form 26QB Filing | ₹200 per day until filed |
| Non-filing of Form 26QB | Penalty up to ₹1,00,000 (Section 271H) |
Disclaimer: The information provided in this article is for general guidance only and should not be considered as professional advice. Tax laws and regulations are subject to change, and specific situations may require tailored solutions. Always consult with a qualified tax professional for advice specific to your circumstances.
