TDS on Purchase of Property

If you are planning to buy a property, it’s essential to understand the tax implications involved in the purchase. One such tax that you should be aware of is TDS on the purchase of property. In this article, we will cover the basics of TDS on property purchase, its applicability, rates, and other essential aspects.

What is TDS on the Purchase of Property?

TDS on property purchase refers to the tax that is required to be deducted at the time of making payment for the purchase of property. The buyer of the property is responsible for deducting TDS and depositing it with the government. The tax is deducted at the time of payment of consideration for the property.

Applicability of TDS on Property Purchase

TDS on property purchase is applicable when the consideration for the property exceeds Rs. 50 lakhs. The tax is applicable on all types of properties, including residential, commercial, and industrial. The tax is also applicable to both Indian residents and non-residents.

Rates of TDS on Property Purchase

The rate of TDS on property purchase is 1% of the consideration amount. However, if the seller of the property does not have a PAN card, the rate of TDS increases to 20%.

Who is Responsible for Deducting TDS?

The buyer of the property is responsible for deducting TDS and depositing it with the government. However, if the buyer is acquiring the property from a non-resident, the buyer may be exempted from deducting TDS under certain conditions.

How to Calculate TDS on Property Purchase?

To calculate TDS on property purchase, you need to first determine the consideration amount. The consideration amount is the amount paid or payable for the property. Once you have determined the consideration amount, you need to multiply it by 1% to arrive at the TDS amount.

For example, if the consideration amount is Rs. 70 lakhs, the TDS amount would be Rs. 70,000 (70 lakhs x 1%).

How to pay TDS on property

If you have purchased a property in India and the value of the property is more than Rs. 50 lakhs, you are required to deduct TDS on the purchase of property at the rate of 1% of the sale value and deposit it with the government. Here’s how you can pay TDS on property:

Obtain the seller’s PAN card details and verify them through the income tax website.
Obtain a TAN (Tax Deduction and Collection Account Number) if you don’t have one already.
Calculate the TDS amount by multiplying the sale value of the property by 1%.
Deposit the TDS amount with the government within 30 days from the end of the month in which TDS was deducted.
Fill out Form 26QB on the NSDL website and enter the buyer and seller details, property details, TDS details, and payment details.
Download the filled-out Form 26QB and generate the TDS certificate.
Issue the TDS certificate to the seller as proof of TDS deduction.

It is important to note that failure to deduct and deposit TDS on the purchase of properties can result in penalty and interest charges. Therefore, it is advisable to comply with the TDS regulations and ensure timely deposit of TDS with the government. If someone don’t have idea or confused ‘how to pay TDS on property’, So we also provide TDS services. Contact us for more information.

What are the Consequences of Non-Deduction or Non-Payment of TDS?

If the buyer fails to deduct TDS or fails to deposit the TDS amount with the government, the buyer may be liable to pay interest and penalty. The interest is charged at the rate of 1% per month, while the penalty may range from Rs. 10,000 to Rs. 1,00,000.

How to deduct TDS on purchase of property?

If you are purchasing a property in India for a value exceeding Rs. 50 lakhs, you are required to deduct TDS on the purchase of property. Here’s how you can deduct TDS on the purchase of property:

Determine the sale value of the property, which is the amount paid or payable for the property.
Obtain the seller’s PAN card details and verify them through the income tax website.
Calculate the TDS amount to be deducted, which is 1% of the sale value of the property.
Deduct the TDS amount from the sale value of the property and pay the balance amount to the seller.
Deposit the TDS amount with the government within 30 days from the end of the month in which TDS was deducted.
Fill out Form 26QB on the NSDL website and enter the buyer and seller details, property details, TDS details, and payment details.
Download the filled-out Form 26QB and generate the TDS certificate.
Issue the TDS certificate to the seller as proof of TDS deduction.

It is important to note that failure to deduct and deposit TDS on the purchase of property can result in penalty and interest charges. Therefore, it is advisable to comply with the TDS regulations and ensure timely deposit of TDS with the government.

TDS on purchase of property by NRI

When an NRI purchases property in India, the buyer is required to deduct TDS at the time of payment to the seller. The TDS rate is generally 1% of the total property value, but it can vary depending on the type of property, the sale price, and the seller’s tax residency status.

How to pay TDS on purchase of property from NRI

To pay TDS on the purchase of property from an NRI in India, you need to:

Determine the applicable TDS rate
Obtain a TAN
Deduct TDS amount from payment to the NRI seller
Deposit the TDS amount with the Indian government within 7 days
File a TDS return with the Indian government.

It is important to meet all TDS obligations to avoid any legal or financial implications, and it is recommended to consult with a tax professional for guidance.

How to Claim TDS Refund?

If the TDS deducted is more than the actual tax liability, the buyer can claim a refund of the excess TDS. The buyer can file an application for TDS refund with the Income Tax Department. Our CA firm will always supports you in claiming. So feel free to contact us.

Conclusion

TDS on property purchases is a tax that must be deducted and deposited with the government by the buyer of the property. The tax is applicable when the consideration amount exceeds Rs. 50 lakhs and is calculated at the rate of 1%. Failure to deduct or pay TDS can result in interest and penalty. Therefore, it’s crucial to understand the basics of TDS on property purchases and comply with the tax laws.

FAQ

What is the rate of TDS on property purchase?

The rate of TDS on property purchase is 1% of the consideration amount, which can increase to 20% if the seller does not have a PAN card.

How can the buyer calculate TDS on property purchases?

To calculate TDS on property purchases, the buyer needs to determine the consideration amount and multiply it by 1%.

Is TDS on property purchases applicable to both Indian residents and non-residents?

Yes, TDS on property purchases is applicable to both Indian residents and non-residents.

Who is responsible for deducting TDS on property purchases?

The buyer of the property is responsible for deducting TDS and depositing it with the government.

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