Definition
TDS on Property Purchase (Section 194-IA)
When buying immovable property above a threshold, the buyer must deduct TDS from the payment and deposit it with the government.
Under Section 194-IA, a buyer purchasing immovable property (other than agricultural land) where the consideration exceeds a specified threshold must deduct TDS from the amount paid to the seller and deposit it using Form 26QB, then issue the seller a TDS certificate.
This applies to resident sellers; purchases from non-resident sellers attract different, often higher, TDS provisions. The buyer does not need a TAN for this; PAN suffices, and the TDS shows up in the seller's Form 26AS.
Buyers should factor this compliance into property transactions to avoid interest and penalties for non-deduction or late deposit. The deducted tax is credited to the seller against their final capital-gains tax.
Related terms
- Form 26ASForm 26AS is a consolidated annual tax statement showing all tax deducted, collected and paid against your PAN.
- Capital Gains TaxCapital gains tax is the tax you pay on the profit from selling an asset such as shares, mutual funds, gold or property.
- TDSTax Deducted at Source is tax withheld by the payer and deposited with the government on your behalf.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.