Can I Deduct TDS on the Purchase of Property Over Rs 50 Lakh After Registry of Property is Done?

When it comes to the purchase of immovable property, tax deduction at source (TDS) plays a significant role. The tax rule for TDS on the sale of immovable property was introduced by the Finance Act 2013 on June 1, 2013, under Section 194IA. This article will provide a comprehensive guide on whether TDS can be deducted on the purchase of property over Rs. 50 lakh after the property registration is done.

What is TDS for Sale of Immoveable Property?

TDS on the sale of immovable property pertains to the sale of real estate, excluding agricultural land. According to the Finance Act 2013, if any person purchases an immovable property (excluding agricultural land) and the value of the property exceeds Rs. 50 lakh, they are required to deduct TDS from the amount payable to the seller. However, it is important to note that this requirement applies only if the seller is a resident of India.

Who Needs to Deduct TDS?

In order to deduct TDS, the buyer must ensure that the seller is a resident of India. The buyer does not need to obtain a Tax Deduction and Collection Account Number (TAN) for this process. Instead, only the buyer's Permanent Account Number (PAN) is required for the submission of the Form 26QB.

TDS Rates and Deduction

The TDS rates are clearly defined based on the value of the property. If the property's value exceeds Rs. 50 lakh, the TDS is deducted as follows:

@ 1%: Deduction applies to the amount payable to the seller.

@ 20%: If the seller has no PAN, TDS is deducted at this higher rate.

Payments and TDS Deduction

One key point to consider is that TDS on the purchase of property over Rs. 50 lakh must be deducted from the total payment to be made to the seller. This means the buyer must ensure that the net payment, after TDS is deducted, is made to the seller. However, one can also deduct and pay the TDS during the final installment if it is required to settle the balance amount after the property registration.

Conclusion

In conclusion, it is essential for potential buyers of immovable property over Rs. 50 lakh to understand the TDS requirements. By ensuring compliance with these tax regulations, buyers can avoid any legal issues and maintain a smooth transaction process.

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