Buying A New Immovable Property In 2024?

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If you are planning to buy any Immovable property in India other than agricultural land, we have compiled some key points to be kept in mind for all resident as well as non-resident buyers.

As per section 194IA of the Income Tax Act 1961, Buyers of above category are required to deduct 1% of Total consideration as TDS on date of payment or credit to seller whichever is earlier.

  • This is applicable irrespective of property type ie. Residential or Commercial or Industrial.
  • Above provision is applicable only if sale consideration is Rs. 50 Lakhs or more.
  • Rate of 1% is increased to 20% if PAN of seller is not available.
  • Amount so deducted has to be deposited with Government through challan-cum-statement in Form No. 26QB which is to be filed electronically within 30 days from the end of the month in which the deduction is made.

Total consideration should be taken as higher of actual consideration and Stamp duty value of the property. For example, Mr. A purchase a flat in Mumbai for 55 Lakhs which has Stamp Duty Value of 50 Lakhs. If the Seller provides valid PAN to Mr. A, TDS of Rs. 55,000 (1% of 55 Lakhs) shall be deducted.

What can be the consequences if TDS is not deducted???

Income Tax Department can demand the amount of TDS as well as late fees from the buyer. For example, if a buyer buying a house of 1 Crore and is found guilty for contravention of this section, A demand of up to 20 Lakhs can be raised by the IT Department under worst case.

Mind map while transacting:

  • If TDS deduction required for property under consideration.
  • How to calculate total value of consideration.
  • If TDS is required to be deducted, at what rate and at which point in time.
  • When is the deadline to Pay TDS so deducted.
  • What if PAN of seller is invalid.

Bonus Question.

Suppose a couple Mr. A and Mrs. B (wife of Mr. A) buys a flat worth 80 Lakhs having stamp duty value of 82 Lakhs in combined name and makes payment of 40 Lakhs each on 15th May 2024. Is TDS applicable? If yes, what should be the value of TDS? Till when should TDS be deposited?

Please comment your answers in the comment box and feel free to ask related questions or doubts.