TDS under Section 194IA is applicable when:

1. Immovable property (other than agricultural land) is purchased, and

2. The sale consideration is ₹50 lakh or more

The threshold applies to the total consideration, not to individual instalments. If the consideration is ₹50 lakh or above, TDS becomes applicable even if payment is made in parts.

Who is required to Deduct TDS

Under Section 194IA, the buyer of the property is responsible for deducting TDS. This applies to:

• Individuals
  
• HUFs
• Companies
• Firms and other entities
• Importantly, no TAN is required for deducting TDS under this section, making compliance simpler for individual buyers.

Rate of TDS on Property Purchase

TDS is required to be deducted at the rate of 1% of the sale consideration.

The deduction is made on the amount payable to the seller, and not on stamp duty value or registration charges, unless such charges are part of the sale consideration.

Timing of TDS Deduction

TDS under Section 194IA must be deducted:

• At the time of credit of the amount to the seller.
• At the time of payment.
• Whichever is earlier.

In cases where the purchase price is paid in instalments, TDS is required to be deducted on each instalment at the time of payment.

Form 26QB – Challan-Cum-Statement

Compliance under Section 194IA is completed through Form 26QB, which serves as both:

• A challan for payment of TDS, and
• A statement for reporting the transaction

Form 26QB must be filed within 30 days from the end of the month in which TDS is deducted.

The form captures details such as:

• PAN of buyer and seller
  
• Property details
• Sale consideration
• TDS amount deducted

Issuance of TDS Certificate – Form 16B

After filing Form 26QB and payment of TDS, the buyer is required to issue Form 16B (TDS certificate) to the seller.

Form 16B must be downloaded from the income-tax portal and issued to the seller within the prescribed time limit. This certificate enables the seller to claim credit of the TDS while filing the income-tax return.

Importance of PAN in Property TDS

PAN of both buyer and seller is mandatory for TDS compliance under Section 194IA. If the seller does not furnish PAN, TDS may be required to be deducted at a higher rate, leading to disputes and cash-flow issues.

Ensuring correct PAN details at the time of transaction is critical to avoid errors and future rectifications.

Common Compliance Issues in Property TDS

• Failure to deduct TDS on property transactions exceeding ₹50 lakh
  
• Delay in filing Form 26QB
• Incorrect PAN details
• Non-issuance of Form 16B
• Confusion in joint buyer or joint seller cases

Such lapses may attract interest, late fees, and notices from the Income Tax Department.

Special Situations : Where there are multiple buyers or sellers, TDS compliance must be done separately for each buyer–seller combination, and separate Form 26QB may be required. Careful structuring and accurate reporting are essential in such cases.

Consequences of Non-Compliance

Failure to comply with Section 194IA may result in:

• Interest for late deduction or late deposit
  
• Late filing fees
• Penalty proceedings
• Difficulty for the seller in claiming TDS credit

Conclusion

Section 194IA has made TDS compliance an integral part of property purchase transactions. Buyers must be aware that TDS on property is a statutory obligation, even for first-time or individual purchasers. Proper deduction, timely filing of Form 26QB, and issuance of Form 16B are essential to ensure smooth completion of property transactions and avoid future disputes.