Section 194-IA of the Income Tax Act, 1961, mandates Tax Deducted at Source (TDS) on payments made for the purchase of immovable property (excluding agricultural land) when the transaction value exceeds ₹50 lakh. Below is a structured breakdown of its provisions, compliance requirements, and penalties.
1. Applicability of Section 194-IA
✅ Covered Transactions:
- Residential/Commercial Property(flats, houses, land, buildings).
- Joint Ownership(threshold applies to the total property value, not individual shares).
- Incidental Charges(club fees, parking, maintenance, etc., added to sale consideration post-2019).
❌ Exemptions:
- Agricultural land(as per Section 2(14)(iii)).
- Transactions ≤ ₹50 lakh.
- Non-resident sellers(covered under Section 195).
2. TDS Rate & Deduction Rules
| PARAMETER | DETAILS |
| Rate (PAN Provided) | 1% of sale consideration or stamp duty value (whichever is higher). |
| Rate (PAN Not Provided) | 20% (under Section 206AA). |
| Threshold | ₹50 lakh (single transaction, not annual). |
| Timing | Deduct at the earlier of: |
- Payment (cash/cheque/installment).
- Credit to seller’s account . |
Example:
- Property Value: ₹60 lakh → TDS (1%): ₹60,000.
- If PAN Not Provided: ₹12 lakh (20%).
3. Compliance Requirements
A. Buyer’s Responsibilities
- Deduct TDS: At payment/credit (whichever is earlier).
- Deposit TDS: Via Form 26QBwithin 30 days of deduction.
- Issue Form 16B: To seller within 15 daysof filing Form 26QB.
B. Key Forms
- Form 26QB: Challan-cum-statement for TDS payment (online only).
- Form 16B: TDS certificate for seller (downloadable from TRACES).
C. Documents Required
- PAN of buyer & seller.
- Property details(address, sale agreement).
- Payment proof.
4. Penalties for Non-Compliance
| DEFAULT | CONSEQUENCE |
| Late Deduction | Interest @ 1% per month. |
| Late Payment | Interest @ 1.5% per month. |
| Non-Filing (Form 26QB) | Penalty up to ₹1 lakh + late fee (₹200/day). |
| Incorrect PAN | Higher TDS (20%). |
5. Key Exceptions & Clarifications
- No TAN Required: Buyers can use PANfor TDS deposit.
- Installment Payments: TDS applies per installment (if total > ₹50 lakh).
- Joint Buyers/Sellers: File separate Forms 26QB for each party.
6. Recent Updates (2025)
- No Surcharge/Cess: Only 1% flat rate applies.
- Higher Threshold for NRIs: Section 195 applies (20% TDS, no ₹50L exemption).
Key Points
🔹 1% TDS on property sales > ₹50L (PAN mandatory to avoid 20%).
🔹 Form 26QB must be filed within 30 days of deduction..
🔹 Seller’s PAN is critical for correct TDS credit in Form 26AS.
