TDS on Sale of Property: In this year’s budget, changes have been made in the rules related to TDS on the purchase and sale of property. The government says that these new rules will bring transparency in property deals and reduce tax evasion. CA C. Kamlesh Kumar, Taxation Partner, Income Tax Consulting Firm, Ravi Rajan & Co LLP, Delhi, is telling us about this.
This year’s budget was a surprising budget in a way. In this, a lot of relief has been given to the middle class. The Finance Minister has made the income tax zero for those earning up to Rs 12 lakh a year. Along with this, the Government of India has made a big change in the Finance Act 2025 to prevent tax evasion in property deals. This change is about TDS (Tax Deducted at Source) on the sale of property. CA C. Kamlesh Kumar, Taxation Partner, Income Tax Consulting Firm, Ravi Rajan & Co LLP, Delhi, is telling us about this.
What has happened?
The Finance Act 2025 has also made an important change in property deals. There is already a provision to deduct one percent (1% TDS) TDS on purchasing property worth more than Rs 50 lakh. This amount has to be deducted by the buyer while paying the money to the selling party. This amount has to be deposited in the Income Tax Department. However, there was an exemption in this earlier. This exemption was in the case of joint owners or joint buyers.
What used to happen earlier?
If a property belonged to more than one person (joint owner), and the share of each owner was less than ₹ 50 lakh, then the buyers did not deduct TDS. They used to say that TDS does not apply because the share of each seller is less than the limit, even if the total value of the property is more than ₹ 50 lakh.
What does the law say now?
The new rule removes this deficiency. From FY 2025-26, TDS will be calculated on the full value of the property, and not on the share of each co-owner. If the total sale price is more than ₹50 lakh, 1% TDS will have to be deducted on the entire amount. This rule will also apply if the property has more than one owner or more than one buyer. This rule applies to the sale of all properties except agricultural land.
Let us understand this with an example
- Suppose Mr. A sells a property for ₹70 lakh to Mr. B and Mrs. B, and both pay ₹35 lakh each.
- Earlier (before FY 2025-26): No TDS was deducted as the share of both was ₹35 lakh, which is less than ₹50 lakh.
- Now (from FY 2025-26): 1% TDS will be deducted on ₹70 lakh as the total value exceeds ₹50 lakh, even if the payment is made by two buyers or joint owners.
Some other important points
- The buyer must obtain the seller’s PAN (Permanent Account Number). If the seller does not have a PAN, the TDS will be 20% instead of 1%, and the seller will not get credit for it.
- The TDS must be deposited with the government using Form 26QB. This must be done within 30 days of the month in which TDS is deducted.
- The buyer must also issue Form 16B (TDS Certificate). This must be given to the seller within 15 days of filing Form 26QB.
If the seller is a non-resident
In such a case, the TDS will not be 1%. This will be either 12.5% without indexation, or 20% with indexation (plus surcharge and 4% health and education cess). This comes under section 195 of the Income Tax Act. The seller or the buyer can apply for a certificate to deduct less TDS. They can also apply to pay less or zero TDS under section 197, depending on the approval. The buyer will need a TAN number to deduct TDS.
Why the change
This change has been made to bring transparency in tax, reduce tax evasion and bring discipline in high-value property deals. Now both buyers and sellers should be more careful and follow the TDS rules properly. The government wants everyone to pay taxes honestly. Therefore, these new rules have been made. “Pay taxes, build the country!” Also, it is now very important to take care of TDS while buying or selling property. If you do not follow these rules, you may get into trouble. So, always be careful and have the right information. If you have any doubts, consult a tax expert. They can guide you in the right direction.
Most Read Articles:
- Income Tax: Zero tax on income up to Rs 17 lakh without any chartered accountant help! know how
- Bank New FD Interest Rates: These bank including SBI changed interest rates on FD, check new rates here
- Credit Card Link UPI: Link your credit card to UPI from home, know step-by-step guide
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
