Effective 1st June 2013, when you buy a property, you have to deduct TDS at the time of making payment to the seller. This has been laid out in Section 194 IA of the Income Tax Act.
Here are the requirements of this section –
- The buyer has to deduct TDS @ 1% of the total sale consideration. However, No TDS is deducted if sale consideration is less than Rs 50lakhs. If installments are being paid – TDS has to be deducted on each installment.
- TDS is applicable on the aggregate sale price of the transaction – applicable even when there are more than 1 buyer or seller.
- Providing PAN of the seller is mandatory – or else TDS is deducted @ 20%. PAN of the buyer is also mandatory.
- TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
- It is not compulsory for the buyer to obtain a TAN number.
- This TDS has to be deposited with along with Form 26QB within 7 days from the end of the month in which TDS was deducted.