Purchasing a new property is a dream come true for most of us. The experience of owning a house you can call your own is unparalleled. Got your eyes on a property you would love to buy? Already applied for an affordable home loan? While most buyers are aware of the tax liabilities associated with selling a property, very few of them know about the tax on property purchases. Since investing in property is a big decision, you must understand these obligations beforehand for a seamless experience.

Here are a few points to remember when you are looking to buy a new property.

When do you need to deduct TDS?

According to section 194IA of the Income Tax Act, if a property is priced above Rs. 50 lakhs, the buyer has to deduct 1% TDS on purchase of property (Tax Deducted at Source).These properties include commercial property, residential property, and land. You need to deduct the TDS either when you are executing the conveyance deed or at the time of paying any required advance before the execution of the deed.

Further, you have to pay the TDS to the central government within 30 days of the end of the month when tax is deducted.

Additional Read –How to Deduct TDS on Home Loan in India?

How to pay TDS online?

You need to obtain a Tax deduction account number (TAN) to deduct TDS. However, in the case of immovable property, you do not require a TAN. For TDS payment, you need to fill the form-cum-challan no. 26QB. Following are the steps to pay TDS online-

  • Visit the TIN NSDL website
  • Click on the option “TDS on sale of property”
  • Next, click on “Online form for furnishing TDS on property”
  • Choose the applicable form, “TDS on sale of property”
  • Fill in the required details of both the buyer and seller, including property details, Pan card, personal details, and tax deposit details
  • Confirm your submission and save the number displayed for future reference
  • Make the required payment via net banking

Fill in the details carefully to avoid mistakes as the website doesn’t allow you to rectify errors once you’ve submitted the form.

Key points to remember

Consider these important points with regards to TDS on purchase of property –

  • The tax is calculated on the overall price of the property and not just on the amount above Rs. 50 lakhs
  • You need the seller’s PAN card details for all transactions
  • The tax rate for an NRI seller will differ, which is calculated under Section 195 of the IT Act
  • If you pay for the property in installments, each instalment will carry taxes
  • You have to file the tax deduction with the government within 7 days of filling the Form 26QB

Additional Read – Your Detailed Guide for Buying a House in Top Indian Cities

Preparing to buy your home?

We know buying a new home is a huge financial decision. That is why Tata Capital is here to offer you a wide range of housing finance options at attractive home loan interest rates.With a loan starting from Rs. 5 lakhs and easy repayment options, your dream home is now just a click away.

Contact us to know more and check your home loan eligibility today!

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