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Understand TDS Applicable on Property

· Loan Against Propert

TDS or Tax Deducted at Source is a definite amount which is charged on monetary transactions like, income tax payment, house rent, salary payment, etc. according to the Income Tax Act, 1961. The Government of India has implemented TDS on property to mitigate the use of illegitimate funds in property-related transactions.

According to the Finance Bill, 2013, TDS is applicable on the sale of immovable property. However, it is only applicable if this transaction value exceeds Rs.50 lakh. In such a case, as per section 194 IA of the IT Act, 1961, a purchaser will deduct a 1% TDS on the entire transaction before making the final payment. Purchasers have to then pay this money back to the government by depositing it in any government account through any authorised financial institution.

Points to remember for purchasers

  • Deduct 1% tax as TDS.

  • Collect PAN details of the seller.

  • PAN of both seller and purchaser should be submitted while filling up the form.

The purchaser and not the seller should complete TDS on property. Homebuyers have to fill up Form 26QB to pay this deducted tax amount to the Income Tax Department. After that, they have to collect Form 16B and provide it to the seller as a validation of tax deduction and payment.

If you are looking to buy properties in Delhi, be ready to pay property tax in Delhi as well as TDS. Paying property tax is vital in case you want to avail a loan against property in the future.

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