TDS on the Property from June 1, 2013

It is an added liability now for all the owners who own the property above 50 lakh. According to Union Budget 2013-14 an additional tax is now being imposed on property transactions. In order to track real estate transactions more widely, the Finance Minister has introduced this new TDS provision through Section 194IA with the current TDS provisions contained under the Income Tax Act. This provision will be in effect from tomorrow i.e. 1st June 2013.

The bill has proposed that purchaser of an immovable property worth Rs 50 lakh and above, which excludes the agricultural land is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor and also that the tax will be cut from the total value and not the balance amount. The sole idea behind this policy was to bring transparency in the whole process of property dealings.

This will add to the responsibilities of buyers as they will have to deduct the tax amount from the payout and deposit it with the government. So, for instance if the property is of Rs 1 crore then a tax of Rs 1 lakh is deductible.

Now, every buyer will have to obtain a TAN number to comply with the provision, deposit the tax deducted within the specified time limit with the government and file the quarterly TDS returns mentioning the Permanent Account Number of the seller. He will also have to issue a TDS certificate to the seller. The proposed TDS provision is required to be applied on gross transaction value and not on the net gains.


Property in Gurgaon