Buying a property is an exciting step, but it also comes with financial responsibilities that many buyers overlook. One such obligation is the deduction of Tax Deducted at Source (TDS) when you purchase an immovable property. Many people are surprised to learn that even regular homebuyers are required to follow this rule under the Income Tax Act.

This article explains the key details about TDS on property purchases, including the latest rates, rules, and a few facts that often surprise buyers. It also shows how planning your loan and tax responsibilities can make the process smoother.

What Is TDS on Property Purchase?

TDS on property purchase is the tax that a buyer must deduct from the payment made to the seller. Under Section 194-IA of the Income Tax Act, if the consideration for transfer of immovable property (other than agricultural land) is ₹50 Lakh or more, you are required to deduct 1% of the sale consideration as TDS and deposit it with the government.

This rule applies whether the property is residential or commercial. The only exceptions are when the property value is below ₹50 Lakh or when you buy agricultural land. Many homebuyers do not realise that they are responsible for deducting and paying this tax, not the seller. Failing to do so can lead to penalties and interest later.

How to Deduct and Pay TDS?

The process of deducting and paying TDS is quite straightforward once you know the steps.

1. Check the property value: Ensure the sale consideration is more than ₹50 lakh.
   
   
2. Deduct 1 percent TDS: The deduction must be made from the total payment amount, including any advance.
   
   
3. Use Form 26QB: The payment and filing must be completed online using this form available on the TIN-NSDL website.
   
   
4. Provide Form 16B to the seller: After paying TDS, download the certificate and hand it over to the seller as proof.
   

These steps are simple but must be followed accurately to stay compliant. Keep in mind that the exact online process and portal layout can change, so always follow the latest instructions shown on the official website.

When and How Much TDS to Deduct?

The buyer must deduct 1% TDS at the time of making the payment or while crediting the amount to the seller’s account. If there are multiple buyers or sellers, the rule applies to each person based on their share in the property value.

For example, if two buyers jointly purchase a house worth ₹1 Crore, each buyer must deduct and deposit TDS on their share of ₹50 Lakh.

Common Mistakes Buyers Make

Many buyers make simple errors while handling TDS, often because of limited awareness. A few of these include:

• Forgetting to deduct TDS altogether
  
  
• Depositing TDS under the wrong section
  
  
• Missing the payment deadline (within 30 days from the month of deduction)
  
  
• Entering incorrect PAN details of the buyer or seller
  
  

Even small errors can delay the transaction or cause issues while registering the property.

Connection Between TDS and Home Loans

If you are purchasing property with the help of a home loan, understanding your TDS duty becomes even more important. The loan amount is disbursed in instalments, and TDS must be deducted proportionately on each instalment paid to the seller.

For instance, if you have taken a housing loan through a lender like PNB Housing Finance, you should coordinate with both the seller and the bank while processing the payment. The PNB Housing Finance home loan interest rate will help determine your EMI, but the TDS responsibility still lies with you as the buyer.

Failing to deduct tax at each payment stage can cause discrepancies in your income tax records later.

Surprising Facts About TDS on Property

Here are a few points that often surprise first-time buyers:

• TDS applies even when the payment is made in instalments
  
  
• If the seller does not have a PAN card, the TDS rate rises to 20%
  
  
• The ₹50 lakh threshold applies to the total sale value, not just the portion paid by one buyer
  
  
• TDS is required even for under-construction properties if payment exceeds ₹50 Lakh
  
  
• The buyer must file the TDS return, even if the seller is responsible for paying other taxes
  
  

Knowing these facts in advance helps you stay compliant and avoid last-minute confusion.

How a Financial Supermarket Helps Buyers?

A financial supermarket is an online platform where you can compare financial products such as loans, insurance, and credit cards in one place. When you plan to buy a property, such platforms help you:

• Compare home loan options and interest rates
  
  
• Check eligibility for pre-approved offers
  
  
• Access EMI calculators and repayment schedules
  
  
• Understand related tax obligations such as TDS
  
  

By comparing different lenders and rates, you can make better financial decisions before finalising your purchase.

Final Thoughts

Buying a home or commercial property is one of the most important investments of your life. Understanding TDS on property purchases helps you stay on the right side of the law and prevents unnecessary fines later.

Make it a habit to calculate your TDS, verify the seller’s PAN, and file the required forms on time. Using a financial supermarket can make your loan planning and payment process much simpler.

By combining smart financial planning with timely TDS compliance, you can enjoy a smoother, worry-free property purchase and focus on building your dream home instead of dealing with tax complications.