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TDS on Property

Home Taxes in India TDS on Property

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Updated: 30-12-2022 11:05:24 AM

What is Property Tax?

Buying a property is an important financial milestone for an individual and it involves taking a loan and repayment of it. Along with this comes the benefit of tax deduction on the re-payments of interests and principal amounts. However, there is one more responsibility of the buyers which is Tax Deduction at Source (TDS).TDS is now applicable for the purchase of the immovable properties like a building, a part of a building or purchasing a piece of land. It is applicable for the properties that cost over ₹50 lakhs. TDS on sale of property was introduced in the Finance Act of 2013-14.  As per Section 194 IA of Income Tax Act 1961, TDS is applicable for all transactions as a part of imposing tax on any capital gain that are taking place from June 1, 2013 onwards. This is effective for:

  • All property transactions of ₹50 Lakhs and above
  • Tax will be collected at 1% rate
  • The purchaser has to deduct the required amount of tax at the time of purchase while making payment of the selling consideration to the seller
  • This tax has to be deposited to the Government
  • Tax payment has to be made through any authorised bank
  • Agricultural land is excluded from the purview of this deduction

Agricultural lands that are excluded from TDS at the time of sale transaction are defined as:

  • A land that is not situated within the jurisdiction of any Cantonment Board or Municipality that is having a population of at least 10,000
  • The land should be more than 2 km away (Aerial distance) from a Cantonment Board or Municipality in case the population of municipality is between 10,000 and 1,00,000
  • The land should be more than 6 km away (Aerial distance) from a Cantonment Board or Municipality in case the population of municipality is between 1,00,000 and 10,00,000
  • The land should be more than 8 km away (Aerial distance) from a Cantonment Board or Municipality in case the population of municipality is more than 10,00,000
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