Buying a home or investment property is one of life’s most significant financial milestones. Whether you are exploring residential projects in Dhanori, considering flats in Pune Satara Road, or looking at 2 BHK flats in Kharadi Pune, the excitement of owning your dream property comes with certain legal and financial responsibilities. Among these, TDS on Property Purchase is one of the most important aspects that every buyer must understand to avoid penalties and ensure smooth ownership transfer.
In this comprehensive guide, we’ll walk you through what TDS is, how it works, when it applies, and the steps to pay it correctly in 2025. By the end of this article, you’ll have a clear roadmap to comply with India’s Income Tax rules while investing in luxurious properties in Pune.
What Is TDS on Property Purchase?
TDS, or Tax Deducted at Source, is a system under the Indian Income Tax Act designed to collect taxes at the time of a financial transaction itself. Instead of the seller paying all taxes at the end of the financial year, a portion of the payment is deducted by the buyer and remitted to the government.
In the context of real estate, this means:
- When purchasing property worth ₹50 lakhs or more, the buyer deducts 1% TDS from the total sale price.
- This amount is deposited with the government via Form 26QB, an online TDS challan.
- The buyer then provides the seller with a certificate (Form 16B) as proof of tax payment.
The system ensures compliance, reduces tax evasion, and protects both the buyer and seller in a transaction. For instance, if you are looking at luxury projects in Pune or 2 BHK flats in Kharadi, this process becomes a mandatory part of your purchase journey.
When Does TDS Apply and When It Doesn’t
It’s important to know the exact circumstances under which TDS is applicable:
TDS is applicable if:
- The property value is ₹50 lakhs or more.
- The property being purchased is non-agricultural, including residential flats, houses, commercial buildings, or land.
TDS is not applicable if:
- The property is agricultural land in rural areas.
- The sale price is less than ₹50 lakhs.
This means even if you are exploring residential projects in Dhanori or flats in Pune Satara Road for personal use, TDS becomes relevant only when the transaction exceeds ₹50 lakhs.
Understanding the TDS Rate
According to Section 194-IA of the Income Tax Act 1961, TDS on property purchase is calculated at 1% of the total sale value. This is straightforward but often misunderstood.
For example, if you are buying a 2 BHK flat in Kharadi Pune worth ₹90 lakhs, the TDS would be:
TDS = 1% of ₹90,00,000 = ₹90,000
A few key points to remember:
- TDS is calculated on the entire sale value, not just the portion exceeding ₹50 lakhs.
- Stamp duty, registration fees, and GST are not included in TDS.
- If the seller does not provide a valid PAN, TDS may be deducted at 20%, which can significantly increase your financial liability.
Step-by-Step Process to Pay TDS on Property Purchase
While TDS might sound complex, the process is simple if followed systematically.
Step 1: Deduction
As the buyer, you are responsible for deducting TDS before paying the seller.
- Verify the seller’s PAN to ensure the standard 1% rate applies.
- Deduct 1% of the total sale value if the property is ₹50 lakhs or more.
- Only after this deduction can you pay the remaining amount to the seller.
For example, if the property is worth ₹65 lakhs:
- TDS = ₹65,000
- Payment to seller = ₹64,35,000
Step 2: Deposit
After deduction, the TDS must be deposited with the government. This is done via Form 26QB, an online challan:
- Log in to the Income Tax e-filing portal.
- Navigate to e-Pay Tax → New Payment → 26QB (TDS on Sale of Property).
- Enter details about the buyer, seller, and the property including type, address, sale value, and agreement date.
- Choose the payment method (net banking, RTGS/NEFT, or debit card) and make the payment.
- Download the challan receipt for your records.
This online system ensures the process is seamless, transparent, and avoids unnecessary delays.
Step 3: Issuing the TDS Certificate
After a week, the payment reflects in Form 26AS, confirming the government has received the TDS. Next:
- Log into TRACES portal using your PAN and challan details.
- Download Form 16B for the seller.
- Share the certificate with the seller within 15 days of filing Form 26QB.
This step is crucial as it allows the seller to claim credit for TDS in their income tax return.
Special Cases You Should Know
TDS rules have specific nuances depending on the transaction:
- Purchasing from an NRI Seller: TDS is typically higher (20% or more). Buyers may need a TAN and professional guidance.
- Under-Construction Properties: TDS applies to each instalment if the total value exceeds ₹50 lakhs.
- Joint Buyers or Sellers: Each party’s PAN must be entered separately in Form 26QB.
- Power of Attorney Transactions: TDS must be deducted in the name of the actual seller, not the PoA holder.
- Bank Auction or Court Sale: Deduction is required if the property value is above ₹50 lakhs, payable to the bank or court.
These rules ensure compliance across all real estate transactions, including luxury projects in Pune or 2 BHK flats in Kharadi Pune.
Penalties for Non-Compliance
Failing to comply with TDS regulations can lead to serious consequences:
- Interest on late deduction or deposit
- Penalty of ₹200 per day for delayed Form 26QB filing
- Disallowance of expenses for the seller
- Legal action in extreme cases
Thus, following the TDS process meticulously safeguards both buyer and seller.
Why TDS Awareness Matters in Pune Real Estate
Pune’s real estate market is thriving, with options ranging from residential projects in Dhanori to offices in Viman Nagar Pune. Many buyers focus solely on amenities and location, but TDS compliance is equally important.
- Investing in flats in Pune Satara Road without proper TDS payment can lead to penalties later.
- Professionals buying 2 BHK flats in Kharadi Pune or luxurious flats in Pune for convenience near work locations must consider TDS in their budget planning.
- Even when exploring luxury projects in Pune, proper TDS payment ensures legal clarity and smooth transaction closure.
Latest Updates on TDS in 2025
- Threshold: Applies to properties worth ₹50 lakhs or more
- Rate: 1% with PAN, 20% without PAN
- Form 26QB Deadline: Within 30 days from month-end in which TDS was deducted
- Form 16B Deadline: Must be issued within 15 days after filing Form 26QB
- Digital Process: Fully online for transparency and efficiency
Conclusion
Understanding TDS on Purchase of Property is essential for every property buyer in India. Whether you are looking at residential projects in Dhanori, flats in Pune Satara Road, 2 BHK flats in Kharadi Pune, or premium luxury projects in Pune, complying with TDS rules ensures your property transaction remains smooth, legal, and hassle-free.
At Goel Ganga Developments, we not only provide luxurious flats in Pune and premium housing options but also guide buyers on all compliance aspects, including TDS. Your dream home in Pune can become a reality while staying fully compliant with tax regulations.
Invest smart, stay informed, and let your property journey be as seamless as possible.
FAQs
1. Who pays TDS on property purchase?
The buyer deducts TDS from the sale value and deposits it with the government on behalf of the seller.
2. Can TDS be avoided?
No, if the property value exceeds ₹50 lakhs. Only agricultural land or properties below ₹50 lakhs are exempt.
3. Is TDS refundable?
Yes, the seller can claim it while filing their ITR if the total tax liability is less than the deducted TDS.
4. Does TDS apply to under-construction properties?
Yes. TDS must be deducted on each instalment for properties worth ₹50 lakhs or more.
5. What happens if TDS is not paid?
Late payment or non-compliance can attract interest, penalties, and even legal action.
