Applicability of TDS on purchase of your new house

Budgeting | May 30, 2021 | 10 min read

Buying a property requires a decent amount of paperwork which includes various financial transactions and furnishing tax liabilities as applicable under the law. Tax Deducted at Source (TDS) deduction is one of such mandatory clauses, if the sales deed exceeds the value of more than INR 50 lakhs. Here are few important details about TDS deduction for first-time home buyers.  

Tax deducted at source

Tax Deducted at Source or TDS is an advance tax collection by taxation authorities, right at the source of income. As per the income tax regulation, any individual who is making some specific type of payment to someone is liable to deduct TDS and deposit it into the central government’s account. The deducted amount is later credited into the account of PAN card holder after through assessment by the income tax officials.      

When TDS is deducted?

Section 194IA mandates a homebuyer to deduct 1% tax of the sales value of the transaction if the total purchase is worth INR 50 lakhs or more. The law covers land, commercial property and residential property except agricultural land. In case a property has an agreement value of Rs 70 lakh then TDS has to be deducted on the entire amount – that is Rs 70 lakh. Thus INR 70,000 is paid to the government towards TDS.

According to the Budget 2019, any property purchased on or after 1 September 2019 will require TDS to be paid at 1% on the consideration value of amenities as well. This includes charges such as nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature.

It is important to note that TDS is to be paid on the entire sale amount. For example, if the agreement value of a house is Rs 90 lakhs, TDS will be paid on Rs 90 lakhs and not on the amount exceeding INR 50 Lakhs i.e. Rs 40 lakhs. Post the budget 2019 amendment to section 194-IA, in the above example, if on or after 1 September 2019, you have paid Rs 2 lakh towards parking fee, Rs 1 lakh for water facility fee and Rs 1 lakh for electricity fee, your sale consideration would be Rs 94 lakh. Thus 94,000 would be required to be paid as TDS (Rs 94 lakh at 1%). In case the transaction is carried out from 14 May 2020 to 31 March 2021, the rate is 0.75%.

TDS deduction, necessary documentation, and payment mode

Property buyer must deduct the TDS either at the time of signing the sales deed or during any advance payment, if paid prior to executing the conveyance deed. The deducted TDS amount   must be deposited within 30 days’ time from the last date of the month in which the deduction is made.

Necessary documents to deposit TDS in central government account include the following:

  • Form-cum-challan No. 26QB (one form for each homebuyer in case of multiple buyers)
  • Developer’s details (PAN, mobile number, name, email and address)
  • Homebuyers’ details (PAN, mobile number, name, email and address)
  • Property details (address, total value of transaction, date of agreement, payment date etc.)

Unlike other TDS deductions, property transaction does not require TAN number for execution of TDS.

TDS payment can be made in both online and offline mode through a bank challan, which would be updated on the IT department’s website by the bank. Once the TDS is submitted, homebuyer can download the TDS certificate and handover the certificate to the developer within 15 days. In case of any delay in TDS payment, the buyer may have to pay a penalty.      

Buying your first house or plot for building one is a very important decision from a financial perspective and personal growth point of view. But, sometimes, first-time homebuyers or young professionals may not have sufficient savings to fund the initial amount for down payment to buy a housing property. HomeCapital supports such individuals by helping them purchase their first house by offering an interest-free unsecured personal loan of up to 50% of the down payment. This assistance can be paid back in 12 EMIs.

Related posts

Quick links

HomeCapital podcast

Listen to our podcast

Offerings

Find projects based on your interests

Check eligibility

Calculate down payment assistance amount

Follow us

https://i0.wp.com/blog.homecapital.in/wp-content/uploads/2021/05/Applicability-of-TDS-on-purchase-of-your-new-house-1200-675.png
WebPageApplicability of TDS on purchase of your new house
WebSiteApplicability of TDS on purchase of your new house
OrganizationHomeCapitalhttps://cdn.homecapital.in/logo.pngHomeCapital is India's first Home Down Payment Assistance Program, revolutionizing the home ownership and changing lives of millions of home buyers.
en-US
ImageObject1200675Applicability of TDS on purchase of your new house
2021-05-30T16:49:49
en-US
Read Actoin
EntryPointhttps://homecapital.in/blog/applicability-of-tds-on-purchase-of-your-new-house
Applicability of TDS on purchase of your new houseBudgeting2021-05-30T16:49:49
WebPage
WebsiteApplicability of TDS on purchase of your new house
OrganizationHomeCapitalhttps://cdn.homecapital.in/logo.pngHomeCapital is India's first Home Down Payment Assistance Program, revolutionizing the home ownership and changing lives of millions of home buyers.
ImageObject1200675Applicability of TDS on purchase of your new house
2021-05-30T16:49:49en-US
ReadAction
EntryPointhttps://homecapital.in/blog/applicability-of-tds-on-purchase-of-your-new-house
OrganizationHomeCapitalhttps://cdn.homecapital.in/logo.pngHomeCapital is India's first Home Down Payment Assistance Program, revolutionizing the home ownership and changing lives of millions of home buyers.
HomeCapital,down payment,real estate Worken-US

Data Security

We use bank-level security for your protection.

Your information is encrypted with an AES 256 bit symmetric key.
Your connection to HomeCapital is always encrypted over HTTPS with Transport Layer Security (TLS). HomeCapital applications and data are physically located in multiple secure data centers. We utilize Amazon Web Services for our hosting which is compliant with numerous security certifications.

Disclaimer

The HomeCapital "Portal" and all its contents are only for the purpose of providing information regarding the HomeCapital Down Payment Assistance Program and should not be construed as binding. By using this website, you accept our Terms of Use and Privacy Policy. We are not a lending institution. All loans are made by our financial institution partners. The real estate properties listed on the Portal are not an advertisement or a solicitation and the customer shall independently review and verify the credentials of the project and/or the developer.

HCPL and it's partners reserve the right to reject any application at any time in accordance to its policies. To qualify, a borrower must be a Indian citizen and meet our financial partners underwriting requirements. To check for an applicant’s eligibility, our lending partner will request your full credit report from one or more credit bureaus. Not all applicants receive the down payment assistance. To qualify for the program, you must have a responsible financial history and meet other conditions. Assistance limits displayed are indicative, actual limits will depend on number of factors. If approved, your program assistance tenure will depend on a variety of factors, including down payment assistance amount, repayment capacity, a responsible financial history, years of experience, income, home-loan to value ratio and other factors.

All Rights Reserved. © Copyright 2020 Homeville Consulting Private Limited.

Jenkins