Section 393 of Income Tax Act 2025

Entry at Serial No. 3 of Table given at Section 393(1) of Income Tax Act 2025 provides that any payment made to a Resident at the time of transfer of Immovable property shall be liable for TDS @ 1% where aggregate consideration for property is Rs 50 Lakh or more.

However, TDS not required in case of property is an Agriculture Land as defined in Section 2(22) of said Act. 

(Refer Section 194-IA of Income Tax Act 1961)

How to deposit TDS on Purchase of Immovable Property

There is a special procedure defined under Income Tax Rules for payment of TDS in this case. In general, TDS is deposited through TAN number, however, in this case, TDS is deposited through PAN account.

  • In the Income Tax Login Account, a form 26QB provided to pay the TDS. This form acts as return cum payment challan;
  • Fill the details of Seller, Buyer, Immovable Property in the given form;
  • Select Appropriate mode of Payment of TDS;
  • After making the payment, Acknowledment will be generated in Form 26QB along with Payment Challan;
  • Income Tax Portal transmits the information to Traces portal for further action by Department like verification and posting of TDS in seller 26AS, generation of TDS certificates, filing of correction returns or refund of excess paid TDS.

PAN Aadhar Verification

PAN Aadhar Verification is a significant important step to check whether PAN of seller is active or inactive. It may be possible that PAN is active for Income Tax Portal purposes, however, it may be inactive for TDS purposes (as per Traces Portal).

  • The Income Tax Department has made PAN–Aadhaar linking mandatory;
  • If the seller’s PAN is not linked to Aadhaar, it becomes inoperative;
  • An inoperative PAN is treated as if the seller has no PAN.
  • This can be checked on the Income Tax Department’s portal where PAN–Aadhaar linking status is available 

In case, PAN and Aadhar are not linked, TDS to be deducted at 20% instead of 1%.

It is the duty of Buyer of property to verify the PAN Aadhar linking status of seller before making payment of TDS. In case, Buyer pays TDS @1%, the department will ask additional 19% from Buyer where seller’s PAN founds to be inactive on the day of payment of TDS.

Questions? You’re Covered

In present times, income tax department has instructed to Registrar Authorities to ensure that TDS on such transactions are deducted and deposited before registering the document for transfer of property. Here are certain questions on the basis of past precedents:-

TDS is required to be deducted in case consideration for a property is Rs. 50 Lakh or more irrespective of number of parties involved in a transaction. In case of multiple sellers, TDS will be deducted in the ratio of ownership of property. In case of Multiple buyers, TDS to be deposited by all buyers in the ratio of ownership proposed in transaction.

Whatever amount is proposed to be paid to seller of property will be considered as consideration except GST. To avoid confusion, department has clarified that it includes all incidental charges linked to the property purchase, such as:

  • Club membership fees
  • Car parking fees
  • Electricity/water facility charges
  • Maintenance fees
  • Preferred location charges
  • Pent house charges
  • EDC/IDC
  • or any other payment by whatever name called

TDS to be deducted on higher of Stamp Duty Value or Actual Consideration. So, here stamp duty value is higher, TDS to be deducted on Stamp duty value (i.e. Circle Rate/Collector Rate) instead of actual consideration.

In case, overall property value is Rs 50 Lakh or more, any payment made from day one is liable for TDS. TDS will be deducted and deposited before making any instalment. Every instalment will act as a separate transaction.