Property Rules – If you’re planning to buy or sell a property anytime soon, here’s some important news. From April 2025, the Indian government has rolled out new guidelines for TDS (Tax Deducted at Source) in property transactions. These updated rules are designed to prevent tax evasion, streamline compliance, and ensure more transparency in real estate deals.
So whether you’re a first-time buyer or an experienced seller, it’s important to stay informed and make sure you’re following the latest guidelines. Let’s break it down in simple terms.
Why TDS Is a Big Deal in Property Deals
TDS in property transactions is not just a formality. It ensures that sellers don’t get away without paying taxes on their profits and helps the government track high-value transactions in real-time.
As per Section 194-IA of the Income Tax Act, buyers need to deduct TDS when purchasing property (other than agricultural land) if the value is more than ₹50 lakh. The deducted amount must then be deposited with the government.
These rules help prevent the under-reporting of sale amounts, ensure more accurate tax reporting, and provide a digital trail for transactions.
What’s Changed in April 2025
The new rules don’t just tweak old laws—they add some clarity and bring new compliance steps. Here’s what’s new:
Also Read:
Ration Card New Rules : Big Shock for Ration Card Holders – New Rules Effective from April 27
- The TDS rate remains 1 percent for properties above ₹50 lakh
- TDS must be calculated on the higher of the sale price or the stamp duty value
- PAN and Aadhaar of both buyer and seller must be linked to proceed
- Online payment through Form 26QB is now compulsory within 30 days of payment
- In case of multiple sellers, the buyer must deduct TDS proportionately for each seller
- Delays or non-compliance now carry stricter penalties and interest
This update is mainly about better enforcement and digitization.
Who Needs to Deduct TDS and When
Here’s a quick overview of when TDS is applicable and how it works depending on the property deal:
- Residential property above ₹50 lakh: TDS applies
- Under-construction property worth over ₹50 lakh: TDS applies
- Agricultural land: No TDS
- Multiple sellers: Deduct TDS in parts for each seller
- Sale below ₹50 lakh: TDS not applicable
- NRI sellers: TDS at 20 percent, regardless of property value
Remember, the threshold of ₹50 lakh is based on the total transaction value or stamp duty value, whichever is higher.
Step-by-Step Process for TDS Deduction
If you’re the buyer, follow these steps to stay compliant:
- Confirm that both your PAN and Aadhaar, and those of the seller, are linked
- Figure out whether the sale price or the stamp duty value is higher, and calculate 1 percent of that
- Deduct the TDS before making full payment or registering the property
- Fill out Form 26QB online within 30 days of deduction
- Use net banking or digital modes to deposit the amount
- Download Form 16B and give it to the seller within 15 days
Simple, right? Just make sure you stick to the timeline.
Mistakes That Can Cost You
A small mistake can lead to penalties or interest. Here’s what you should avoid:
- Skipping TDS deduction when value is just above ₹50 lakh
- Delaying the payment of TDS beyond the 30-day limit
- Filling in incorrect PAN or Aadhaar numbers
- Forgetting to issue Form 16B
- Assuming the land is agricultural without confirming land records
Always double-check documents and keep a paper trail.
Impact on Buyers and Sellers
For buyers, the biggest change is the need for more paperwork and timely filing. Any delays could lead to interest and even legal notices.
For sellers, the deducted TDS will be visible in their Form 26AS, which means there’s no scope to hide the sale from tax authorities. The good news? It helps maintain clean financial records.
What Happens If You Mess Up
Here’s a quick look at the penalties and interest you might face:
- Not deducting TDS: 1 percent monthly interest
- Not depositing deducted TDS: 1.5 percent interest per month
- Late filing of Form 26QB: ₹200 per day
- Not issuing Form 16B: ₹100 per day
- Wrong PAN or Aadhaar: ₹10,000 penalty
What You Should Do Right Now
If you’re planning a property deal soon, here’s what you need to focus on:
- As a buyer, verify all PAN and Aadhaar details early, and make sure you deduct and deposit TDS on time
- As a seller, keep track of Form 26AS and report full income from the sale
- If you’re a real estate agent or builder, educate your clients about these updates so they don’t run into trouble later
These changes might seem like a hassle, but they’re aimed at cleaning up the real estate sector and making property transactions more transparent. By following the steps correctly, you can avoid legal issues, penalties, and future tax problems.
It’s always a good idea to consult a tax expert if you’re unsure about anything. Stay updated, follow the rules, and make your property deal a smooth one.