The Icon Faridabad · Buyer Q&A
What are the TDS rules on a commercial property purchase in India?
Section 194-IA at a glance
Section 194-IA was introduced in 2013 to bring property transactions into the tax-deduction-at-source framework. The rule: when the property's consideration is ₹50 lakh or more, the buyer must deduct 1% TDS from each payment made to the seller and deposit it with the IT Department against Form 26QB. The TDS is on the seller's PAN, not the buyer's. The seller can claim credit for this TDS while filing income tax — so it's a withholding mechanism, not an extra tax.
How it applies to under-construction purchases
For under-construction property, payments are made milestone-by-milestone over 24-36 months. The buyer deducts 1% TDS from each milestone payment and deposits each one separately within 30 days from the end of the month of payment. Each deposit needs a corresponding Form 26QB. This is administratively heavier than a single deposit, and many buyers underestimate the operational load. Have a CA or your developer's payment-cell help you with the Form 26QB workflow on each milestone.
What happens if you miss the TDS
Two consequences. First, the seller doesn't get TDS credit and may chase you for the deposit. Second, the buyer becomes personally liable under Section 201 — interest at 1-1.5% per month on the unpaid TDS, plus a penalty equal to the TDS amount under Section 271C, plus prosecution risk in egregious cases. None of this is theoretical: TDS-on-property non-compliance is a high-frequency notice issue from the IT Department. Get it right at every milestone or have your CA do it for you.
Verification — is TDS deductible on this specific purchase
Three checks: (1) the total consideration including BSP + statutory charges crosses ₹50 lakh — if it does, TDS applies; (2) the seller is an Indian resident (different rules apply to non-resident sellers — Section 195 kicks in with higher TDS rates); (3) the property is land or a building (immovable property) — TDS does not apply to certain transactions like agricultural land in some categories. Cross-check with your CA on the specific transaction profile.
Talk to the HRERA-registered channel partner
Unit-specific cost sheet, payment plan and the current pre-launch discount on WhatsApp within 10 minutes.