Introduction

When choosing a property, most homebuyers focus on location, lifestyle amenities, and the builder’s credibility. Chennai offers a wide mix of residential options, from gated community apartments to premium villas and plotted developments, each promising convenience, security, and long-term value.

However, beyond selecting the right home, it is essential to understand the financial and legal responsibilities that accompany the purchase. One such key requirement is the deduction of TDS for property transactions above a specified value. Being aware of TDS requirements supports a smoother registration and ownership transfer, avoiding delays, mistakes, or future tax issues.

Table of Contents

  • Understanding TDS on Property Purchases
  • Why TDS Compliance Matters for Homebuyers
  • TDS in Under-construction Property Purchases
  • TDS on Property Purchases Directly from Builders
  • TDS in Land Purchase Transactions
  • Common Errors to Avoid
  • Calculate and Deposit TDS Correctly

Understanding TDS on Property Purchases

TDS on immovable property transactions is regulated under Section 194-IA of the Income Tax Act. Key considerations include:

  1. The responsibility of deducting and depositing TDS lies with the homebuyer, not the seller or builder. This ensures that tax collection happens at the source before the payment is completed.
  2. TDS must be paid to the government within the stipulated timeline. Typically, this needs to be done within 30 days from the end of the month in which the payment was made.
  3. Relevant forms must be filed to ensure proper documentation. Form 26QB and the TDS certificate (Form 16B) must be generated and shared with the seller.
  4. Non-compliance may result in penalties or interest charges. Delays or missed filings can affect property registration and future financial records.

Therefore, awareness of TDS while buying property is essential for ensuring that the transaction remains compliant and properly recorded.

Why TDS Compliance Matters for Homebuyers

Proper deduction and deposit of TDS helps ensure:

  1. Smooth and legally clear transfer of property ownership
  2. Avoidance of notices, penalties, or delays in documentation
  3. Seller receives an accurate tax credit in Form 26AS
  4. Transparency in government tax records

For homebuyers, accurate documentation is central to registration and handover. Errors in TDS deduction or filing may lead to administrative delays.

TDS in Under-construction Property Purchases

Many homebuyers choose under-construction properties because they offer flexible payment terms and a wider selection of layouts. However, TDS on an under-construction property has specific guidelines. In such cases:

  • TDS must be deducted each time an instalment is paid.
  • The deduction is calculated on the base sale value only, excluding GST.

This prevents over- or under-deduction and maintains compliance with tax rules.

TDS on Property Purchases Directly from Builders

When buying a home directly from a builder, the TDS process for property purchases requires attention to documentation accuracy. The homebuyer must:

  1. Ensure the PAN details for both the homebuyer and the builder are correct.
  2. Deduct 1% TDS before each payment instalment.
  3. File Form 26QB online for each deduction.
  4. Download and issue Form 16B to the builder as proof of TDS payment.

Many well-established property builders in Chennai provide support for homebuyers navigating this process, streamlining compliance.

TDS in Land Purchase Transactions

Homebuyers of plotted developments must consider TDS on land purchase where the land is:

  • Non-agricultural
  • The transaction value meets or exceeds the ₹50 lakh threshold.

Plotted developments offered by organised builders often come with structured approvals, internal road networks, utility infrastructure, and community-level safety features. These planned layouts support easier compliance because documentation is standardised and clear.

Common Errors to Avoid

When purchasing property, even small oversights can delay or complicate the process. Below are some common errors to avoid:

  1. Calculating TDS on the total amount, including GST or stamp duty (only the sale value is relevant). While handling TDS on flat purchase, some homebuyers mistakenly include GST or stamp duty in the calculation. This leads to deducting more TDS than required since only the base sale value should be considered.
  2. Missing the deadline for depositing TDS after payment. A delayed deposit can result in penalties and interest, increasing the overall cost of the property purchase.
  3. Incorrect PAN entry for homebuyer or seller. Even a small error in PAN details can lead to credit reflection issues for the seller and compliance mismatches for the homebuyer.
  4. Failing to submit Form 16B to the seller. This document acts as proof of TDS deduction, and not providing it can create complications during the seller’s tax filing.

Avoiding these errors ensures smooth processing and prevents administrative complications.

Calculate and Deposit TDS Correctly

TDS plays an important role in property transactions valued at ₹50 lakh or more, and understanding it helps ensure a smooth and compliant home purchase. Homebuyers must calculate and deposit TDS correctly to avoid penalties and delays.

If you would like guidance in understanding the TDS process for your home purchase, our experts at Casagrand are always available to assist you. Being aware of these requirements gives homebuyers the confidence to complete their purchase responsibly.