Your Money: Tweak in TDS on property sale to prevent tax evasion

Your Money: Tweak in TDS on property sale to prevent tax evasion

In Budget 2022, finance minister Nirmala Sitharaman proposed that the 1% TDS (Tax Deduction at Source) on non-agriculture immovable property of Rs 50 lakh or more will be calculated based on the sale price or the stamp duty value, whichever is higher. The Income Tax Act will have an amendment to incorporate this change in Section 194-IA. This amendment will be applicable from April 1, 2022.

How the TDS will be calculated

For example, if X has bought a property for Rs 70 lakh but the stamp duty value of such property is Rs 75 lakh, TDS of 1% will be now calculated and deducted on Rs 75 lakh. X will deduct Rs 75,000 as TDS and pay the remainder to the seller. Till now, TDS was deducted only on the consideration value of the immobile properties and not on the stamp duty. This amendment will remove inconsistencies in TDS computation where the property’s value is Rs 50 lakh or more. The tax department will also track tax evasion where a property is bought below the stamp duty value.

The government proposed the amendment in Section 194-IA of the Income Tax Act, to remove inconsistency with Section 43CA and 50CA of the law.

Earlier Section 194-IA provided a deduction of 1% TDS on the amount of consideration paid by the transferee to the transferor. On the other hand, Section 43CA and Section 50C of the Act had provisions for calculating income under the head ‘profits and gains from business or profession’ and ‘capital gains’ respectively. The stamp duty value was also considered. However, this inconsistency is now addressed as per the new amendment.

Details on TIN website

Property buyers will have to deduct the TDS and deposit the same in the government treasury by quoting his PAN and the seller’s PAN. They will have to furnish information regarding the transaction online on the TIN website i.e.

After successfully providing details of the transaction, the buyer can either make the payment online (through the e-tax payment option) immediately or make the payment subsequently through the e-tax payment option (net-banking account) or by visiting any authorised bank branches. However, such bank branches will make e-payment without digitisation of any challan. The bank will get the challan details from the online form filled out on TIN website (

The transaction details will reflect in Form 26AS of both buyers and sellers. The income tax department may launch an enquiry in case of any mismatch. The new provisions are expected to bring more transparency in property transactions and remove inconsistencies in TDS calculation.