When purchasing an immovable property in India with a transaction value of ₹50 Lakh or more, statutory tax compliance is not the seller's responsibility alone. Under Section 194-IA of the Income Tax Act, 1961, the legal burden of deducting and depositing Tax Deducted at Source (TDS) rests entirely upon the buyer.
Every residential homebuyer or commercial property investor purchasing from a resident seller must deduct 1% TDS from the total consideration and deposit it with the central government using the online Form 26QB challan.
However, many buyers face severe tax penalty notices under Section 271H because they deduct 1% solely on the basic apartment price, overlooking statutory amendments that mandate TDS deduction across all ancillary charges—including car parking allotments, clubhouse memberships, internal development charges (IDC), and electricity meter fees.
Understanding the correct calculation base, filing deadlines, and TRACES Form 16B generation protects property buyers from interest penalties and registration snags.