Budget 2024: 1% TDS on Property Sales Over Rs 50 Lakh, Even with Multiple Sellers or Buyers

If you are planning to sell your property worth over Rs 50 lakh involving multiple buyers or sellers, a TDS of 1 per cent will apply, according to Finance Minister Nirmala Sitharaman’s Budget Speech 2024-25.

Presenting the Union Budget 2024-25, FM Nirmala Sitharaman stated, “It is proposed to clarify that where there is more than one transferor or transferee in respect of an immovable property, the consideration for the transfer shall be the aggregate of the amounts paid or payable by all transferees to all transferors for the property.”

The government clarified in the budget document that Section 194-IA of the Income Tax Act requires tax deduction on payments for the transfer of certain immovable properties, excluding agricultural land. An amendment will be made to clarify this.

Under current law, the buyer (transferee) is responsible for deducting tax at source on the amount paid to the seller (transferor) for transferring the immovable property.

As per the budget document, Sub-section (1) of Section 194-IA states that any person responsible for paying a resident any sum by way of consideration for transferring any immovable property must deduct an amount equal to 1% of the sum or the stamp duty value of the property, whichever is higher, as income tax at the time of credit or payment.

Sub-section (2) specifies that no tax deduction should be made if both the consideration for the transfer and the stamp duty value of the property are less than Rs 50 lakh.

“It has been observed that some taxpayers interpret the consideration being paid or credited as referring to each individual buyer’s payment rather than the total consideration paid for the property. Hence, if a buyer pays less than Rs 50 lakh, no tax is being deducted, even if the property’s value and stamp duty exceed Rs 50 lakh. This goes against the intention of the legislature,” the document stated.

To address this, the government proposes amending Sub-section (2) of Section 194-IA to clarify that where there is more than one transferor or transferee for an immovable property, the consideration shall be the aggregate amount paid or payable by all transferees to all transferors.

These amendments will take effect from October 1, 2024.