TDS on Property Sale (1%)

TDS (Tax Deducted at Source) is a mandatory tax withholding mechanism where the property buyer must deduct 1% from the payment when buying a property valued above 50 lakhs. This 1% is deducted at the time of payment and deposited directly with the income tax authorities by the buyer. The seller receives the remaining 99% as net proceeds from the sale. TDS is a compliance requirement under Section 194LA of the Income Tax Act and applies to all immovable property transactions (residential, commercial, land) above the threshold. The actual amount of TDS deducted becomes a credit against the seller's total income tax liability when filing their return. However, sellers can obtain a TDS exemption certificate from the income tax department if they can prove their income doesn't require TDS deduction. Understanding TDS is essential for property sellers to correctly estimate their net proceeds and for buyers to plan their payment accurately.