Property purchase & sale — 194-IA TDS and capital gains

A property transaction creates duties on both sides of the table, and both sides usually find out about them late.

If you are buying. Section 194-IA requires the buyer to deduct 1% TDS where the consideration or the stamp duty value of the property is ₹50 lakh or more. It is the buyer's obligation, not the seller's, and it is discharged through Form 26QB — a challan-cum-statement filed within thirty days from the end of the month of deduction — followed by Form 16B to the seller. Joint buyers and joint sellers each need their own 26QB, which is where most defaults come from. Agricultural land outside the specified limits is outside the section.

If the seller is an NRI, 194-IA does not apply at all: section 195 does, at a much higher rate, on the whole consideration rather than the gain, and the buyer needs a TAN to comply. Deducting 1% in that situation is a default waiting to be discovered.

If you are selling. We compute the gain properly: holding period, cost of acquisition and improvement, transfer expenses, and the exemptions you are entitled to — reinvestment in a residential house under section 54 or 54F, and bonds under section 54EC within the six-month window and the annual cap. Where the sale falls near a year end, the timing of possession and payment can change the tax materially, so it is worth asking before you sign, not after.

Property is also where the capital gains account scheme matters: if the reinvestment will not be complete before the return is due, the money has to be parked in the right kind of account to keep the exemption alive.