TDS on 1% refers to a specific rate of Tax Deducted at Source that applies to certain financial transactions in India. Most notably, and as highlighted in the provided reference, this 1% rate is relevant for the sale of immovable property.
According to the reference:
- A TDS deduction of 1% of the entire sale value will be made by the buyer.
- This deduction is made by the buyer when they purchase an immovable property.
When Does 1% TDS Apply to Property Sales?
While the rate is 1%, it doesn't apply to all property transactions. The reference explicitly states a crucial condition:
- No TDS payment on the sale of the property is deducted if the property's value is less than Rs.50 lakhs.
This means the 1% TDS rule comes into effect only when the value of the property being sold is Rs. 50 lakhs or more.
Key Aspects of 1% TDS on Property
Understanding the context of this 1% deduction involves several points:
- Rate: The rate of TDS is exactly 1% of the total sale consideration.
- Applicability Threshold: Applies only if the sale value is Rs. 50 lakhs or above.
- Payer of TDS: The buyer of the property is responsible for deducting this tax.
- Basis of Deduction: The deduction is calculated on the entire sale value, not just the amount exceeding Rs. 50 lakhs.
- Payment Flexibility: The reference mentions that the buyer may pay in instalments, suggesting the payment method for the property value doesn't alter the TDS obligation if the threshold is met.
Practical Example
Let's illustrate with examples:
-
Scenario 1: Property Value below Threshold
- Property Sale Value: Rs. 45,00,000
- Is TDS applicable? No, because the value is less than Rs. 50 lakhs.
- TDS Amount: Rs. 0
-
Scenario 2: Property Value at or above Threshold
- Property Sale Value: Rs. 65,00,000
- Is TDS applicable? Yes, because the value is Rs. 50 lakhs or more.
- TDS Rate: 1%
- TDS Amount: 1% of Rs. 65,00,000 = Rs. 65,000
- Action Required: The buyer must deduct Rs. 65,000 before paying the seller and deposit this amount with the government.
Summary Table: TDS on Property Sale
To summarize the applicability based on value:
| Property Sale Value | TDS Rate | Buyer's Obligation |
|---|---|---|
| Less than Rs. 50 lakhs | 0% | No TDS deduction required |
| Rs. 50 lakhs or more | 1% | Deduct 1% of the entire value and deposit with Govt. |
In essence, when people refer to "TDS on 1%", they are very likely referring to the mandatory 1% TDS deduction required on the sale of immovable property in India when the transaction value meets or exceeds Rs. 50 lakhs, with the responsibility lying entirely on the buyer.
