Government Clarifies TDS Rules for Real Estate Transactions

The government clarified that a 1% TDS will apply on the sale of immovable property valued at Rs 50 lakh or more, even with multiple buyers and sellers involved. Finance Minister Nirmala Sitharaman addressed this in her Budget Speech to resolve misinterpretations of the law.

The government has clarified that a 1% TDS will be applied to the sale of immovable property valued at Rs 50 lakh or more, even when multiple buyers and sellers are involved. This was articulated by Finance Minister Nirmala Sitharaman during her Budget Speech, addressing ongoing misinterpretations of tax provisions.

On Tuesday, the government stated that the 1% TDS rule applies to transactions of immovable properties involving multiple parties if the total consideration is Rs 50 lakh or more. The amendment to Section 194-IA of the Income Tax Act will ensure this.

Clarifying further, the budget document notes that the total amount paid or payable by all parties involved will be considered for TDS calculation. The rule changes aim to plug loopholes and ensure proper tax collection, and will take effect from October 1, 2024.