Here’s how you can deposit TDS while buying property and save yourself from Rs 1 lakh fine

Not many people are aware but you have to deposit TDS while buying a property of above Rs 50 lakh.

The tax gets deducted at source and if you fail to do, you may get a notice from the Income Tax department and a fine of Rs 1 lakh.

The rule came in from June 1, 2013, which stated that buyers had to give TDS on the total sale price using Form 26QB.

"Sometimes total sale price, which exceeds Rs 50 lakh in aggregate, may be payable in instalments. The TDS in that case must be deducted from each instalment no matter how small the instalment is. Most people fail to do that," Archit Gupta, founder, ClearTax.in, told ET.

The interest payable under Section 201 is 1% per month if tax wasn't deducted and 1.5% in case this was done but not paid.

“Take the example of a property purchased in January 2015 worth Rs 60 lakh where the first Rs 20 lakh was paid that month and the rest in June that year. For the first instalment of Rs 20 lakh, the interest will be applicable from January onwards, while that on the second payment will be from June 2015. There is also a late filing fee under Section 234E for delaying the interest payment of Rs 200 per day, subject to the maximum of taxes due. There may be some leniency if the seller has already paid capital gains tax or claimed capital gains exemption (on the sale of property),” Vaibhav Sankla, director, H&R Block, told ET.