TDS u/s 194-IA on the Home Loan Disbursement Amount

This query is : Resolved

Quick Summary

When purchasing a property over Rs. 50 lakhs, you are responsible for deducting 1% TDS on the sale consideration. For home loans, this means arranging for the bank to disburse 99% of the loan amount directly to the seller and transfer the remaining 1% to your account. You then use this 1% to pay the TDS to the government via Form 26QB. A sample letter format is provided to request this arrangement from your bank.

niki

niki (Querist)
Follow

09 April 2025 Hi All,

I am buying a property for 80 lacs. I have paid a token amount of Rs. 1,00,000/- to the seller on 2nd April 2025. Housing loan will be of Rs. 50 lacs.

The balance sale consideration will be pay in 3 instalments i.e. Rs. 9 lacs on 10th April 2025 and Rs. 20 lacs 15th April 2025 and the Sale Agreement will also be signed on the same day - 15/04/2025. Finally, the balance amount will be paid by housing loan directly by bank.

I will pay tds on payments to seller thru my bank account - as 99% to the seller and 1% to GOVT. thru 26QB...
but what about tds on home loan amount? how does it work?

My query is how tds paid on home loan amount? whether I should pay or bank will deduct and pay on my behalf?

Should I inform bank to pay 99% to seller and 1% to me (my sb a/c) and then I pay tds thru 26QB? This seems a proper approach to me. Please advise.

Does anyone have a format of letter to write to bank home loan department for such request?

Thanks
Niki

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

10 April 2025 TDS needs to be deducted on the whole of the amount. In case you have already paid your part of the consideration, the bank can give you the 1% of the loan amount for TDS and the balance directly transferred to the seller. Talk to your relationship manager.

niki

niki (Querist)
Follow

11 April 2025 So I have to ask the bank to only disburse 99%to buyer and transfer 1% to my account and then I should pay the tds thru 26qb ... Is that correct?

Does anyone have a format of letter to write to bank home loan department for such request?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

12 August 2025 You are responsible to deduct TDS on any part of the payment you make directly to the seller.

Hence, bank disburses 99% of loan amount to seller and 1% to your account, so you can deposit TDS via Form 26QB on that 1%.

The bank should transfer 1% to your account for TDS deposit; you then file 26QB & deposit TDS to the government.

Sample Letter Format to Bank for TDS Deduction and Payment Request
[Your Name]
[Your Address]
Date: [DD/MM/YYYY]

To
The Branch Manager
[Bank Name]
[Branch Address]

Subject: Request for Disbursement of Home Loan Amount with TDS Deduction under Section 194-IA

Dear Sir/Madam,

I am availing a home loan of Rs. [Loan Amount] for the purchase of property from [Seller’s Name]. As per Income Tax provisions under Section 194-IA, TDS @ 1% on sale consideration exceeding Rs. 50 lakhs needs to be deducted and deposited with the government.

I kindly request you to disburse the loan amount in the following manner:

Transfer 99% of the sanctioned loan amount directly to the seller’s account.

Transfer the remaining 1% of the loan amount to my account [Your Account Number], so that I may deduct and deposit TDS on behalf of the bank through Form 26QB.

This arrangement will ensure timely compliance with TDS provisions and smooth processing of the transaction.

Please acknowledge the receipt of this letter and confirm your action at the earliest.

Thank you for your cooperation.

Yours sincerely,
[Your Name]
[Your Contact Details]

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now