TDS on purchase of flat by co-owners

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Mohan Kale

400 Points Posted on 17 February 2025

1. Single seller

2. 2 Co-buyers. First buyer contributes 100% towards the cost. Second buyer's name is mentioned in the agreement but does not contribute anything towards cost.

3. Whether only first buyer should deduct and pay the tax or both buyers have to do it?

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9615 Points Posted on 18 February 2025

A interesting scenario! TDS on Immovable Property As per Section 194-IA of the Income Tax Act, 1961, TDS is applicable on immovable property transactions. The buyer is responsible for deducting TDS at 1% of the sale consideration. Co-buyers' Responsibility In your scenario, since there are two co-buyers, the question arises about who should deduct and pay the TDS. CBDT Circular The Central Board of Direct Taxes (CBDT) has issued a circular (Circular No. 18/2016, dated May 6, 2016) that clarifies the TDS responsibility in cases of co-buyers. As per the circular, if there are multiple buyers, and one buyer pays the entire consideration, then only that buyer is responsible for deducting and paying the TDS. Conclusion In your case, since the first buyer contributes 100% towards the cost, only the first buyer is responsible for deducting and paying the TDS. The second buyer, who does not contribute anything towards the cost, is not responsible for deducting and paying the TDS. However, it's always a good idea to consult with a tax professional or chartered accountant to ensure compliance with the latest tax laws and regulations.

Kartik verma

Content writer

46 Points Posted on 03 April 2025

In the case of TDS on the purchase of a flat by co-owners, the applicable provision is Section 194IA of the Income Tax Act, 1961, which mandates 1% TDS on property purchases exceeding ₹50 lakh.

Analysis:

Single Seller – TDS applies if the transaction value exceeds ₹50 lakh.
Two Co-Buyers – The first buyer pays 100% of the consideration, while the second buyer is included in the agreement but does not contribute financially.

Who Should Deduct TDS?

Since the first buyer is the sole contributor, he is responsible for deducting and depositing the TDS (1% of the total consideration).
The second buyer, having no financial contribution, does not have any TDS liability.

Conclusion

Only the first buyer should deduct and pay the TDS, mentioning their own PAN and seller’s PAN while filing Form 26QB. Reach out to detailed Expert Consultation at Setindiabiz.