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From multilingual support to real-time response, discover why top developers and brokers are switching to voice-first customer engagement.
Always-on voice support that handles client calls anytime—day or night.
Syncs with your CRM & tools—every call and lead, tracked automatically.
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We start by building a robust data ingestion pipeline that can seamlessly connect to a wide range of enterprise data sources, including databases, data warehouses, CMS, and external APIs.
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We start by quickly identifying all relevant data assets across your organisation, from databases and data warehouses to content repositories and external APIs. Our pre-built connectors allow us to establish secure connections to these sources in a matter of days, not weeks or months.
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Explore ideas, innovations, and step-by-step guides crafted for real estate industry looking to harness the power of AI voice technology.
Villa vs Apartment: How to Choose the Right Residential Option When it comes to a villa vs apartment debate, it’s not just about the cost or space. It’s about investing in a lifestyle that aligns with both your immediate needs and long-term goals. With India’s urban population expected to grow by 40% by 2030, choosing a home that balances convenience and long-term value becomes even more important. Apartments offer convenience and easy access to amenities making it ideal for busy professionals or investors seeking high rental yields. Villas, on the other hand, appeal to those who value privacy, legacy, and spacious living, making them a strong choice for multi-generational families and long-term investors looking for capital appreciation. As Robert Kiyosaki, founder of the Rich Dad Company, wisely said: ‘The problem with real estate is that it’s local. You have to understand the local market.’ This guide is here to do just that. It will help you weigh both options and make an informed decision. Understanding Villas and Apartments First, you need to get the basis right. Here are the key differences between a villa and an apartment: What is a villa? Features and characteristics A villa is a standalone, luxurious home designed for privacy and exclusivity. Villas typically offer spacious layouts, private gardens, and, in some cases, personal pools. These homes give you complete independence, with no shared walls, entrances, or outdoor spaces. They’re usually situated in suburban or semi-urban areas, providing a peaceful environment away from urban noise. Plus, they’re: Perfect for those seeking solitude Designed with expansive outdoor spaces Often tailored for luxurious living Unique, offering a personalized architectural style What is an apartment? Features and characteristics An apartment is a residential unit within a larger building, offering options from compact studios to expansive penthouses. Modern apartments often feature shared amenities like gyms, pools, and parking spaces. Apartments are typically located in urban areas, making them a favorite for those who enjoy city life. They offer: A strong sense of community Accessible services like maintenance and security Convenience in daily living A great investment (option) for first-time homebuyers Proximity to workplaces and public transit Basic differences in structure and layout Regarding structure and layout, villas and apartments offer very different living experiences. Let’s see below the differences between villas and apartments. Cost Comparison Between Villas and Apartments When it comes to apartment vs villa investment, you need to consider your financial goals as a primary aspect. To help you plan better, here’s a breakdown of the upfront and ongoing costs. Initial costs: Purchase price and down payment Villas tend to have a higher purchase price due to the land value, leading to steeper down payments and associated costs. Depending on the location, you could be looking at a 20-30% higher down payment when compared to an apartment. Ongoing costs: Maintenance, taxes, and utilities Owning a villa comes with higher maintenance responsibilities, including landscaping, repairs, and utility expenses. Monthly utility bills could reach ₹24,750 due to the villa's larger size, and maintaining outdoor spaces like gardens and driveways can add ₹7,000-₹12,000 to the monthly cost. Property taxes are also higher, considering the larger land area. In contrast, owning an apartment is more cost-effective. Maintenance fees, ranging from approximately ₹8,250 to ₹33,000 per month, typically cover cleaning, security, and common areas. Utility bills are lower, averaging ₹13,125, and property taxes are generally lower due to the smaller land area. Here’s a quick overview comparing the villa and apartment in terms of ongoing costs: Expense Estimate Villa Apartment Utility Bills ₹24,750/month ₹13,125/month Landscaping/Maintenance ₹7,000-₹12,000/month Included in monthly fees Maintenance Fees Paid individually ₹8,250-₹33,000/month Property Taxes Higher due to a larger land area Lower due to smaller plots Resale value and return on investment Villas generally see great long-term appreciation, especially in high-demand areas. For example, in Grade A locations in Goa like Anjum, Arpora, and Calangute, villa prices have jumped by an impressive 22% in FY 2024-2023, highlighting just how much value they can add over time. Apartments can also see appreciation but tend to grow at a slower rate, offering steadier but sometimes less dramatic returns. However, residential apartments usually offer rental yields of 3.33-7.17% annually, making them a strong option for investors seeking steady rental income. Lifestyle Considerations: Villa vs Apartment Choosing between a villa and an apartment comes down to your lifestyle. Here's how each option stacks up in this area. Privacy and personal space Villas are a haven for privacy lovers. With no shared walls, you’ll enjoy quiet, uninterrupted living. The best part? You won’t have neighbors stomping upstairs or peeking over balconies. Your outdoor spaces are your own to enjoy! In contrast, apartments are more communal by nature. You’ll share walls, entrances, and sometimes outdoor spaces, which means a bit less privacy but you’ll be a part of a community. There are always people around, and that can be a good thing sometimes! Community living and social interaction Villas are designed for people who want their own space. You can grow your garden, play with your pet, or have a party without complaints about the noise. Apartment living encourages connection and social interaction. Whether you’re exchanging pleasantries in the elevator or joining in on building events, you get to build relationships daily. Access to amenities and facilities Villas give you all the privacy you need, but you might miss out on shared amenities unless you're in a gated community. Still, having your own space — like a private garden or jacuzzi — without needing to share with anyone is a big win for those who love their peace and quiet. Now, speaking of apartments, they’re the clear winners when it comes to convenience and amenities. With on-site gyms, swimming pools, and top-notch security, you’ve got everything you need right at home. Of course, who doesn’t love having all these facilities so close by? For many, it just makes life a whole lot easier. The choice ultimately depends on your preference for convenience versus privacy. Factors to Consider When Choosing Between Villas and Apartments Selecting between a villa and an apartment is about more than just preferences. Here are the influencing factors you need to know. Location and accessibility Apartments are usually in the city’s heart, close to offices, schools, and shopping centers. This makes life easier for those who want to be close to work, entertainment, fitness centers, and public transport. It’s no surprise that over 70% of urban homebuyers choose apartments for the unbeatable convenience they offer. Plus, their central location attracts renters, enhancing long-term value. Villas, while spacious, are often nestled in quieter suburbs, which might mean longer commutes. This offers a more serene living environment but also fewer amenities compared to the city. For those who don’t mind the extra travel time, a villa provides a chance to disconnect from the hustle. However, for many, the convenience of being closer to everything is a trade-off worth considering. Many suburban areas are growing rapidly, bringing in new amenities and infrastructure that could increase villa property values over time. Customization and personalization options Let’s discuss the customization factor in our villa vs apartment debate. One of the key perks of owning a villa is the freedom to shape it to your exact liking. Want to tear down walls, add a pool, or build a gazebo — your call. Villas offer nearly unlimited customization potential. Apartments typically have stricter guidelines for modifications due to shared infrastructure. You might be able to paint walls or install new fixtures, but significant alterations are usually off-limits, especially in multi-unit buildings. Maintenance and upkeep requirements When you own a villa, you’re responsible for everything; maintenance, repairs, landscaping, and more. While this gives you full control over your property, it can also mean significant time and financial investment. Apartments, however, generally come with lower maintenance demands. Most upkeep is handled by the building management, including repairs and common area maintenance. This makes apartments a hands-off living option, though it usually comes with monthly fees to cover the management costs. Investment Potential: Which Option is Better? When deciding between investing in a villa or an apartment, you need to look at appreciation, rental income, and market demand. Here’s how they compare. Long-term Appreciation Trends for Villas and Apartments Villas tend to appreciate better because of their association with land ownership and exclusivity. For instance, a villa located in a growing suburban area could significantly gain value as the area develops. Apartments might not always catch up, especially in saturated markets. But they’re easier to rent out and liquidate. Resale value can be more predictable in urban centers with steady demand. Rental Yield Comparisons Apartments generally offer higher rental yields since they attract a diverse pool of tenants, e.g. students, professionals, and small families. For example, an apartment near a city center or university can consistently generate income. Villas, while being premium and offering lower yields, cater to luxury tenants, which might mean longer vacancies but higher rental income when occupied. Market Demand and Liquidity Apartments are easier to sell due to their demand among young professionals and small families. Villas may take longer to sell but attract high-value buyers. This makes them less liquid but highly rewarding when sold in prime locations. Pros and Cons of Villas First, let’s explore the unique advantages and challenges of owning a villa to help you understand its true value. Pros Cons Ample space for living and outdoor fun Higher maintenance costs Freedom to personalize your home Limited access to shared amenities Exclusive privacy and independence Can feel a bit isolated Pros and Cons of Apartments Now, we’ll take a closer look at the advantages and disadvantages of apartments to help you weigh your options. Pros Cons Budget-friendly, perfect for first-timers Less privacy due to shared walls Easy access to amenities right at home Limited options for customization Enhanced security with guards & CCTV Noise from neighbors can be a downside Tools to Simplify Your Decision Making To make the right choice, consider using these options, which provide accurate insights into the villa vs apartment decision. Villa vs Apartment Cost Calculators Online cost calculators allow you to compare upfront costs, mortgage rates, taxes, and maintenance expenses for both options. These tools help break down the financials, allowing you to make an informed choice based on your budget. Aurum PropTech offers accurate PropTech Pulse calculators that provide detailed comparisons, helping you to see the true cost of each property type. This can be particularly valuable when you're deciding on the most cost-effective option over time. Real Estate Market Trends Reports Market trends play a crucial role in determining whether a villa or apartment is a smart investment. Staying updated with market reports helps you understand price fluctuations, demand, and potential for future growth in both property types. With our real-time market insights, you can access detailed reports on neighborhood trends, appreciation rates, and demand for both villas and apartments. This information equips you to make a decision based on solid data, ensuring you select a property with promising long-term returns. [Bonus] Expert Consultation Services When in doubt, speaking with a real estate expert can provide invaluable clarity. Real estate professionals can offer tailored advice based on your goals, whether you're looking for a family home, investment property, or a suitable option for a professional lifestyle. At Aurum PropTech, our expert consultants are available to help assess your specific needs, review your financial situation, and guide you through every step of the buying process. This ensures that you’re making a well-informed decision backed by industry knowledge and expertise. Conclusion In a nutshell… Choosing between a villa and an apartment comes down to lifestyle, priorities, and long-term goals. Villas are ideal if you value privacy, spacious living, and the freedom to customize your home, but they come with higher costs and maintenance responsibilities. Apartments, on the flip side, offer convenience, security, and easy access to shared amenities, making them perfect for urban living or those preferring a low-maintenance lifestyle. For investors, villas often promise stronger long-term appreciation, while apartments may deliver higher rental yields in high-demand areas. Take your time to assess your financial capacity, future needs, and preferred lifestyle. Leverage PropTech AI tools and consult experts to make the right villa vs apartment decision quickly and confidently. Get in touch with us today; we’re here to answer your questions and help you take the next step with confidence!
Shahid Khan
5th June '25 • 21 min
Understanding TDS on Property Sale While purchasing or selling a piece of land in India, one has to understand the tax responsibilities related to it. A very important aspect that a lot of people ignore is TDS (Tax Deducted at Source) which is applicable to the sale of a high-value property. One can definitely become aware of the TDS application and its associated responsibilities to avoid non-compliance problems and financial penalties irrespective of his status as a first-time buyer or a seasoned investor. Let’s break down what TDS means in real estate and the laws that govern it. What is TDS and Why is it Deducted on Property Transactions? Tax Deducted at Source (TDS) serves as a channel through which the government retrieves tax at the time of the transaction itself. In the real estate business (property sales), in case the amount is more than 50 lakh rupees, the buyer has to cut 1% TDS from the total of the sale proceeds and then the same has to be deposited with the Income Tax Department. It is this method, which makes TDS an efficient tool to prevent tax evasion and to also ensure a transparent trail in the high-value real estate transactions. Legal Basis: Section 194IA & 195 of the Income Tax Act Section 194IA applies when a resident Indian sells property worth more than ₹50 lakh. For non-resident sellers, Section 195 is applicable and may require a higher TDS rate based on capital gains and DTAA provisions. These sections mandate buyers to deduct and deposit TDS, making it a legal obligation in real estate transactions. When is TDS Applicable on Property Sales? Understanding when TDS (Tax Deducted at Source) applies to property sales is essential for both buyers and sellers. The applicability of TDS can differ based on the seller’s residency status and the value of the property. Below, we break it down for clarity. TDS Applicability for Resident Sellers Tax Deducted at Source (TDS) from the seller is done under Section 194IA of the Income Tax Act but this is only for sellers who are resident Indians and the sale price of the property is ₹50 lakh or more. In such cases, the buyer must deduct 1% TDS on the total sale amount at the time of payment. The sum deducted should be with Form 26QB deposited within 30 days of the payment of the sale to the Income Tax Department, failing this the buyer may be penalized with the Interest. TDS on Property Sale by NRIs (Section 195) Non- resident Indian (NRIs) selling property in India, TDS regulations differ slightly. As per Section 195, the TDS rate is normally more than the 1% deducted in the case of resident sellers. The TDS is generally deducted from capital gains which are considered as 20-30% of the amount (plus the applicable surcharge and cess). Buyers also have to get a Tax Deduction Account Number (TAN), and in some cases, a certificate from the Assessing Officer may be needed to reduce the TDS rate. Exemptions and Threshold Limits There are no TDS requirements for properties whose funds are less than ₹50 lakh and are sold by a resident. However, Non-Resident Indians(NRIs) are not considered for this. The TDS is subtracted even if your property is of a lower value. Also, only those agricultural lands that are situated in rural areas and meet other conditions are exempt from TDS under Section 194IA. TDS Rates and Calculation for Property Transactions Understanding the TDS rates and how they are calculated is critical for both buyers and sellers. TDS rates vary depending on whether the seller is a resident or a non-resident. Additionally, it’s essential to follow the correct procedure to avoid penalties for non-deduction or late payment of TDS. Let’s explore the details below. TDS Rate for Residents vs. Non-Residents Criteria Resident Sellers Non-Resident Sellers (NRIs) TDS Rate 1% of the sale price, if property sale exceeds ₹50 lakh 20% of capital gains (plus surcharge and cess Applicable When Sale price of property exceeds ₹50 lakh Capital gains from the sale of property Applicable For Residential, commercial, or any property type Residential or commercial property Example Calculation For ₹70 lakh sale price, TDS = ₹70,000 For ₹40 lakh capital gains, TDS = ₹8 lakh (20%) How to Calculate TDS on a Property Sale? To calculate TDS, follow these steps: Resident Sellers: TDS is calculated at 1% of the sale price. Example: If the sale price is ₹70 lakh, the TDS would be ₹70,000. Non-Resident Sellers (NRIs): TDS is calculated on capital gains. This involves subtracting the property's purchase price and allowable expenses from the sale price. Example: If the sale price is ₹1 crore and the capital gains after deductions come to ₹40 lakh, the TDS would be ₹8 lakh (20% of ₹40 lakh). Penalty for Non-Deduction or Late Payment of TDS Non-deduction: If TDS is not deducted at the time of payment, the buyer is liable to pay the TDS amount. Interest of 1.5% per month is charged on the delay. Late Payment: If TDS is not deposited on time with the government, a penalty ranging from 10% to 100% of the TDS amount can be levied. Serious delays can lead to prosecution. How to Deduct and Pay TDS on Property Purchase? When purchasing a property, the buyer is responsible for deducting TDS before making the payment to the seller. Here’s a breakdown of how to go about it: Step-by-Step Process for TDS Deduction Verify Sale Agreement: Make sure the transaction price of the property is ₹50 lakh or it exceeds that amount, and enquire about the seller, whether he is a tax resident or a non-resident. Calculate TDS Amount: For resident sellers: 1% of the sale price; for non-resident sellers: 20% of capital gains (after deducting the expenses). Deduct TDS: Deduct the TDS amount that is known as the payment of the seller; transfer the balance as paid to the seller. Deposit TDS: Make the payment of the deducted TDS amount to the government through online platforms. Provide TDS Details: Ensure that the TDS amount is recorded in your payment records of the property. Filing Form 26QB Online Get the Form: To complete the TDS payment on property transactions, go to the Income Tax Department website and get Form 26QB. Information Filling: Keepings (PAN, address) and fill in the transaction details of the sale (property details, sale price, TDS amount) will be the next steps. TDS Payment: After all the information is provided, a link will be displayed on the screen, click on the same, and you will be able to make the payment and choose from the selection of bank transfer or net banking modes of payment. Generate Acknowledgment: The receipt for your own records of payment will be made available to you for downloading if the payment is successful. Generating TDS Certificate (Form 16B) Access Form 16B: After paying TDS via Form 26QB, the buyer can generate Form 16B, a TDS certificate, from the TDS portal. Download Form 16B: Log in to the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System); download Form 16B after entering the relevant transaction details. Provide the Certificate to the Seller: The buyer must provide the seller with a copy of Form 16B as proof of TDS deduction; the seller uses this form while filing their tax returns to claim the deducted TDS. TDS Refund & Exemptions for Property Sellers When TDS is deducted during a property sale, sellers may find themselves in a position to claim a refund or reduce the amount deducted. This is particularly useful for those whose actual tax liability is lower than the TDS amount deducted. How Sellers Can Claim a TDS Refund? File Income Tax Return (ITR): Sellers must file their ITR for the relevant financial year to claim the refund. Example: If ₹80,000 was deducted as TDS but the seller’s actual tax liability is ₹50,000, they can claim a ₹30,000 refund after filing the ITR. Submit Proof of TDS Deduction: Attach Form 16B (TDS certificate) along with the ITR. This form is issued by the buyer and shows the TDS deducted on the sale transaction. Refund Process: After the ITR is processed, the Income Tax Department will assess the refund, which may take several weeks or months. Example: If ₹80,000 was deducted as TDS but the tax liability is ₹60,000, ₹20,000 will be refunded. Lower TDS Deduction Certificates (Form 13) Property sellers who expect to pay less tax than the TDS deducted can apply for a lower TDS deduction certificate. This helps reduce the amount deducted upfront. How to Apply for Form 13: The sellers can apply for a lower TDS deduction certificate if they anticipate their taxable income to be lower than calculated in the normal TDS calculation. Example: If a seller expects low capital gains on the property, they can file Form 13 to reduce the TDS rate from 1% to a lower rate. Eligibility & Submission: Sellers can file Form 13 online on the portal of the Income Tax Department. The department processes the application and issues a certificate indicating the lower TDS rate. Usage of Form 13: After the certificate is sanctioned, the buyer makes TDS at the lower rate, reducing the seller's upfront tax burden. Example: A lower TDS rate of 0.5% rather than the usual 1% can cut upfront deductions drastically. Capital Gains Tax & TDS Interrelation TDS is deducted on the sale consideration of the property, but the capital gains tax is levied on the profit made (sale consideration minus acquisition cost). The TDS deducted at the sale can be claimed as credit for the liability towards capital gains tax while filing the Income Tax Return (ITR). Short-Term Capital Gains (STCG): When the property is sold within 2 years, the gains are taxed at 30%. Long-Term Capital Gains (LTCG): If sold after 2 years, the gains are charged at 20% with indexation advantage. Common Mistakes and Compliance Issues in TDS Payment Mistakes in TDS on property transactions can lead to compliance issues, penalties, or delays. It's essential to understand and avoid these errors for a smooth transaction and tax filing process. Incorrect PAN Entry and Its Consequences Mistake: Entering the PAN of the buyer or seller incorrectly at the time of TDS payment. Consequences: This could lead to TDS credit not being accurately credited to the right individual's tax account, resulting in delays in tax processing and potential penalties. Example: When a buyer incorrectly enters the seller's wrong PAN at the time of TDS payment, the seller will lose the TDS credit, and hence, they will face problems while filing their income tax return (ITR). Failure to Deposit TDS on Time Mistake: Delaying the deposit of TDS beyond the due date (7th of the month following the deduction). Consequences: This attracts penalties and interest under Section 234E of the Income Tax Act, increasing the overall tax burden. Example: If a buyer fails to deposit TDS on time, they will face a penalty of ₹200 per day until the TDS is paid, along with the interest at 1.5% per month on the delayed amount. Misinterpretation of TDS Rules for NRIs Mistake: Incorrectly applying TDS provisions for NRI property sellers, particularly where rates under Section 195 are concerned. Consequences: This has the potential to result in either an excess deduction of TDS or the complete failure to deduct TDS, which can make the tax filing process for NRIs more complicated. Example: An NRI seller may take the TDS rate for residential property sale to be the same as for resident buyers. Unless the seller's TDS is deducted at 20% as in the case of LTCG, the buyer may end up paying short and face penalties. Conclusion In conclusion, TDS on property transactions is a vital component of property deals in India, which will help in maintaining tax compliance and avoiding tax evasion. Buyers and sellers should be aware of TDS rates, filing requirements, and the consequences of non-compliance. With the right procedures followed, property deals can be executed seamlessly and within the parameters of law, without any untoward tax-related hassles.
PropTech Pulse Editorial
3rd June '25 • 32 min
Understanding TDS on Property Sale While purchasing or selling a piece of land in India, one has to understand the tax responsibilities related to it. A very important aspect that a lot of people ignore is TDS (Tax Deducted at Source) which is applicable to the sale of a high-value property. One can definitely become aware of the TDS application and its associated responsibilities to avoid non-compliance problems and financial penalties irrespective of his status as a first-time buyer or a seasoned investor. Let’s break down what TDS means in real estate and the laws that govern it. What is TDS and Why is it Deducted on Property Transactions? Tax Deducted at Source (TDS) serves as a channel through which the government retrieves tax at the time of the transaction itself. In the real estate business (property sales), in case the amount is more than 50 lakh rupees, the buyer has to cut 1% TDS from the total of the sale proceeds and then the same has to be deposited with the Income Tax Department. It is this method, which makes TDS an efficient tool to prevent tax evasion and to also ensure a transparent trail in the high-value real estate transactions. Legal Basis: Section 194IA & 195 of the Income Tax Act Section 194IA applies when a resident Indian sells property worth more than ₹50 lakh. For non-resident sellers, Section 195 is applicable and may require a higher TDS rate based on capital gains and DTAA provisions. These sections mandate buyers to deduct and deposit TDS, making it a legal obligation in real estate transactions. When is TDS Applicable on Property Sales? Understanding when TDS (Tax Deducted at Source) applies to property sales is essential for both buyers and sellers. The applicability of TDS can differ based on the seller’s residency status and the value of the property. Below, we break it down for clarity. TDS Applicability for Resident Sellers Tax Deducted at Source (TDS) from the seller is done under Section 194IA of the Income Tax Act but this is only for sellers who are resident Indians and the sale price of the property is ₹50 lakh or more. In such cases, the buyer must deduct 1% TDS on the total sale amount at the time of payment. The sum deducted should be with Form 26QB deposited within 30 days of the payment of the sale to the Income Tax Department, failing this the buyer may be penalized with the Interest. TDS on Property Sale by NRIs (Section 195) Non- resident Indian (NRIs) selling property in India, TDS regulations differ slightly. As per Section 195, the TDS rate is normally more than the 1% deducted in the case of resident sellers. The TDS is generally deducted from capital gains which are considered as 20-30% of the amount (plus the applicable surcharge and cess). Buyers also have to get a Tax Deduction Account Number (TAN), and in some cases, a certificate from the Assessing Officer may be needed to reduce the TDS rate. Exemptions and Threshold Limits There are no TDS requirements for properties whose funds are less than ₹50 lakh and are sold by a resident. However, Non-Resident Indians(NRIs) are not considered for this. The TDS is subtracted even if your property is of a lower value. Also, only those agricultural lands that are situated in rural areas and meet other conditions are exempt from TDS under Section 194IA. TDS Rates and Calculation for Property Transactions Understanding the TDS rates and how they are calculated is critical for both buyers and sellers. TDS rates vary depending on whether the seller is a resident or a non-resident. Additionally, it’s essential to follow the correct procedure to avoid penalties for non-deduction or late payment of TDS. Let’s explore the details below. TDS Rate for Residents vs. Non-Residents Criteria Resident Sellers Non-Resident Sellers (NRIs) TDS Rate 1% of the sale price, if property sale exceeds ₹50 lakh 20% of capital gains (plus surcharge and cess Applicable When Sale price of property exceeds ₹50 lakh Capital gains from the sale of property Applicable For Residential, commercial, or any property type Residential or commercial property Example Calculation For ₹70 lakh sale price, TDS = ₹70,000 For ₹40 lakh capital gains, TDS = ₹8 lakh (20%) How to Calculate TDS on a Property Sale? To calculate TDS, follow these steps: Resident Sellers: TDS is calculated at 1% of the sale price. Example: If the sale price is ₹70 lakh, the TDS would be ₹70,000. Non-Resident Sellers (NRIs): TDS is calculated on capital gains. This involves subtracting the property's purchase price and allowable expenses from the sale price. Example: If the sale price is ₹1 crore and the capital gains after deductions come to ₹40 lakh, the TDS would be ₹8 lakh (20% of ₹40 lakh). Penalty for Non-Deduction or Late Payment of TDS Non-deduction: If TDS is not deducted at the time of payment, the buyer is liable to pay the TDS amount. Interest of 1.5% per month is charged on the delay. Late Payment: If TDS is not deposited on time with the government, a penalty ranging from 10% to 100% of the TDS amount can be levied. Serious delays can lead to prosecution. How to Deduct and Pay TDS on Property Purchase? When purchasing a property, the buyer is responsible for deducting TDS before making the payment to the seller. Here’s a breakdown of how to go about it: Step-by-Step Process for TDS Deduction Verify Sale Agreement: Make sure the transaction price of the property is ₹50 lakh or it exceeds that amount, and enquire about the seller, whether he is a tax resident or a non-resident. Calculate TDS Amount: For resident sellers: 1% of the sale price; for non-resident sellers: 20% of capital gains (after deducting the expenses). Deduct TDS: Deduct the TDS amount that is known as the payment of the seller; transfer the balance as paid to the seller. Deposit TDS: Make the payment of the deducted TDS amount to the government through online platforms. Provide TDS Details: Ensure that the TDS amount is recorded in your payment records of the property. Filing Form 26QB Online Get the Form: To complete the TDS payment on property transactions, go to the Income Tax Department website and get Form 26QB. Information Filling: Keepings (PAN, address) and fill in the transaction details of the sale (property details, sale price, TDS amount) will be the next steps. TDS Payment: After all the information is provided, a link will be displayed on the screen, click on the same, and you will be able to make the payment and choose from the selection of bank transfer or net banking modes of payment. Generate Acknowledgment: The receipt for your own records of payment will be made available to you for downloading if the payment is successful. Generating TDS Certificate (Form 16B) Access Form 16B: After paying TDS via Form 26QB, the buyer can generate Form 16B, a TDS certificate, from the TDS portal. Download Form 16B: Log in to the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System); download Form 16B after entering the relevant transaction details. Provide the Certificate to the Seller: The buyer must provide the seller with a copy of Form 16B as proof of TDS deduction; the seller uses this form while filing their tax returns to claim the deducted TDS. TDS Refund & Exemptions for Property Sellers When TDS is deducted during a property sale, sellers may find themselves in a position to claim a refund or reduce the amount deducted. This is particularly useful for those whose actual tax liability is lower than the TDS amount deducted. How Sellers Can Claim a TDS Refund? File Income Tax Return (ITR): Sellers must file their ITR for the relevant financial year to claim the refund. Example: If ₹80,000 was deducted as TDS but the seller’s actual tax liability is ₹50,000, they can claim a ₹30,000 refund after filing the ITR. Submit Proof of TDS Deduction: Attach Form 16B (TDS certificate) along with the ITR. This form is issued by the buyer and shows the TDS deducted on the sale transaction. Refund Process: After the ITR is processed, the Income Tax Department will assess the refund, which may take several weeks or months. Example: If ₹80,000 was deducted as TDS but the tax liability is ₹60,000, ₹20,000 will be refunded. Lower TDS Deduction Certificates (Form 13) Property sellers who expect to pay less tax than the TDS deducted can apply for a lower TDS deduction certificate. This helps reduce the amount deducted upfront. How to Apply for Form 13: The sellers can apply for a lower TDS deduction certificate if they anticipate their taxable income to be lower than calculated in the normal TDS calculation. Example: If a seller expects low capital gains on the property, they can file Form 13 to reduce the TDS rate from 1% to a lower rate. Eligibility & Submission: Sellers can file Form 13 online on the portal of the Income Tax Department. The department processes the application and issues a certificate indicating the lower TDS rate. Usage of Form 13: After the certificate is sanctioned, the buyer makes TDS at the lower rate, reducing the seller's upfront tax burden. Example: A lower TDS rate of 0.5% rather than the usual 1% can cut upfront deductions drastically. Capital Gains Tax & TDS Interrelation TDS is deducted on the sale consideration of the property, but the capital gains tax is levied on the profit made (sale consideration minus acquisition cost). The TDS deducted at the sale can be claimed as credit for the liability towards capital gains tax while filing the Income Tax Return (ITR). Short-Term Capital Gains (STCG): When the property is sold within 2 years, the gains are taxed at 30%. Long-Term Capital Gains (LTCG): If sold after 2 years, the gains are charged at 20% with indexation advantage. Common Mistakes and Compliance Issues in TDS Payment Mistakes in TDS on property transactions can lead to compliance issues, penalties, or delays. It's essential to understand and avoid these errors for a smooth transaction and tax filing process. Incorrect PAN Entry and Its Consequences Mistake: Entering the PAN of the buyer or seller incorrectly at the time of TDS payment. Consequences: This could lead to TDS credit not being accurately credited to the right individual's tax account, resulting in delays in tax processing and potential penalties. Example: When a buyer incorrectly enters the seller's wrong PAN at the time of TDS payment, the seller will lose the TDS credit, and hence, they will face problems while filing their income tax return (ITR). Failure to Deposit TDS on Time Mistake: Delaying the deposit of TDS beyond the due date (7th of the month following the deduction). Consequences: This attracts penalties and interest under Section 234E of the Income Tax Act, increasing the overall tax burden. Example: If a buyer fails to deposit TDS on time, they will face a penalty of ₹200 per day until the TDS is paid, along with the interest at 1.5% per month on the delayed amount. Misinterpretation of TDS Rules for NRIs Mistake: Incorrectly applying TDS provisions for NRI property sellers, particularly where rates under Section 195 are concerned. Consequences: This has the potential to result in either an excess deduction of TDS or the complete failure to deduct TDS, which can make the tax filing process for NRIs more complicated. Example: An NRI seller may take the TDS rate for residential property sale to be the same as for resident buyers. Unless the seller's TDS is deducted at 20% as in the case of LTCG, the buyer may end up paying short and face penalties. Conclusion In conclusion, TDS on property transactions is a vital component of property deals in India, which will help in maintaining tax compliance and avoiding tax evasion. Buyers and sellers should be aware of TDS rates, filing requirements, and the consequences of non-compliance. With the right procedures followed, property deals can be executed seamlessly and within the parameters of law, without any untoward tax-related hassles.
Shahid Khan
2nd June '25 • 4 min
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