How to Mention TDS in Sale Deed?

Although including TDS details in the sale deed isn't compulsory, it's recommended to add a clause specifying the TDS deducted under Section 194-IA at 1% of the sale value, along with the buyer's PAN/TAN information. This clause should state that the buyer withheld TDS from the total consideration and deposited it with the government, mentioning the Form 26QB reference number. Doing so safeguards both parties legally and acts as reliable evidence for future property dealings or tax-related matters. Below, I have shared how to mention TDS in sale deed.

How to Include TDS Details in a Sale Deed?

• State the total sale consideration and the applicable TDS rate (1% if it exceeds Rs50 lakh).

• Mention the exact TDS amount deducted by the buyer from the total consideration.

• Include the buyer's PAN and TAN details along with the seller's PAN.

• Reference Form 26QB filing and the acknowledgment/challan number generated after payment.

• Confirm that the deducted amount was deposited with the government within the prescribed timeline.

• Add a clause stating the seller will receive Form 16B as proof of TDS deduction.

• Specify that the net payment to the seller is after adjusting the TDS amount deducted.

What is Section 194-IA and Why Does it Matter?

Section 194-IA of the Income Tax Act governs TDS on property transactions where the sale value exceeds Rs50 lakh. It requires the buyer, not the seller, to deduct 1% TDS from the total consideration and deposit it with the government via Form 26QB. This provision ensures tax compliance is captured right at the point of transaction. Referencing this section in the sale deed strengthens the document's legal standing and confirms both parties followed due tax procedure during the property transfer.

Taxes play a significant role in the purchase or sale of real estate in India. The Tax Deducted at Source (TDS) on property sales under Section 194-IA is one example of such a tax. Coming to your query, how to mention TDS in sale deed? You can follow the process I shared below.

Steps to Mention TDS in Sale Deed

Here’s how you can incorporate TDS in a sale deed:

• The sale deed must contain a particular provision addressing TDS. The buyer’s agreement to deduct TDS at the applicable rate from the entire transaction consideration and deposit it with the government should be made explicit in this provision.

• Don’t forget to specify the percentage of TDS applicable to the transaction.

• In the deed, the seller should state that they understand the TDS deduction and that they would supply the information required, including their PAN (Permanent Account Number), to make this procedure easier.

• You must mention Form 26QB will be filed by the buyer after deducting TDS, and get a copy of this form along with proof of payment, which serves as evidence for both parties regarding compliance.

• Clearly state how the net amount payable after the TDS deduction will be calculated.

You must consult with a legal professional or tax advisor. I hope you found this helpful.

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