Due to taxpayers' propensity to avoid paying taxes, income tax regulations provide for tax to be collected directly from the source of income. In accordance with this system, the payer is required to withhold tax at the rates determined by the department under the relevant sections of the Income Tax Act of 1961 before making the final payment to the recipient. Depending on which occurs first, the tax must be subtracted either at the time of credit in the books or at the time of payment to the receiver.

It guarantees prompt revenue collection for the government and discourages tax avoidance. Application of TDS on Property Sales Every time a property is bought, the buyer is required to withhold tax from the sale price and give the seller the remaining money.

The amount of tax that can be written off depends on whether the seller is a resident or not. If the sale consideration exceeds Rs. 50 lakhs and the seller is an Indian resident, section 194IA requires the tax to be subtracted at 1% of the sale consideration.

In contrast, regardless of the property's transaction value, tax must be withheld from the selling consideration if the seller is a non-resident Indian (NRI).

Therefore, even if the value of the property is less than Rs. 50 lakhs, the buyer must deduct the tax in the event of an NRI seller. The buyer is then compelled to submit this sum with the income tax authorities on the seller's behalf.

To get the quotation read here: Low TDS Certificate