Check kit · Tax on purchase · CHECK 4-min read

The tax traps that hit the BUYER, not the seller

Deducting TDS is your job, not the seller's. Deduct 1% from an NRI seller and you become liable for the shortfall. And 'register low to save tax' is the buyer's trap, not the seller's.

For anyone about to register a property purchase — especially buying from an NRI seller.

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One number, never sold.

TDS on a resident seller — §194-IA, and it is the buyer who deducts

up to ~23%

TDS under §195 where the seller is an NRI — not 1%

§56(2)(x)

taxes the BUYER on the gap if you register below circle rate

The 30-second version

Three tax rules in a property purchase fall on the BUYER. Get any of them wrong and the department comes to you, not to the seller.

The three traps

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1 · TDS on a resident seller is 1%, and deducting it is YOUR job
Under §194-IA the buyer deducts TDS on the purchase and deposits it. This is not something the seller handles for you. Get the mechanics and the form right with your CA before you pay.
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2 · If the seller is an NRI, it is §195 — up to roughly 23%, NOT 1%
For an NRI seller the deduction runs under §195, not §194-IA. On a long-term-held property that is roughly 14.95%+ and can reach the low-20s% with surcharge and cess. Deduct only 1% and YOU become the 'assessee-in-default' — liable for the entire shortfall plus interest and penalty. Confirm the exact rate with your CA, and check the seller's residential status before you pay a rupee.
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3 · Registering below the real value is the BUYER's trap
'Register low to save tax' is sold as a favour to you. It is not. The seller is taxed on circle rate under §50C. But under §56(2)(x) the BUYER is taxed on the gap between circle rate and the declared price as 'income from other sources' — where it exceeds ₹50,000 and the 10% band. You save nothing and inherit a tax bill. Register at the real value.

Not legal or tax advice

General information to help you ask the right questions — not legal or tax advice. Rules, rates and procedures vary by state, property type and date. Confirm your specific case with an independent property lawyer and, for tax, a chartered accountant before you pay anything.

Sources & citations›

TDS on a resident seller: §194-IA (1%), deducted by the buyer. NRI seller: §195 — roughly 14.95%+ and up to the low-20s% with surcharge/cess; under-deduction makes the buyer the assessee-in-default, liable for the shortfall plus interest and penalty. Confirm the exact rate with a CA.
Register-low buyer trap: §50C taxes the seller on circle rate; §56(2)(x) taxes the BUYER on the gap between circle rate and declared price as income from other sources, subject to the ₹50,000 / 10% band.