How to Record TDS on Property Purchase (Section 194IA) in Tally Prime

When a business or individual purchases immovable property — land or a building — valued at ₹50 lakh or more from a resident Indian, the buyer is required to deduct TDS at 1% under Section 194IA of the Income Tax Act. This obligation applies to businesses purchasing commercial premises, warehouses, or factory premises.

This guide explains how to record this transaction in Tally Prime for both the buyer and the seller.

1. Section 194IA — Key Provisions

• Who Deducts: The buyer (purchaser) of the immovable property.
• TDS Rate: 1% of the total sale consideration.
• Threshold: Applicable only when the property value exceeds ₹50 lakh.
• PAN Requirement: If the seller does not provide PAN, TDS is deducted at 20%.
• Form: TDS is deposited using Form 26QB (online, on the income tax portal).
• Due Date: Within 30 days from the end of the month in which TDS is deducted.

2. Buyer's Tally Prime Entries

Step 1: Create Required Ledgers

• "Immovable Property (Asset)" — under Fixed Assets.
• "TDS Payable u/s 194IA" — under Current Liabilities (Duties & Taxes).

Step 2: Record the Purchase

Record a Journal Voucher (F7) on the purchase date:

Step 3: Record TDS Payment via Form 26QB

After paying the TDS via the income tax portal:

3. Seller's Tally Prime Entries

For the seller, record the property sale and the TDS deducted by the buyer:

When the net payment arrives (after TDS):