Supreme Court Dismisses Plea Seeking Checks To Prevent TDS Defaults On Property Purchases Above ₹50 Lakh

The Supreme Court on Wednesday dismissed a plea seeking directions to introduce safeguards so that property buyers are not unknowingly penalised for failing to deduct tax at source (TDS) while purchasing property worth more than Rs 50 lakhs.

A bench of Justice Vikram Nath and Justice Sandeep Mehta heard the matter and dismissed the petition after brief submissions.

The petition concerned Section 194IA of the Income Tax Act, 1961. The provision requires a buyer of immovable property (other than agricultural land), where the sale consideration is ₹50 lakhs or more, to deduct 1% TDS from the amount payable to the seller.

The deducted tax must be deposited with the Central Government by filing an online challan-cum-statement in Form 26QB within the prescribed time. After depositing the amount, the buyer must issue a TDS certificate in Form 16B to the seller.

The petitioner appeared in person before the Court. He clarified that he was not challenging the validity of Section 194IA, nor was he seeking any personal relief. Instead, he sought institutional safeguards at the stage of property registration to ensure buyers are made aware of the TDS requirement and do not later face interest and penalty for non-compliance.

When asked by the Court, he informed the bench that he holds an M.Tech in Computer Science and works in a multinational company. He submitted that despite being technically qualified, he was unaware of the TDS requirement when he purchased property as a first-time homebuyer. According to him, this showed that the issue was systemic.

He argued that the entire TDS obligation has been placed on the buyer on the assumption that every property purchaser has working knowledge of income tax law. In the absence of any verification or awareness mechanism at the stage of property registration, he said, this assumption was unreasonable.

The petitioner further submitted that many buyers complete registration without any check by the Registrar's Office regarding compliance with Section 194IA. He contended that this exposes honest buyers, acting in good faith, to interest and penalty even when there is no intention to evade tax.

On this basis, he sought directions to require verification of Form 26QB at the time of registration or to introduce similar safeguards.

After hearing the petitioner, the Supreme Court dismissed the plea.