Supreme Court Rejects Plea For Safeguards Against Inadvertent TDS Default By Buyers In Property Purchases Above Rs. 50 Lakh

The Supreme Court today dismissed a plea seeking directions to introduce safeguards so that property buyers do not unknowingly default on their obligation to deduct and deposit tax at source while purchasing property valued at more than Rs. 50 lakhs.

A bench of Justice Vikram Nath and Justice Sandeep Mehta heard the matter.

Section 194IA of the Income Tax Act, 1961 requires a buyer of immovable property, other than agricultural land, where the sale consideration is Rs. 50 lakhs or more, to deduct tax at source at the rate of 1 per cent of the consideration payable to the seller.

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

The petitioner, who appeared in person, sought directions for institutional safeguards at the stage of property registration so that buyers are not exposed to interest and penalty for failure to deduct tax at source. He clarified that he was not challenging the validity of Section 194IA, disputing the tax liability on seeking any personal relief.

At the outset, at the Court's query, he informed the Court that he holds an M. Tech in Computer Science and is employed at a multinational company. He submitted that despite his postgraduate technical education, he remained unaware of the requirement under Section 194IA when he purchased property as a first-time homebuyer. According to him, this demonstrates that the issue is systematic.

He submitted that the entire TDS obligation is placed only on the buyer on the assumption that every property purchaser has working knowledge of income tax law. He argued that in the absence of any mechanism for awareness or verification at the stage of property registration, this assumption is unreasonable.

“Under the present framework, the entire TDS obligation or liability is placed only on the buyer on the implicit assumption that every property purchaser, regardless of background and expertise, has working knowledge of income tax law. In the absence of any statutory or administrative mechanism for the awareness or verification at the Registry stage, this assumption becomes unreasonable”, the petitioner said.

He told the Court that his personal case was only illustrative. He submitted that many buyers complete registration without any verification of compliance with TDS requirements and the Registrar's Office does not check whether Form 26QB has been filed.

He contended that this results in honest people acting in good faith being exposed to interest and penalty despite having no intention to default. Thus, he sought directions for safeguards such as verification of Form 26QB at the time of registration.

After hearing him, the Court dismissed the plea.

Case no. – Diary No. 50293/2025

Case Title: Arun Singh v. Union of India