TDS on Salary, Property, and Professional Fees

Three of the TDS provisions ordinary individuals run into most often, each triggered differently: one runs off an annual estimate, one off a single high-value payment, and one off a modest recurring fee.

Income Tax

HRA, LTA, and Standard Deduction

TDS on Salary, Property, and Professional Fees

Form 15G/15H

Section 194Q

Form 26AS, AIS, and TIS

Belated and Revised Returns

Rectification (Section 154)

Income Tax Refunds

Notices Under 143(1) and 143(2)

Appeals

TDS thresholds and rates are periodically revised. This article is for general information and does not constitute tax advice.

TDS on Salary (Section 192)

Unlike most TDS provisions that apply a flat rate, Section 192 requires the employer to estimate the employee’s total taxable income and average tax rate for the year, then deduct proportionately each month. This means declared investments, HRA claims, and the choice of tax regime all feed directly into the monthly deduction, and a mismatch between what was declared and what’s actually claimed at return time can result in either a large final tax payment or a refund. Employees can switch their regime choice for TDS purposes once during the year by informing the employer, though the final choice made at return filing governs the actual liability regardless of what was communicated to the employer.

TDS on Property (Section 194-IA)

A buyer purchasing immovable property (other than agricultural land) for ₹50 lakh or more must deduct 1% TDS on the entire consideration and deposit it using Form 26QB, generally within 30 days from the end of the month of payment. Where the seller is an NRI, this provision doesn’t apply; a different, higher-rate withholding regime under Section 195 applies instead, based on the actual capital gain rather than a flat percentage of the sale price. The buyer, not a bank or intermediary, is personally responsible for deducting and depositing this tax; failing to do so exposes the buyer to interest and penalty.

TDS on Professional Fees (Section 194J)

Payments for professional services (legal, medical, engineering, accountancy, and similar), technical services, or royalty, exceeding the applicable annual threshold, attract 10% TDS for most professional and royalty payments, and 2% for technical services and certain call centre payments. This obligation falls on any payer required to deduct TDS, businesses and individuals subject to tax audit, not on ordinary individuals paying a professional out of purely personal, non-business capacity.

FAQs: TDS on Salary, Property, and Professional Fees

Is the 1% TDS on property deducted from the loan amount or paid separately by the buyer?

It’s deducted from the sale consideration owed to the seller, and deposited separately by the buyer; it isn’t something the bank automatically handles as part of loan disbursement.

If a property is jointly purchased by two buyers, is the ₹50 lakh threshold per buyer or for the whole transaction?

For the whole transaction. If the total consideration is ₹50 lakh or more, TDS applies even if each buyer’s individual share is below that amount.

Why might salary TDS not match the final tax liability at return time?

Because it’s based on declarations and estimates made during the year; actual investments, income from other sources, or a different regime choice at filing time can all cause a mismatch.

Does an ordinary individual hiring a lawyer for a personal matter need to deduct TDS under 194J?

Generally no. This obligation applies to businesses and individuals subject to tax audit, not to an individual paying for a purely personal service.

Does 194-IA apply to under-construction property paid in instalments?

Yes, TDS applies at 1% on each instalment as it’s paid, as long as the total consideration for the property is ₹50 lakh or more.

Can an employee change their tax regime choice with the employer mid-year?

Only once during the financial year for TDS purposes; the final binding choice, however, is whatever is selected at the time of filing the return.

Last updated on 8 August 2026