Splitting the TDS when a property has more than one buyer or seller

Where a property is sold to more than one buyer, for example a couple buying jointly, the withholding does not fall on one of them for the whole price. Each buyer deducts tax under Section 195 on the portion of the consideration that they pay to you, and each of those buyers needs their own TAN to do it, because Section 195 deduction runs through a TAN and a joint one is not allowed.

So a sale to two buyers means two deductors, two TANs, two sets of Form 27Q filings, each for their share of the payment. This is more administrative than a single-buyer sale, and it is where co-purchases to an NRI seller most often go wrong, one buyer assumes the other is handling it, or they try to run it through a single PAN-based deduction. A practising CA sets each buyer up correctly so the credit reaches your PAN in full.

When the property has several sellers, each co-owner is a separate taxpayer. Each seller's capital gain is computed on their own share of the price and their own share of the cost, and each is taxed individually. There is no single gain for the property as a whole.

The deduction has to follow the same logic. If the co-owners are a mix of residents and non-residents, the buyer cannot apply one rate to the whole consideration. On a resident co-owner's share the buyer uses the 1% rule under Section 194-IA with Form 26QB and the seller's PAN. On your non-resident share the buyer uses Section 195, with a TAN and Form 27Q. Blending the two, or applying 1% across the board, under-deducts on the NRI share and exposes the buyer, so the shares must be separated at the point of deduction.

The 1% resident-buyer rule under Section 194-IA is written to apply only where the seller is a resident. It does not reach a non-resident seller at all. So a buyer who deducts a flat 1% on the whole price of a property that has an NRI co-owner has short-deducted on the NRI portion, and as the deductor it is the buyer who is treated as in default for the shortfall, with interest and penalties.

The fix is to compute each seller's share up front, apply the right regime to each, and, for your NRI share, use a Form 13 lower-deduction certificate so the Section 195 withholding is on your real gain rather than a heavy flat rate on the gross. A practising CA maps the shares, gets the buyers their TANs where needed, and lines up the certificates so everyone's deduction is correct and your credit is clean.