TDS on Sale of Property in India (Sec 194IA) TIN
TDS on Sale of Property in India sec 194IA– A new TDS Section 194-IA of the Income Tax Act was proposed in the finance bill 2013, According to this section from 01 June 2013, when a buyer buys immovable property costing more than Rs 50 lakhs, then the buyer has to deduct tax at source (TDS) when he pays the seller.
In this post, we will try to know all faqs about TDS on the sale and purchase of property in India. And before, we need to know basic things such as
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According to the rules in respect of TDS sec 194IA, The buyer of the property would have to deduct the TDS and the same have to deposit in the Government treasury. Note, the seller is not liable to deduct TDS under section 194IA.
A buyer need to deduct or deposit the TDS on property cost more than 50 lac. Here, buyer can use this simple steps to deposit or file TDS online-
TDS required to deduct @ 1% and .75% for period of 14.05.21 to 31.03.21. And TDS is to be paid on the entire sale amount.
For example, if you have bought a house at Rs 60 lakh, you have to pay TDS on Rs 60 lakh and not on Rs 10 lakh (i.e. Rs 60 lakh – Rs 50 lakh). This is applicable even when there is more than 1 buyer or seller.
Post the budget 2019 amendment to section 194-IA, in the above example, if on 1 September 2019, you have paid Rs 2 lakh towards parking fee, Rs 1 lakh for the water facility fee, and Rs 1 lakh for electricity fee, your sale consideration would be Rs 64 lakh (60+2+1+1). You will have to pay TDS on Rs 64 lakh @ 1%. Your TDS payable would be Rs 64,000. In case the transaction is carried out from 14 May 2020 to 31 March 2021, the rate is 0.75% Hence, TDS payable would be 48,000.
And in case of payment consideration in installments where the value of property 60 lakh more than 50 lakh limit then TDS also application at the time of Part payment or installment. Such as there are 3 installments decided of 20 lakh each then TDS will be deducted and deposited in each installment payment.
These all information is required to enter in the form 26QB which is given below-
1) Permanent Account Number (PAN) of Property Purchaser and Seller.
2) Then, Address of the Purchaser, Seller as well as the property being purchased
3) Then, Financial Year during which the Purchase has been made
4) After that, Major Head Code – To indicate the type of tax applicable that is Tax on companies/Tax on other than companies
5) Then Value of Property
6) Date of agreement/booking
7) Amount Paid/credited (Transaction amount)
8) Rate of TDS
9) TDS Amount
10) Dates of payment/credit, deduction
11) Select the option for Payment of taxes on Subsequent Date
The requirements for TDS on the sale of Property are-
The income tax department started to match the TDS data with the data they received from the property registrar for property transactions over 50 lakh. Wherever there was a discrepancy, either the buyers failed to deduct or deposit the TDS, a notice has been sent to the buyer of the property.
And if you have not deposited the deducted TDS on property within time to the income tax department. Then, you may have to give a penalty of up to 1 lac.
There may be a buyer have to give penalties as interest, late fees if TDS is not deducted such as
Interest @1% per month for the period from the date on which TDS is deductible/collectable to the date on which TDS/TCS is actually deducted.
Interest @1.5% per month for the period from the date on which TDS is deducted to the actual date of payment.
Late fees, In case of default of non-filing or late filing of Form 26QB, a penal fee is applicable under section 234E of the income tax act. Rs. 200 has to be paid for every day during which such failure continues. The buyer would also be liable for defaults of late Deduction, late payment, and interest thereon.
Penalty– An Assessing Officer may levy a penalty under section 271H at his discretion. This section is applicable when a statement as required by the tax laws is not submitted timely. The penalty under this section must be more than Rs 10,000 and can extend to Rs 1lakh. However, if TDS is deposited with a fee & interest and statement is submitted within 1 year of the time prescribed, no penalty shall be levied.
There is a simple process to claim TDS on sale of property just need to follow this steps-
According to sec 194IA, The responsibility to deduct TDS on Property Sale rests solely with the Buyer. Even, if it is financed by Home Loan or property is purchased from the builder. But In some cases, Bank can deduct TDS on the property from disbursement and help in depositing TDS on buyers’ behalf but they are not obliged to do so. Therefore, You have to give a written request to Bank for the same.
There are many more FAQS which you would like to know and we have collected all from the source of NSDL
PAN of the seller is mandatory. The same may be acquired from the Seller before effecting the transaction.
The online form available on the TIN website for furnishing information regarding TDS on property is termed as Form 26QB
a) Acknowledgment number for the Form 26QB furnished is available in the Form 26AS (Annual Tax Statement) of the Deductor (i.e. Purchaser/ Buyer of property). The same can be viewed from the TRACES website (www.tdscpc.gov.in) or
b) Taxpayer can also click the option ‘View Acknowledgment’ hosted on the TIN website. Taxpayer needs to enter PAN of the Buyer and Seller, Total Payment and Assessment Year (as mentioned at the time of filing the Form 26QB) to retrieve the Acknowledgment Number.
Form 16B is the TDS certificate to be issued by the deductor (Buyer of property) to the deductee (Seller of property) in respect of the taxes deducted and deposited into the Government Account.
Form 16B will be available for download from the website of Centralized Processing Cell of TDS (CPC-TDS) www.tdscpc.gov.in
Buyer may approach any of the authorized Bank Branch to facilitate in making e-payment.
Online statement cum challan Form/ Form 26QB is to be filled in by each buyer for unique buyer-seller combination for respective share. E.g. in case of one buyer and two sellers, two forms have to be filled in and for two buyers and two seller, four forms have to be filled in for respective property shares.
As per section 234E of the IT Act, 1961 read with Rule 31A (4A) of IT rules, 1962, failure on the part of taxpayer to furnish challan-cum-statement in Form No. 26QB electronically within seven days from the end of the month in which the tax deduction is made will attract levy of fee to be paid by the buyer/transferee/payer.
Provision to enter Tax amount (comprising of basic tax, interest and fee) in Form 26QB is given in TIN website and Bank’s site.
The TDS amount as per Form 26QB should be entered in the field ‘Basic Tax’ (Income Tax) on the Bank’s web-portal as TDS certificate (Form 16B) will be based on ‘Basic Tax’ (Income Tax) only.
You may access the access link ‘View/Payment of TDS on property” on the TIN website. On entering the details as per the acknowledgment slip, you will be provided options to either Print the Acknowledgment Slip.
In case you desire to make an online payment, on the same screen option for Submit to the bank is provided wherein you have to select the Bank for payment. Then, You will be taken to the net banking login screen wherein you can make the payment online.
Yes, PAN No of buyer and seller is mandatory for deducting and depositing TDS on a property. and on the other hand, TAN No of buyer and seller is not mandatory for deducting and depositing the TDS on a Property.