Basic Terms of TDS Part- III (On Sale of Immovable Property)

Hello Friends, 

My this blog is related to tell you about TDS on sale of Immovable Property. Let's discuss in details:

Any person purchasing immovable property (other than rural agricultural land) of Rs. 50 lac or more is required to deduct tax @1% from the payment made to seller. This new rule (Section 194IA of the Income Tax Act) was introduced by Finance Act, 2013.

But due to COVID-19, TDS rate has been reduced to 0.75% for the period of 14th May, 2020 to 31st March, 2021.

Responsibility of the Purchaser of the Immovable Property:

• Deduct TDS at the time of payment to the seller.

• Online filling of statement cum challan in the Form 26QB at www.tin.nsdl.com with the PAN of seller as well as the purchaser.

• Depositing the tax deducted.

• Issue of TDS Certificate (FORM 16B) which will be  Downloaded from TRACES(www.tdscpc.gov.in)

Responsibility of the Seller of the Immovable Property

• Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.

• Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.

Other Important Points

• TAN NOT REQUIRED (ONLY PAN NO TAN)

• The buyer needs to deposit the amount through statement cum challan in the Form 26QB within seven days from the end of the month in which the tax is deducted. So ,if you deducted tax in August 2018,you need to deposit it with the Government by September 7.  

• If it will be late then he have to deposit the TDS with Interest & Late Fee.

• In case the seller does not furnish his PAN, tax will have to be deducted at 20 percent.

• The buyer has to give tax deducted at source (TDS) certificate to the seller within 15 days from the due date for depositing the tax deducted. So, if you deduct tax in August and deposit it by September 7,you need to issue the TDS certificate by September 22. 

• If a buyer pays for the property in installments,tax has to be deducted at the time of payment of each installment. 

• TDS on which amount: If the amount of property is 70 Lakhs, then buyer doesn’t have to pay tax only on 20 Lakhs but on the entire amount of sale consideration, here it is on 70 Lakhs.

• If more than One Buyer or Seller: Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share. 

• For example in case of one buyer and two sellers, two challan and Form 26QB have to be filled in and in case two buyers and two sellers, four challan and Form 26QB have to be filled in for the respective property shares. 

• For application of Section 194-IA total value of the property will consider, not the respective share of buyer and seller. E.g Property purchased by two buyer / seller and property value is 80 Lakhs, So sale consideration respective share of buyer / seller is 40 Lakhs each (below 50 Lakhs) but as per rule total value of the property will consider, so Section 194-IA is applicable.

I hope it will be helpful to you.

Thanks & Regards 

Kulvinder Kaur

B.Com(Hons.), MBA (Finance)

9871580806, 8826566751

rightsteptoinvest@gmail.com