TDS on Sale of Property

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TDS on Sale of Property Compliance, Easily and Fast with VenueTax | Kolhapur

TDS on Sale of Property​

1. Section 194IA of Income Tax Act,1961.

  • This provision is applicable in respect of transactions effected on or after June 1, 2013
  • It seeks deduction of tax at source on transfer of certain immovable property other than agricultural land to a resident transferor.
  • Any person being a transferee who is liable to Pay to a resident by way of consideration for transfer of any immovable property exceeding 50 Lakhs shall at the time of credit of such sum to the account of the transferor or at the time of payment in whatever manner, has to deduct tax at source at 1% only

This TDS on property is required to be deposited in 30 days from the end of the month in which deduction is made for all payments to be made on or after 01st June 2016. 

  1. Deduct tax @ 1% from the sale consideration.
  2. Collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.
  3. PAN of seller as well as Purchaser should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction.
  4. Do not commit any error in quoting the PAN or other details in the online Form as there is no online mechanism for rectification of errors. For the purpose of rectification you are required to contact Income Tax Department.

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  1. Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
  2. Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement..

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TDS on Sale of Property (Form 26QB)

As per Finance Bill of 2013, TDS is applicable on sale of immoveable property wherein the sale consideration of the property exceeds or is equal to Rs 50,00,000 (Rupees Fifty Lakhs). Sec 194 IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration. Tax so deducted should be deposited to the Government Account through any of the authorised bank branches.

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The Finance Bill 2013 has proposed that purchaser of an immovable property (other than rural agricultural land) worth ₹ 50 lakh or more is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor

As per Income Tax Rules, any payment towards purchase of immovable property worth ₹ 50 lakh or more, whether built up or under construction, you are required to withhold tax at the rate of 1% from the sale consideration payable to a resident transferor.

According to rules in respect of tax deducted at source, buyer of the property would have to deduct the TDS and deposit the same in Government treasury.

Buyer or Purchaser of the property is not required to procure Tax Deduction Account Number (TAN). The Buyer is required quote his or her PAN and sellers PAN.

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

the due date of payment of TDS on transfer of immovable property has been extended to thirty days (from existing seven days) from the end of the month in which the deduction is made.

Example: If a taxpayer has made payment of sale consideration in the month of February, then corresponding TDS should be deposited on or before (thirty days) March 30th.

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.

For example, If amount of   property sold is ₹ 70 Lakhs, would TDS be calculated at ₹ 20 Lakhs or on ₹70 Lakhs? 
TDS is to be deducted on the amount paid/credited to the seller. In the above e.g. the deduction will be on total amount i.e. on ₹ 70 Lakhs.

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 30 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.

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