CA Pratik Anand
In its latest move to penalise late payers of TDS, the CPC TDS has started issuing intimation u/s 200A of the Income Tax Act’1961 to the deductors u/s 194IA i.e the buyers of property who have paid TDS U/s 194IA late.
The CPC TDS is not only charging interest u/s 201 but also late fee u/s 234E of the Act.
Let us examine the relevant Sections of the Income Tax Act’1961.
(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.
(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
Sec 194-IA deals with TDS on sale of immovable property. Under this section TDS is to be deducted @1% at the time of credit of such sum to the account of the transferor or at the time of payment of such sum whichever is earlier on sale of immovable property.
The transferor or the seller contemplated in this section should be a resident of India. Therefore, this section only deals with sale of property by residents and TDS @1% is to be deducted on such sale by resident seller provided the consideration for sale of property exceeds Rs. 50 lacs.
Tax will be deducted at the time of making payment of installment or the whole of purchase consideration as the case may be. If any advance payment is done for the purchase of property, tax should be deducted at the time of advance payment.
For example, if you are going to make payment of a installment of Rs. 10,00,000 on 25th March’2015, tax of Rs. 10,000 shall be deducted the same day ie. 25th March’2015 and you should pay the seller Rs. 9,90,000 (net of TDS).
Time limit for payment of Tax u/s 194IA to the Govt. Account
Tax deducted(TDS) from payments made to seller shall be deposited to the goverment treasury within 7 days from the end of the month of deduction.
For example: if Rs. 10,000 tax was deducted on 25th April 2014, same shall be deposited with the government account till 7th May 2014.
How to deposit tax:
Tax shall be deposited to the government treasury by filling a challan cum statement Form 26QB online, availble at TIN-NSDL website. Payment of TDS on purchase of property is to be made online by availing any one of the following options:
Make sure to fill challan cum statement in Form 26QB correctly as till now there is no possibile way to rectify any error/mistake online. You will be required to contact the assessing officer or CPC-TDS for any subsequent rectification.
Facility for verification of status of TDS deposit is also available at online services of TIN-nsdl.
Ques: What if TDS is not paid to the Govt. account by the due date?
Ans: Section 201 of the Income Tax Act’1961:
Where any person, including the principal officer of a company,—
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
(b) referred to in sub-section (1A) of section 192, being an employer,
does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:
[(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,—
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,
and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:]
Therefore from reading of the above section we can draw the following conclusions:
Interest u/s 201 is to be levied and the deductor is to be deemed as an assessee in default for failure to pay or for late payment of any TDS including TDS on immovable property.
a) If tax deducted is not paid by the 7th of next month of the month of deduction but is paid at a later date:
Interest at one and one-half per cent(1.5%) for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
b) If tax is not deducted at all:
Interest at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted.
For example: If Rs. 10,000 tax was deducted on 25th April 2014, same shall be deposited with the government account till 7th May 2014. But if the same is paid say by 7th June then,
Interest will be calculated as follows:
Months of default: 3 (April to June)
Interest Rate: 1.5%*3=4.5%
Amount of Interest: Rs. 10,000*3*1.5%= Rs.450/-
Ques: Besides interest is there any penalty also for late payment of TDS u/s 194IA also?
Ans: As per Section 200(3) of the Income Tax Act’1961,
Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter (Chapter of TDS) or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, [prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed:
Therefore, every person paying any tds has to furnish a statement in the prescribed form containing details of the tds deducted and paid.
The meaning of prescribed statement is given in Rule 31A of the Income Tax Rules’1962. Sub rule 4A of Rule 31A states as follows:
4A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3) or sub-rule (4), every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorised by the Director General of Income-tax (System) a challan-cum-statement in Form No. 26QB electronically in accordance with the procedures, formats and standards specified under sub-rule (5) within seven days from the end of the month in which the deduction is made.
Therefore, Rule 31A(4A), clearly prescribes that the Form 26QB by which Tds on immovable property is paid is not only a challan for the payment of tax but is also treated as a statement of tax deducted at source (i.e tds return in simple words).
Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.]
Therefore, as per section 234E, late fee of Rs. 200/-per day subject to the amount of tax is to be levied for late filing of any statement of tax deducted/collected at source.
Since form 26QB is treated as a statement prescribed u/s 200(3), therefore late filing of the same will attract late fee u/s 234E of Rs. 200/-per day.
Continuing with the above example, If Rs. 10,000 tax was deducted on 25th April 2014, same shall be deposited with the government account till 7th May 2014. But if the same is paid say by 7th June then, late fee will be calculated as follows:
No. of days from 8th May to 7th June’2014= 31 days
Late fee= 31*200= 6200/- or Rs.10,000 (amount of tax) whichever is lower
= Rs. 6200/-
Therefore, to avoid interest and late fee, pay your TDS on immovable property timely.
Hope you find the above information relevant and useful in your daily practice
(The author is a CA in practice at Delhi and can be contacted at: E-mail: firstname.lastname@example.org, Mobile: +91-9953199493)
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