As per Section 194IA of the Income Tax Act, tax must be deducted at source by the buyer of a property from payments made to a seller who is resident in India. TDS must be deducted on sale of all types of property, except where the property sold is an agricultural land. TDS is applicable when receipts are of more than Rs 50 lakh. This TDS must be deducted @1 per cent by the buyer at the time of making the payment. Do note that no surcharge or cess is applicable on this 1 per cent TDS deducted.
TDS must be deposited within within 30 days from the end of the month in which it was deducted.
A Form 26QB is required to be submitted by the buyer to the income tax department where PAN of both the buyer and seller must be compulsorily specified. This form can be prepared and submitted online and the TDS payment can also be made online. On successful payment a challan counterfoil is generated which will have the CIN and payments details and this proof of payment must be retained by the buyer. Since this payment is made on behalf of the seller and linked to the seller’s PAN, it is reflected on the seller’s Form 26AS under the head Part F, usually within 7 days. The buyer also has to provide a TDS certificate in Form 16B to the seller. This can be downloaded from the TRACES website.
If the seller does not plan to invest capital gains and has to pay tax on them, a credit for the TDS deducted can be claimed by the seller. This TDS amount appears both in Form 16B issued by the buyer as well as in the seller’s Form 26AS. However, if the seller wants to claim capital gains exemption, either he can claim refund of TDS in the tax return by providing details of investment of capital gains. Or he can also obtain a certificate from the assessing officer specifying that no TDS must be deducted on payments made to him and present this certificate to the buyer.
1. 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. In some cases, Bank can deduct TDS on property from disbursement and help in depositing TDS on buyers behalf but they are not obliged to do so. You have to give written request to Bank for the same.
2. TDS on Property Sale should be deposited with Govt by the Buyer within 30 days from the end of the month in which the TDS is deducted.
3. While depositing TDS on Property Sale, it is mandatory to Quote both Buyer and Seller’s PAN.
4. Non-deduction of TDS or Non Deposit of TDS may attract a heavy penalty.
5. TDS should be deducted at the time of payment to the seller. If the payment is in installments than TDS should be deducted with each installment. If the entire amount is paid in single installment than entire TDS amount should be deducted at the time of making complete payment.
6. TDS on Property Sale can be deposited with Govt by filing Form 26QB Challan.
7. All details related to property transaction should be furnished in form 26QB
8. You can deposit TDS online through following link
9. After depositing TDS on property sale with Govt, the buyer needs to issue TDS certificate to the Seller. TDS Certificate is referred as form 16B. It is available online after 10-14 days from the date of deposit of TDS. TDS certificate can be downloaded online from following link
1. Penalty u/s 201
(a) 1% interest for the delay of every month i.e. Late deduction of tax from the date the tax was deductible to the date the TDS is deducted.
(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS was deducted till the actual date of payment.
* Interest calculated will be simple interest. The fraction/part of the month is considered as full month.
2. Penalty u/s 234E
(a) Late fee penalty of Rs 200 per day for late filing of the statement of Tax Deducted at Source. Late fee penalty will be lower of TDS Amount or Delay in No of Days X Rs 200. For example, if TDS Amount is Rs 15,000 and delay are of 100 Days then the late fee is 100 X Rs 200 i.e. Rs 20,000. Lower of Rs 15,000 and Rs 20,000 is Rs 15,000 therefore max late fee penalty is Rs 15,000. In Short, max late fee penalty cannot exceed TDS Amount.
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(Republished with Amendments by Team Taxguru)