Understanding of Notice, Penalty, Late fees and Interest on TDS under Section 194IA for Purchase of Immovable Property
As we all know that TDS is applicable on transfer of Immovable property, wherein the consideration of the property exceeds or is equal to ₹ 50 Lakhs. Sec 194IA of the Income Tax Act, 1961 read with Rule 30, 31 and 31A of Income Tax Rules states that:
- For all such transactions Tax @ 1% should be deducted by the buyer of the property at the time of making payment of sale consideration.
- Tax so deducted should be deposited to the Government Account trough e-tax Payment option (Net banking) or any of the authorized bank branches. Any sum so deducted under section 194 IA shall be required to be paid to the credit of the Central Government within a period of Thirty days from the end of the month in which the deduction is made.
- PAN of seller as well as buyer should be mandatorily furnished in an online Form 26QB for furnishing information regarding the property transaction.
- TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account.
Page Contents
- Major Points of Section 194IA
- Agricultural Land Meaning Under Section 194IA
- Other Important Points related to TDS under Section 194IA
- Interest on default of TDS payment
- Late fee on default in furnishing statement of TDS (26QB)
- Penalty on default in furnishing statement of TDS (26QB)
- Notice from TDS Reconciliation Analysis and Correction Enabling System
Major Points of Section 194IA
- Person responsible for Tax Deduction: Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property is liable to deduct tax at source.
- Threshold Limit: No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than ₹ 50 Lakhs. It is deductible only wherein the consideration of the property exceeds or is equal to ₹ 50 Lakhs.
- Time of deduction: Tax shall be deducted 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.
- Rate of TDS: TDS to be deducted @ 1% of the sum paid. Condition of higher rate TDS if the deductee (Seller) does not furnish PAN is not applicable because PAN of buyer as well as seller is mandatorily furnished in Form 26QB.
- On transfer of what type of property: Any immovable property (other than agricultural land in rural area), wherein the consideration of the property exceeds or is equal to wherein the consideration of the property exceeds or is equal to ₹ 50 Lakhs.
Agricultural Land Meaning Under Section 194IA
Agricultural land means agricultural lands in India, It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or It is situated in any area within below given distance measured aerially. A land shall not be treated as Agriculture Land, if:
| Population of the Municipality | Distance from Municipal limit or Cantonment Board |
| More than 10,000 but does not exceed 1,00,000 | Within 2 kms. |
| More than 1,00,000 but does not exceed 10,00,000 | Within 6 kms. |
| Exceeding 10,00,000 | Within 8 kms. |
- 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.
- TAN to pay the TDS: Buyer of the property is exempt to procure Tax Deduction Account Number (TAN) for Tax deduction and payment of TDS under this section.
- TDS on the entire amount or on the payment of each installment: Tax needs to be deducted at the time of payment either it is payment of entire amount or installment. If the payments are being made in installments then at the time every installment payment.
- If some amounts have paid before 1st June 2013: If some amounts have paid to the seller before 1st June 2013 than TDS will be deducted on balance amount. Either balance amount is less than ₹ 50 Lakhs or more than ₹ 50 Lakhs this rule is applicable if the consideration of the property (Total amount) exceeds or is equal to ₹ 50 Lakhs. No TDS is required to be deducted in respect of installments paid before 1st June, 2013. The provision will also apply in case where the buyer has bought an under construction property prior to this rule coming into effect but the part payment is due after 1st June, 2013. TDS is required to be deducted on all such installments Individually which fall due after 1st June, 2013 but only on principal portion and not on the interest or penalty portion
- 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.
- Deposit of tax to the credit of the Central Government: Any sum deducted undersection 194-IA shall be paid to the credit of the Central Government within a period of Thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB. The sum so deducted shall be deposited to the credit of the Central Government by remitting it electronically to the Reserve Bank of India or the State Bank of India or to any authorized bank.
- Certificate/statement for tax deducted at source: Every person responsible for deduction of tax undersection 194-IA shall furnish the certificate of deduction of tax at source in Form No. 16B to the payee within fifteen days from the due date for furnishing the Challan-cum-statement in Form No. 26QB under Rule 31A after generating and downloading the same from the web portal specified by the Director General of Income-tax (System) or the person authorized by him.
- Furnishing of statements by tax deductor to department: Every person responsible for deduction of tax undersection 194-IA shall furnish to the Director General of Income-tax (System) or the person authorized by him a challan-cum-statement in Form No. 26QB electronically within Thirty days from the end of the month in which the deduction is made.
Interest on default of TDS payment
If TDS is not paid on time to the credit of the Central Government within a period of Thirty days from the end of the month in which the deduction is made. Interest under section 201 of Income Tax Act,1961 will be payable. This Act expressly states that any person liable to deduct TDS on the income distributed, makes default in deduction and / or payment of TDS shall be treated “assesse in default”. Such interest shall be paid before furnishing the Form 26QB.
- If TDS has deducted but not paid: In this case one and one-half percent (1.5%) for every month or part of a month on the amount of such TDS from the date on which such TDS was deducted to the date on which such TDS is actually paid.
- If TDS is not deducted: In this case one percent (1%) for every month or part of a month on the amount of such tax from the date on which such TDS was deductible to the date on which such TDS is deducted.
Late fee on default in furnishing statement of TDS (26QB)
No filing or late filing of statement of TDS / TDS returns (Form 26QB) shall invite late fees under section 234E. It should be filed with challan within a period of Thirty days from the end of the month in which the deduction is made. Deductor will be liable to pay by way of fee of Rs 200 per day till the failure to file TDS statement continues. The total fee cannot exceed the amount of TDS deductible for which statement was required to be filed. TDS return cannot be filed without payment of late filing fees. In other words, the late filing fees shall be deposited before filing the TDS return (Form 26QB). It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.
Penalty on default in furnishing statement of TDS (26QB)
No filing or late filing of statement of TDS / TDS returns (Form 26QB) shall invite penalty under section 271H. It should be filed with challan within a period of Thirty days from the end of the month in which the deduction is made. As section 271H which provides that a deductor shall pay penalty of minimum Rs 10,000/- to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E. Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000/- can be levied if the deductor/collector files an incorrect TDS/TCS return. TDS return will be filed without payment of Penalty under section 271H. It may be levied on deductor by the assessing officer.
Notice from TDS Reconciliation Analysis and Correction Enabling System
TDS Reconciliation Analysis and Correction Enabling System is sending two types of notice. One for demand of interest payment if TDS is already paid but interest is payable and second for demand of TDS and interest payment if TDS is deducted or not deducted but not paid to the credit of the Central Government and TDS return (Form 26QB) not filed.
We would be glad to know your doubts or queries or clarification or suggestion. In case you need our assistance in handling notice received, please feel free to contact us at : [email protected] +919022838615 www.arssolutions.co.in
The Author ‘Abhishek Ranjan Singh‘ is a Certified and authorized Tax Return Preparer of Income Tax Department of India; currently he is Managing Director and Founder of ARS Solutions.
Disclaimer – Before making any decisions do consult the experts. Author does not take any responsibility for misrepresentation or interpretation of act or rules. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.
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Republished with Amendments
Author Bio
Hello
We bought & paid fully a flat in 1992 . After a long litigation we r going to register it now . Any TDS INVOLVED THERE . No money transaction with the seller now because we paid full in 1992.
Thanks in advance
Sir
We have sold a property to someone in Dec 2020 , value more than 50 lakhs.
He made all payment but didnt deposited the TDS amount after checking my 26 AS.
Should we report to income tax or appeal in court for illegal registry.
Hi sir, property purchase price is 1.24 crore. But earlier paid tds on 99 lacs. What is the solution to pay the balance outstanding amount.
Hi,
I have bought a house recently and paid 1% TDS to the builder. Have got 26AS form and 16 B as well.
My question is now that I am filing my ITR should I be mentioning about this 1 % TDS paid? Is this refundable to me? Which section should I highlight this TDS paid in the ITR-1 form?
Please suggest
Regards,
Jay
I have purchased a (resale) flat in Mumbai for 1cr.
Part Payment of Rs 14lacs made on 05.03.2020 before registering sale agreement on 06.03.2020.
I have deposited TDS Rs 14000/-@1% and also submitted 26QB on 02.04.2020.
Still I got a mail from IT department for default *Late deduction* and interest Rs 280/- to be paid for late deduction.
Kindly advise what can be the fualt, and why I got this mail. What I should do.
SIR WHAT IF PROPERTY IS PURCHASED FROM NRI .AT WHAT RATE TDS TO BE DEDUCTED AND WHAT WILL BE THE PROCEDURE,thanks A LOT IN ADVANCE
We have purchased a residential land for Rs.46 lacs but the registration authority registered the document at Rs.60 lacs. Is TDS u/s 194IA is applicable ?
Sir we bought an Industrial plot on 10.08.2018 for Rs. 87,00,000/- and still as on 12.12.2018 we could not be deducted and deposited TDS on purchase of immovable property.
sir pls. advise the interest and penalty on this transaction
ONE BUYER PURCHASE 3 FLATS 40 LCS, 45, LCS & 35 LCS RESPECTIVELY , BUYER HOLDING ONE PAN , TOTAL 120 LCS , TDS REQUIRE 1% DEDUCT ? ALTHOUGH ONE FLAT BELOW 50LCS , PLEASE INFORM ME
I bought a under construction flat whose value is below Rs 50 Lacs without GST, but it exceeds Rs 50 Lacs with GST. Should I deduct 1% TDS ?
There is a CBDT which clarifies that TDS is to be deducted on amount excluding GST, if GST is indicated separately. This circular clarifies the ‘quantum’ on which 1% TDS should be deducted, but it is not clarifies whether or not GST should be excluded from consideration value for the purpose of scoping TDS applicability.
Please share your valuable opinion with a Caselaw or any guidance issued on this matter
I think 234E does not apply on 194IA . Please tell me. Thanks.
I have just purchased a property few days back and have query around the “Total Value of Consideration (Property Value)” field that needs to be filled in the Form 26QB.
Here is my purchase scenario:
1. The property is part of the complex built and sold by a builder. So, builder is the original owner of the property. Herein called as Builder in further discussion below.
2. Builder sold the a flat (property into consideration) in the above mentioned complex to a person called as Seller. Seller purchased the flat few years back on construction linked plan in 70 lacs. He has paid 60 lacs to the builder as of now and 10 lacs is still pending.
3. I am the buyer of the property and I have bought the property in the same price as Seller bought from builder few years back. So, I paid 60 lacs to the Seller and 10 lac is to be paid to the builder when the builder demands the same (in next few months).
Now, as I have paid 60 lac to the seller, I need to pay 60 thousand as TDS against the PAN number of the seller. Also when I pay the remaining 10 lac to the Builder, I will have to pay 10 thousand as TDS against the PAN number of the builder.
I understand that I will have to fill the TDS form twice – once for seller’s TDS and second time for builder’s TDS. But what is the value that I need to fill in “Total Value of Consideration (Property Value)”?
I can think of two ways:
1. Fill the “Total Value of Consideration (Property Value)” as 70 lac and select installment option. In first installment, I enter seller’s PAN. In second installment, I enter Builder’s Pan.
2. I the first TDS form, I enter the “Total Value of Consideration (Property Value)” as 60 lac and enter the PAN of Seller. In the second TDS form, I enter “Total Value of Consideration (Property Value)” as 10 lac and enter the PAN of builder.
Which of the above ways is correct?
Hello,
I have a Query that if the Total Consideration is around Rs. 53,00,000/- which also includes Service Tax Amount. If we exclude the Service Tax portion from the total consideration, it will be less than Rs. 50,00,000/-
In the above scenario, do we still need to deduct TDS u/s 194IA ?
Hello, I want to know that if there are two Sellers and two purchasers in an agreement for property purchase over Rs. 50 Lacs. What is the TDS criteria to be fulfilled. The entire amount is being transferred to one seller other being silent owner and providing a NOC. In this case can we consider only one PAN for TDS deduction. Also the buyers have made payment partly. So both need to deduct TDS seperately or anyone can fill ( i.e. the first owner.)
Whether the TDS is deductible in case of auction by court / Tribunal (Debt Recovery Tribunal) in execution of a Decree/Recovery Certificate. If so, who is seller in the case whether it Court/Tribunal or the Decree/Recovery Certificate Holder or the defaulter or the person who’s property is being sold.
Further, Who is liable to pay whether it is auction purchaser or the Decree Holder or the executing court / Tribunal.
Further, who is liable to bear the burden of TDS whether it is auction purchaser over and above the sale price or court/Tribunal or the Decree / Certificate holder.
Further when it is payable i.e. when auction purchaser makes the payment or the court/Tribunal confirms the sale or the sale certificate is issued in his favour or when the sale certificate is presented for Registration to the Sub Registrar.
Please guide.
I ENTERED INTO AGREEMENT FOR PURCHASE OF FLAT FOR RS.50.47 LAC WHICH INCLUDE CLUB MEMBERSHIP RS. 1 LAC, POWER BACKUP RS.20000/-, LEASE RENT 111000/-, IFMS 37250/-. WHETHER THESE ARE TO BE EXCLUDED WHILE CALCULATING TDS on purchase of flat
A Purchaser is purchasing 2 immovable properties of Rs.35 Lakhs each from a single seller, 2 different registry deeds are being made for this. Whether TDS @ 1% will be deducted?
I had sold my property and buyer deducted TDS @ 1% and deposited TDS. My 26AS on TRACES reflects deducted TDS but now he has refused to issue Form 16B to me. What should I do. Do I need TDS certificate no to file my return. Will Income tax department penalize him(buyer) or me(seller) for this.
Hello Sir,
is this TDS applicable in case of NRI buyer also?
Please advise.
Regards,
Vikram
Hi,
I have recently executed an agreement for sale for an under construction property.
Agreement Value is 7964460
Owners & co owners: my self (owner) & my maternal grand mother (co owner)
I would like to ask few queries related to TDS;
Background:
We paid 5710000 so far in installments from Oct 2015 till date. All the payments so far made from my grand mother’s account.
Out of the total cost of property the remaining amount which is payable through home loan and I will be paying EMI for the same.
Questions on TDS:
I m aware that TDS needs to be deducted and deposited with govt for each installment/payment made to the builder. The TDS should be deposited by end of next month for the month you have paid the installment. In my case I can deposit till the end of Nov 2016. (Note that they have recently extended the time frame for depositing TDS as per few news publications – however please confirm and let me know)
1. Would that be file if we pay TDS at the end of this month for the whole installments which we paid in the month of Oct and Nov 2016 or should I paid as per the individual installments?
2.Since there are 2 buyers and so far all the payments done through my grand mother’s account so would that be fine if we shows her name under payees column and when my loan will get disbursed and when I actually need to pay another part of TDS at that time I will show my name in the payees column? Would that be fine? I know all the owners and co owners must pay TDS proportionately. So this condition is also getting satisfied.
Your help on this is much appreciated.
Please reply me as soon as possible.
Regards,
Hi,
I have recently executed an agreement for sale for an under construction property.
Agreement Value is 7964460
Owners & co owners: my self (owner) & my maternal grand mother (co owner)
I would like to ask few queries related to TDS;
Background:
We paid 5710000 so far in installments from Oct 2015 till date. All the payments so far made from my grand mother’s account.
Out of the total cost of property the remaining amount which is payable through home loan and I will be paying EMI for the same.
Questions on TDS:
I m aware that TDS needs to be deducted and deposited with govt for each installment/payment made to the builder. The TDS should be deposited by end of next month for the month you have paid the installment. In my case I can deposit till the end of Nov 2016. (Note that they have recently extended the time frame for depositing TDS as per few news publications – however please confirm and let me know)
1. Would that be file if we pay TDS at the end of this month for the whole installments which we paid in the month of Oct and Nov 2016 or should I paid as per the individual installments?
2.Since there are 2 buyers and so far all the payments done through my grand mother’s account so would that be fine if we shows her name under payees column and when my loan will get disbursed and when I actually need to pay another part of TDS at that time I will show my name in the payees column? Would that be fine? I know all the owners and co owners must pay TDS proportionately. So this condition is also getting satisfied.
Your help on this is much appreciated.
Please reply me as soon as possible.
Regards
Hello
I booked a apartment with a reputed builder in NCR through the banks subvention scheme. The basic cost is approx 1cr. Since the booking in Jan 2015, the bank has been paying the demands without deducting TDS and the builder has been accepting the payment. Recently after 4 demands , i receive an invoice from the builder with a amount 17000 due(only for the last demand) ..when i enquired the answer was TDS not deducted of last demand. No invoice for TDS not deducted was received since 18 months.
I have not received any notice from IT dept.
the possession of the apartment is due dec 2017.
after reading several article i unserstand that i will have to pay the TDS with late fee and interest.
My question is how can i avoid paying any penalty which will be substantial (i read somewhere about submitting form 26A to avoid paying the penalty) can you please provide more information?
thanks
Hello
I booked a apartment with a reputed builder in NCR through the banks subvention scheme. The basic cost is approx 1cr. Since the booking in Jan 2015, the bank has been paying the demands without deducting TDS and the builder has been accepting the payment. Recently after 4 demands , i receive an invoice from the builder with a amount 17000 due(only for the last demand) ..when i enquired the answer was TDS not deducted of last demand. No invoice for TDS not deducted was received since 18 months.
I have not received any notice from IT dept.
the possession of the apartment is due dec 2017.
after reading several article i unserstand that i will have to pay the TDS with late fee and interest.
My question is how can i avoid paying any penalty which will be substantial (i read somewhere about submitting form 26A to avoid paying the penalty) can you please provide more information?
thanks
Hello
I have baught property in auction from bank. We didnt pay TDS as we were not aware of it. After 6 months when we came to know abt it ,We consulted bank and paid TDS in banks PAN No , as bank is a seller in our registered agreement. Which is extra amount we have paid to bank.Now bank is asking us to change the PAN NO to the original buyer who was banks defaulter.There is no mention of that person in our agreement as a seller, what should we do to get the extra amount of TDS paid to bank?
Hello, I have been asked to pay interest on late deduction of TDS. Please Can you advise (or guide me to the link) on how to pay it and do I have to correct and resubmit 26QB via TRACE?
I have a quarry: Mr. X has sold 30% of his property to Mr. A for 21 Lakhs and 30% of his property to Mr. B for 20 Lakhs and 40% to Mr. C for 28 Lakhs. These sale has taken place by all separate sale deeds in favor of Mr. A, Mr., B & Mr. C. Please clarify whether all of them have to pay 1% IT .
Thank You
I got my answer from this Article after wasting 2 months time here and there. So now i am thinking to share this Article every one so i will try to post the link of this Article in every article where i visited in last two months and waste my time.
Once Again Thank You
I have read with interest your article on TDS on immoveable property as published by Tax Guru today.
I understand that the provisions of s.194iA are not applicable to purchase of agricultural land if it meets the specified parameters.
We have recently received an e-mail notice from TRACES in one individual’s case re: non deduction or non-filing of from 26QB in FY 2013-14 based on information received by them from the Stamp Office. However, in this case it was the purchase of agricultural land in Dist. Raigad and that too it was prior to 01.06.2013.
How do we reply to TRACES in this case?
With regards.
Manish Pandit
ACS
Hi Abhisekh
What will be the status of payment of tds when the consideration is not yet decided but it will be greater then 50 lacs,and we make payment in instalments ie below the threshold limit of Rs,50 lacs.
Since suitable instructions were not issued to the Registrar’s Offices, the transactions are registered and sales are completed without deduction of Tax, which results in receipt of notice by the purchaser from the Income Tax Department after a lapse of considerable time. The purchaser has to pay the TDS with interest and he has to claim the Tax (without interest) from the seller. But in the meantime if the seller had filed his return of income, it will be difficult for the purchaser to get the TDS from him. Even if he had not filed his return of income it will be difficult to get the TDS if the relationship between them had got strained. Delay in filing TDS returns also attracts penalty. Hence the authorities concerned, whether the Income Tax Department or the State Government, should give strict instructions to the Registering Authorities about the provisions of the ACT and see that the purchaser produces documentary proof for payment of TDS before registering such documents.