Introduction: In 2013, Indian government introduce a section 194IA i.e. TDS on sale of immovable property. Government is curious to know about your land dealing and collection of tax on land. Government introduce section for more transparency and accuracy in case of sale of immovable property. Maharashtra government generated revenue of ₹21959cr from “Stamp and Registration Fee” which is 0.04% of government revenue.
In Maharashtra there is a trending slogan “ 3 aakdi 7/12 ye aapla” means person have 100 acres of land. So, the government is going to collect the tax on sale of immovable property. This provision help government to track the flow of income.
Applicability:
Provision: as per sec 194IA of income tax Act, if immovable property, other than agricultural land, is transferred tax (TDS) will be deducted @1% if sale consideration or stamp duty value is more than ₹50L.
Clarification:
A person is required to deduct the TDS on fulfillment of following conditions
- Sale of immovable property other than agricultural land
- Sale consideration exceeds ₹50L
In such case deductor required to deduct TDS @1%.
From above we can say that, if a person buying an agriculture land for ₹100cr then also he is not required to deduct TDS even a single penny.
Who is required to deduct TDS and when?
TDS stand for Tax Deducted at Source, where the payer is required to deduct TDS at the time of making payment. As per sec194IA, the payer can deduct the TDS even he does not have TAN number.
In this case buyer is required to deduct TDS @1% at the time of making payment.
On which amount TDS is going to be deducted?
Somehow people thought that you have to deduct TDS on amount exceeding ₹50L similar to sec194Q i.e. TDS on purchase of good but payer is required to deduct TDS on whole consideration.
For e.g. If Mr. x is buying commercial property from Mr. y for consideration of ₹1.3cr and stamp duty value of land is 1.5cr than payer is required to deduct TDS on stamp duty value i.e. ₹1.5cr@1% ultimate TDS amount will be ₹1.5L.
How and when to file return?
Deductor has to file return out of challan cum statement in form 26QB within 30 days from end of month in which tax has been deducted.
Consequences of failure of furnishing TDS return:
If a person fails to file the TDS statement within the time then he shall be liable for payment of fee under section 234E at the rate of Rs. 200 per day during which such default continues. However, such fee shall not exceed the amount of TDS.
Further, he may also be liable for payment of penalty under section 271H and section 272A.
For e.g. If a person make payment on 22th oct 2023 for purchase of immovable property. he realizes it on 25th may 2025 and TDS amount is ₹150,000
in such case interest amount shall be ₹50250 [for late deduction ₹48,000 [(150000*1%*32M) and for late filling 2250(150000*1.5%*1M)]
TDS Certificate:
Form 26QB: Challan-Cum-Statement for TDS on Property Transactions
Form 26QB is essentially a declaration and payment form used by the buyer of immovable property to deduct and deposit the TDS for buying property with the government. It acts as a digital challan for online payment and needs to be filled out when a property transaction requires TDS deduction.
Form 16B: TDS Certificate for Property Transactions
Form 16B is the TDS certificate that is issued by the buyer to the seller, detailing the deducted TDS for buying property and deposited with the government. It serves as proof for the seller that the TDS was duly deducted and paid.
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