In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the, specified payments made to residents, inter alia, for the acquisition of immovable property (194-IA) has been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021.
So any person purchasing immovable property (other than rural agricultural land) of Rs. 50 lack or more is required to deduct tax @1% up to May 13,2020 and thereafter @ 0.75% up to March 31,2021 , from the payment made to seller may be lump sum or in form of installments.
Many builders and developers insist on deducting tax even at @ 1% on payment made after May 14, 2020. Normally a buyer does not mind continuing to pay @ 1% instead of 0.75% as for him total outgo remains the same. But here is practical difficulty when you deduct @ 1% after the specified date. While filing Form 26QB (return-cum-challan) form for the payment of Tax Deducted at Source (TDS), a buyer shows TDS amt payable @ 1% and accordingly challan generates and pays TDS. But while generating Form 16B (Certificate under Section 203), credit is only given @ 0.75%.and his 26AS and 16B shows TDS amt as 0.75% only. It means the Assessing Officer (TDS) has not given full credit @ 1% but sticks over to 0.75%. Therefore a buyer has to put a refund request through TRACES of reaming 0.25%. And this is really a cumbersome procedure. After applying for refund, you have to generate form 26B acknowledgement and submit the same within 14 days, from the date of transmitting the data electronically to the Jurisdiction Assessing Officer, along with 1) Bank Details verification documents, 2) Copy of Pan and 3) undertaking by PAN duly verified by the PAN’s assessing officer that there is no outstanding demand against the PAN. The readers will calculate how it would be difficult to get a document marked under serial no 3. The conclusion is that please deduct only @ 0.75% for simplification, regardless the seller’s wish. In other cases of TDS (in cases which require Form 16A to be generated), this problem does not arise as the Assessing Officer hardly worries about over deduction.