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.

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Qualification: LL.B / Advocate
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Location: Ahmedabad, Gujarat, IN
Member Since: 31 May 2020 | Total Posts: 1

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23 Comments

  1. Suman says:

    Hi, everyone is asking after change in taxing we deduct 0.75% as TDS and seller of property is asking to give them back 0.25%. And in every answer you are giving same answer without clearly specifying do we need to pay back 0.25% to the seller of the property or not. Dont give confusing answers. The answer should be simple YES or NO . ” YOU DO NOT HAVE TO PAY THE SELLER BACK 0.25%. If you dont know admit it. Nothing wrong in it. But dont give confusing answers.

  2. Kamal Kishore Gupta says:

    I’m purchasing a house in the name of my son. About 95% of purchase value will be paid by me. Only 5% by son. Is it possible. Is it necessary to register the gift deed. Who will detect the TDS 0.75%? By me or my son ? In the challan of TDS, as a buyer, who will mention PAN card number ? Thanks a lot.

  3. Ravi says:

    We have booked the property in 2019 october we have been paying 1 % tds followed by installment but after the new tds rates we are paying 0.75 as per rules but builder is asking to pay them remaining 0.25% tds . Please suggest .

  4. Namrata Shankar says:

    Hi, I am also having the same issue. In February was in the midst of buying property. Due to lockdown things stopped for a while. After June, procedure started again. We paid tds according to 1% but for 16b showed according to .75%. now we have filed for return, and assigned a ward and assessing officer, but no name. Do we have to submit these documents personally?? Is it necessary to be present physically? My mother is a senior citizen I wanted to know if this can be resolved with least possible contact due to covid

  5. ashibansal says:

    My registry was done on 26th may, as per registry doc 1% tds.
    But portal is showing .75% now.

    Builder is asking remaniing .25%. Bcz agreement value is same.
    But as per my understanding it is for buyer benefit.
    Pleaee clarify.

    1. Ashish says:

      TDS is just advance tax to record your transaction in system. Total outgo of 100 should remain same. earlier you paid 99 to builder, 1 to govt. Now you pay 99.25 to builder, .75 to govt

  6. Ashish Bansal says:

    My registry date is on 26th may . & 1% tds is mentioned in doc.
    But on portal it is .75%.
    Building is saying Remaining amount give to them.
    My understanding is, This benefit for buyer.
    Please clarify

  7. Ashish Bansal says:

    Hi,
    My agreement was done on 26th may …..in registry 1% tds was mentioned.
    But now online it is showing .75%.

    Building is saying remaining amount give to builder.
    As per my understanding that benefit is for buyer.
    Please clarify.

  8. Shringar says:

    Hi Sir,

    I purchased flat recently in june 20 and i deducted 1% TDS from seller payment. Now i’m trying to pay TDS, its showing 0.75%. Do i need to pay the 0.25% to seller? Or this 0.25% will have to pay again later point of time? Please confirm.

    My property value is 80Lac and i have dedcuted 80K. Pls help

  9. Manoj Agarwal says:

    Hi, we purchased the property in March 2020 and paid the amount after deducting tax @1% to the seller in March 2020. However we are trying to deposit the same now and the rate of tds is showing as .75% What is the rate applicable in such cases .75% or 1%

  10. CA Madhu Agarwal says:

    I am trying to file 26QB TDS on property through NSDL portal, as per the current rate of 0.75 % however, on the portal, the rate is set default at 1% and I am unable to edit that. Please advise how to proceed .

  11. Rahul Jain says:

    Hi, i am also trying to pay tds @0.75% also communicated by the builder, but in NSDL site, it is showing @1% by default. Anybody can advise regarding this hote to pay tax @0.75%?

  12. Shubham Goyal says:

    Hi, I am trying to pay the property TDS through NSDL portal, as per the current rate of 0.75 pc and the same is also communicated by seller. however, on the portal, the rate is set default at 1% and I am unable to edit that. Please advise

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