TDS on Immovable Property Purchase – Return Filing & Payment wef 01.04.2023

“Learn the updated process of filing Form 26QB for TDS on the purchase of immovable property under section 194-IA from April 1, 2023. Understand rates, due dates, and steps for seamless compliance. Stay informed and avoid penalties.”

Filing of Form 26QB (TDS on Purchase of Immovable Property) and Payment of TDS Under section 194-IA w.e.f. 01st April, 2023 through Income Tax Site (E-filing Portal)

As per section 194-IA of the Income Tax Act, 1961, any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, 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, deduct an amount equal to one percent of such sum [ or the stamp duty value of such property, whichever is higher,] as income-tax thereon.

Section 194-IA and Form 26QB Decoded:-

1) Applicability of Section 194-IA-

This section is applicable on any person being Resident or Non-Resident Transferee (buyer of the immovable property) who purchases any immovable property (other than agricultural land) from a Resident Transferor (seller of the immovable property).

2) Rate of TDS under section 194-IA-

TDS @ 1% should be deducted by the buyer of the immovable property on the higher of the following sum:

• Consideration paid for purchase of immovable property,
• Stamp Duty Value of such property. (Amendment inserted w.e.f. 01-04-2022 through the Finance Act, 2022)

TDS @ 20% shall be deducted by the buyer if the seller of the immovable property does not furnish PAN to the buyer. (Section 206AA of the Income Tax Act, 1961)

3) Time of Deduction of TDS-

The Buyer of the immovable property should deduct TDS at the earliest of the following:

• time of credit of such sum to the account of the seller,
• time of payment of such sum in cash,
• time of issue of cheque or draft or any other mode.

4) Non-applicability of Section 194-IA-

Deduction of TDS under Section 194-IA is not applicable in the following circumstances:

• Threshold of Rs.50 Lakhs- No TDS under this section shall be deducted if the consideration paid for purchase as well as the stamp duty value of such property is less than Rs.50 Lakhs (Fifty Lakh Rupees).
• Non-Resident Seller- In case where the seller of the property is a Non-Resident, no TDS under this section shall be deducted by the buyer. However, TDS under section 195 of the Income Tax Act, 1961 should be deducted at the rates in force.
• Agricultural Property- No TDS shall be deducted under this section is the immovable property transferred is rural agricultural land i.e., not being a land situated in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of  section 2 of the Income Tax Act, 1961.

5) Due-Date for filing of Form 26QB and deposit of TDS under Section 194-IA-

Rule 30 and 31A of the Income Tax Rules, 1962 as amended notified upto the Income Tax (2nd Amendment) Rules, 2022

Due-Date for filing of Form 26QB- Challan-cum-statement in Form 26QB shall be filed by the buyer of the immovable property within 30 days from the end of the month in which the deduction is made. [See Point No.3 above]

Penalty for late filing or non-filing of Form 26QB- Penalty for late filing or non-filing of Form 26QB within the due date as mentioned above is Rs.200/per day for every day during which the failure continues.

Due-Date for deposit of TDS u/s 194-IA- TDS under this section shall be deposited with the Central Government within 30 days from the end of the month in which the deduction is made. [See Point No.3 above]

Interest for late deposit of TDS- Interest @ 1.5 % for every month or part thereof shall be payable if TDS under this section is deducted by the buyer but not deposited within the due-date with the Central Government for the period for the period between the date on which TDS was deducted and date on which TDS was actually deposited with the Central Government . Interest @ 1% for every month or part thereof shall be payable if the buyers fails to deduct TDS under this section for the period between the date on which TDS was deductible and the date on which such TDS is deducted.

Filing of Form 26QB and Payment of TDS under Section 194-IA w.e.f. 01/04/2023

Steps for filing Form-26QB and Payment of TDS (For Buyer only) –

1. Go to income tax site (E-filing Portal) https://eportal.incometax.gov.in.

2. Login with your USER ID and Password.

3. Navigate to the e-file tab and click on e-pay Tax.

4. Click on the New Payment icon appearing on the upper – right side.

5. Locate the 26 QB (TDS on Sale of Property) tab and click on Proceed.

6. Select the Residential status of the Seller.

7. Confirm your pre-filled details such as PAN, Aadhar, Address, Name, Category, Mobile No. and E-mail ID. (In case of any discrepancy, click on the Name tab on the  upper-right hand corner and select My Profile for updation of editable fields and then proceed with e-file tab >>> e-pay Tax >>> Saved Drafts >>> Actions (Edit))

8. After completing Step 7, If there are more than one buyer, select Yes in the option given at the end of the screen New Payment. Click on Continue. *Note:- Every co-buyer has to fill separate Form 26QB and deposit TDS under section 194-IA.

9. On the next page, Fill the PAN of the Seller of the property. Aadhar, Name and Category of the PAN of Seller will be pre-filled by the site. Fill the Address Details, Mobile No. and E-mail ID of the Seller and then click on Continue. If there are more, than one seller, select Yes in the option given at the end of the screen. Click on Continue. *Note:- For every seller of the property, the buyer has to fill separate Form 26QB and deposit TDS under section 194-IA.

10. After completing Step 9, fill the relevant details such as Type of Property, Address, Date of Booking, etc.  and then click on Continue.

11. On the next page, proceed with the payment using net banking, Debit Card, Pay at Bank Counter, RTGS/NEFT or Payment Gateway Option.

12. After successful filing and deposit of TDS with the Central Government, Form 16B can be applied and generated from the Traces Site https://contents.tdscpc.gov.in/.

Note:- Penalty of Rs.100/- is imposable on Non-issuance of TDS certificate in Form 16B by the Buyer to the Seller within 15 days from the due-date of filing of Form 26QB.