Rakesh Nahar, Advocate
Any person purchasing immovable property (other than rural agricultural land) of Rs. 50 lac or more is required to deduct tax @1% from the payment made to seller. This new rule (Section 194IA of the Income Tax Act) was introduced by Finance Act, 2013.
Extract of Section 194IA
Payment on transfer of certain immovable property other than agricultural land.
194-IA. (1) 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 per cent of such sum as income-tax thereon.
(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
Explanation.—For the purposes of this section,—
(a) “agricultural land” means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;
(b) “immovable property” means any land (other than agricultural land) or any building or part of a building.
Responsibility of the Purchaser of the Immovable Property:
Step-1 – Deduct TDS
(i) Deduct tax @1% from the payment made to the seller.
(ii) Collect the permanent Account Number (PAN) of the seller and verify the same with the Original PAN card.
Step-2 Online filling of statement at www.tin.nsdl.com
(i) It is mandatory to furnish the PAN of seller as well as the purchaser while providing the information regarding the sale transaction in the online from (From No.26QB).
(ii) Please insure that there is no error in quoting the PAN or other details in filling online form 26QB.
Step-3 Depositing the tax deducted
(i) Deposit the tax deducted through e-payment only, either at the time of filling of Form 26QB or subsequent to it, e-payment can be made using electronic payment facility at any authorized bank, including self net banking facility.
(ii) In case, the payment of tax deducted is made subsequent to the filling of Form 26QB,pay tax using electronic payment facility at any authorised bank within 7 days after online filling of statement at www.tdscpc.gov.in
(iii) If there is a delay beyond 7 days in payment of tax, the statement filed online would be treated as “Invalid”. In that case Form 26QB,will need to be filed again.
Step-4 Issue of TDS Certificate
(i) Download TDS certificate from TRACES(www.tdscpc.gov.in)
Responsibility of the Seller of the Immovable Property
(i) Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
(ii) Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.
TAN NOT REQUIRED (ONLY PAN NO TAN)
TAN of the deductor is not required for the payment and reporting of the Tax deducted under this section and PAN allocated to the deductor shall be used for payment and reporting of TDS made under this section.
To whom and what does this apply to?
When should the tax be deducted?
By when and how should the tax be deposited with the Government?
The buyer needs to deposit the amount within seven days from the end of the month in which the tax is deducted. So ,if you deducted tax in August 2018,you need to deposit it with the Government by September 7. The deposit needs to be done electronically using Form 26QB. This will have details such as name, address and permanent account number (PAN) of the buyer and seller. In case the seller does not furnish his PAN, tax will have to be deducted at 20 percent.
Does the buyer need to give any certificate to the seller?
Yes, the buyer has to give tax deducted at source (TDS) certificate to the seller within 15 days from the due date for depositing the tax deducted. So, if you deduct tax in August and deposit it by September 7,you need to issue the TDS certificate by September 22. This should be issued in Form 16B which can be downloaded electronically from the Web site of the income tax Department.
If a buyer pays for the property in installments, should he deduct tax with each installment?
Yes. In such cases, tax has to be deducted at the time of payment of each installment.
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(Republished With Amendments)