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?
- All persons buying immovable property from a resident Indian have to deduct the tax.
- This applies on purchase of all kinds of real estate such as Land, Building, Land along with Building/flat.
- It applies to property bought in a resale and also on purchases from builders. The only exception is if you are buying agricultural land.
- The seller needs to be a resident of India, and could be either individual, partnership, company or other person mentioned in tax laws.
- If you are buying immovable property from a non-resident seller, the tax deduction rules are different.
- Payment to non- resident sellers would continue to be governed under provisions of section 195 of the Income- tax 1961 as before.
When should the tax be deducted?
- If you maintain books of accounts, the tax should be deducted at the time of paying the seller or crediting his account, whichever is earlier.
- If you do not maintain books of accounts (most individual buyers would come in this category) you need to deduct the tax at the time of paying the seller.
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.
RELATED POSTS ON THE TOPIC
(Republished With Amendments)
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If we sale Factory Shed In which section TDS Will be diducted
Total consideration of Villa is 2cr.85 lakhs. I paid 1cr at the time of agreement I.e month of December 2019. Another 1 crore June 2020. Rest of 85 lakhs during registration September 2021. I have not deducted TDS from what I paid . Seeking your advise regarding this mistake
In case of default of non-filing or late filing of Form 26QB, a penal fee is applicable under section 234E of the income tax act. Rs. 200 has to be paid for every day during which such failure continues. The buyer would also be liable for defaults of late Deduction, late payment and interest thereon.
Suraj Pal Ghai
9891555876
valuable content . i hope you gave more information for user . all the best for upcoming Article
if the seller (developer) says to purchaser do not deduct the tds, he will pay and provide certificate, how long it will take for certificate, and what documents required
Sec 194 IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% or 0.75% should be deducted (depending upon the Date of Payment/Credit to the Seller) by the purchaser of the property at the time of making payment of sale consideration.
Suraj Pal Ghai
9891555876
If any immovable property put in for Public Auction by Central Government in public interest, whether 194IA is leviable in this case?
IF WE PURCHASE LAND AND BUILDING (COMBINED) HOW WE FILL TYPE OF PROPERTY ON 26QB
If tds is already deducted on property, should that amount be deducted from tds of salary, eg if 50000 is deposited as tds for property and your tds for salary comes to 2 lakhs for the financial yr, then is it that 50000 to be deducted from 2 lakhs and tds of 150000 to be deducted from salary
I bought a under construction flat whose value without GST is below Rs 50 Lacs, but it exceeds Rs 50 Lacs with GST.
Should I deduct 1% TDS ?
There is a CBDT circular which clarifies that TDS is to be deducted on amount excluding GST, if GST is indicated separately. While this circular clarifies the ‘quantum’ on which 1% TDS should be applied, but it is not clear whether or not GST should be excluded from consideration value for the purpose of scoping TDS applicability limit of Rs 50 Lacs.
Please share your opinion with a case law or guidance issued on this matter
i entered into a sale agreement in May 2013 and made part pmt before June 2013, but registration of the property in 2017 June. Do I have to deduct TDS ??
2) property jointly owned by 3 persons- value of the property to be considered for each person 50 lacs ?? in other words
if the property value is less than 1.50 crores are we exempted for TDS ??
1) PROPERTY VALUE MORE THAN 1CRORE. REGISTERED BEFORE 1/6/2013 AND 45% PAID BEFORE 1/06/2013. IS TDS APPLICABLE ON 55% OF BALANCE AMOUNT. AND
2) LATE FEES ON NON PAYMENT OF TDS IS MAXIMUM TO THE AMOUNT OF TDS.
Booking was done on year 2011 and registration on 2015.
Payment made by installment 70% June 2013 and 30% after June 2013
Total Sale value of the property was less than 50 lakhs
But valuation was more than 50 lakhs
How this act is applicable in above case and what will be the TDS calculation
I had booked a flat in Oct-2012 under 50 % balance on possession plan, builder made agreement of sale on the M/o.Oct’2012 and sent me demand of 50% amount along with all the charges which was paid by me in the M/o.Nov’2012.
Now I received final demand from builder for 50% remaining amount, Please suggest me is TDS also applicable for 50% payment made by me in the M/o.Nov’2012 i.e. before 01-06-2013.
If I paid short amount as TDS on amount received &
If I paid excess amount as TDS on amount received there is any correction process.
Kindly reply as soon as possible.
The following are, in one’s perceptive view, substantial points of doubt, of greater relevance, requiring clarification in the common interests of those concerned interacting on this website, on the following observations:
“To whom and what does this apply to?
• All persons buying immovable property from a resident Indian have to deduct the tax.
• This applies on purchase of all kinds of real estate such as Land, Building, Land along with Building/FLAT…..” (FONT supplied)
>On the second mentioned point, why the learned Advocate thinks that the TDS requirement applies to “flat”? Prima facie such a view runs counter to the points painstakingly set out, in great detail, in the two analytical write-ups published on this website itself. He is requested to elaborate, for others to know, his reasoning / grounds on which he has come to form such a contrary opinion as noted.
>> On the first mentioned point, whether the seller is a ‘resident’ or not will require to be ascertained from the seller himself; especially so, if he claims to be a “NRI”. So far as is known, presently there is no mechanism provided for by the law, so as to enable the buyer to ascertain,- without any hassle , before proceeding with TDS, -whether or not the seller is a ‘resident’ within the meaning of the IT Act. The learned Advocate, if so pleased, is requested to provide his useful suggestion (s) for a way out, if any; or his eminent reactions.
This adds to the deficiencies / pitfalls pointed out in the published article (Supplement) in the incomplete legislation, gone ahead with impulsively, without adequate home work. And is bound to prove one more area of practical difficulty in implementing the provision; more so, for buyer to scrupulously follow and comply with.
your second question does this apply to commercial properties ofcourse yes clause where ever property value above above 50lakh other than agricultural land
In reply to vishwas even in banks if you are going to purchase only up to 80% of the loan amount will be released until you produce the tds certificate
If the person is purchasing home by bank loan, then who will deduct TDS on every installments – the lending bank .?
Does this applies to commercial properties/ shops also .?
If the person is purchasing home by bank loan, then who will deduct TDS on every installments – the bank .?
Does this applies to commercial properties/ shops also .?
I have 2 doubts
1) what if property is purchased jointly by two or more persons and its cost more than 50 lakhs, who’s name (purchaser) and pan number should be given while filing 26 QB?
2) what if a person purchses 2 flats from builder of Rs. 30 each on one single day, Is that person liable for deducting TDS under this section?