1. Deductor & Deductee: Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property (i.e. building or part of building or any land other than agricultural land) is liable to deduct tax at source u/s 194-IA. This provision came in June 2013.
In other words, as per this section the buyer has to pay TDS and not the seller.
2. Time of deduction: At the time of payment or credit to the transferor in the books of transferee, whichever is earlier.
3. Rate of TDS:-
a. In case of PAN of Deductee is available-1%
b. In case of NO PAN of Deductee is available-20%
4. Limit: No TDS is to be deducted when consideration is less than Rs 50, 00,000.
5. Provision of TAN not applicable.
6. Immovable property means any land or building or part of building. Such may be situated in India or may be situated out of India.
PLEASE READ FOLLOWING VIEWS/OPINION ALSO:-
1. Under the registry of property purchased, we have to mention the consideration paid along with required TDS deducted.
2. In case property is financed by the any financial institution or banks :
a. 100% financed by the bank: Although it is not practically possible that any bank can finance the property 100% yet purchaser has to give standing instructions to the financing bank or institution for deducting the TDS out of the total consideration paid or to be paid, as the case may be & depositing the same.
b. In case or promoter contribution case i.e. less than 100% finance by the bank:
In such cases, purchase can deduct the TDS out of the total sum to be financed by the himself & can deposited in to bank & Rest portion will be financed by the bank.
3. In case of instalment system of payment is followed, TDS is required to be deducted on all such instalments individually which fall due after 01.06.2013 & whose cumulative amount is more than 50lacs. but only on principal portion ,not on the interest portion or penalty portion (if any).
4. Threshold limit of Rs 50 lacs will be applicable to each & every property separately.
5. Property can be of residential or official purpose.
6. Transferor can be dealer, user of the property or salaried class employee.
7. TDS under section 194IA is to be deposited on CHALLAN cum Statement on Form 26QB.
8. Online Payment of TDS is mandatory. Online payment CHALLAN is available in TIN NSDL Website.
9. TDS certificate must be issued to deductee (buyer) in Form 16B within 15 days from due date of deposit.
(The author, Parthik Dikshit , is a Chartered Accountant. He can be reached at – [email protected])
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