CA Pratik Anand

In its latest move to penalise late payers of TDS, the CPC TDS has started issuing intimation u/s 200A of the Income Tax Act’1961 to the deductors u/s 194IA i.e the buyers of property who have paid TDS U/s 194IA late.

The CPC TDS is not only charging interest u/s 201 but also late fee u/s 234E of the Act.

Let us examine the relevant Sections of the Income Tax Act’1961.

Sec 194IA:

(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.

Sec 194-IA deals with TDS on sale of immovable property. Under this section TDS is to be deducted @1% at the time of credit of such sum to the account of the transferor or at the time of payment of such sum whichever is earlier on sale of immovable property.

The transferor or the seller contemplated in this section should be a resident of India. Therefore, this section only deals with sale of property by residents and TDS @1% is to be deducted on such sale by resident seller provided the consideration for sale of property exceeds Rs. 50 lacs.

Tax will be deducted at the time of making payment of installment or the whole of purchase consideration as the case may be. If any advance payment is done for the purchase of property, tax should be deducted at the time of advance payment.

For example, if you are going to make payment of a installment of Rs. 10,00,000 on 25th March’2015, tax of Rs. 10,000 shall be deducted the same day ie. 25th March’2015 and you should pay the seller Rs. 9,90,000 (net of TDS).

Time limit for payment of Tax u/s 194IA to the Govt. Account

Tax deducted(TDS) from payments made to seller shall be deposited to the goverment treasury within 7 days from the end of the month of deduction.

For example: if Rs. 10,000 tax was deducted on 25th April 2014, same shall be deposited with the government account till 7th May 2014.

How to deposit tax:

Tax shall be deposited to the government treasury by filling a challan cum statement Form 26QB online, availble at TIN-NSDL website. Payment of TDS on purchase of property is to be made online by availing any one of the following options:

  • online using your net banking account or
  • by filling the Form 26QB and selecting the option e-tax payment on subsequent date. Now you should take the print out of the acknowledge slip, and visit any of the authorized banks for payment of TDS. Bank will make the e-payment of tax and provide you the challan of tax payment.

Make sure to fill challan cum statement in Form 26QB correctly as till now there is no possibile way to rectify any error/mistake online. You will be required to contact the assessing officer or CPC-TDS for any subsequent rectification.

Facility for verification of status of TDS deposit is also available at online services of TIN-nsdl.

Ques: What if TDS is not paid to the Govt. account by the due date?

Ans: Section 201 of the Income Tax Act’1961:

Where any person, including the principal officer of a company,—

(a) who is required to deduct any sum in accordance with the provisions of this Act; or

(b) referred to in sub-section (1A) of section 192, being an employer,

does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:

[(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,—

(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,

and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:]

Therefore from reading of the above section we can draw the following conclusions:

Interest u/s 201 is to be levied and the deductor is to be deemed as an assessee in default for failure to pay or for late payment of any TDS including TDS on immovable property.

Therefore,

a) If tax deducted is not paid by the 7th of next month of the month of deduction but is paid at a later date:

Interest at one and one-half per cent(1.5%) for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

b) If tax is not deducted at all:

Interest at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted.

For example: If Rs. 10,000 tax was deducted on 25th April 2014, same shall be deposited with the government account till 7th May 2014. But if the same is paid say by 7th June then,

Interest will be calculated as follows:

Months of default: 3 (April to June)

Interest Rate: 1.5%*3=4.5%

Amount of Interest: Rs. 10,000*3*1.5%= Rs.450/-

Ques: Besides interest is there any penalty also for late payment of TDS u/s 194IA also?

Ans: As per Section 200(3) of the Income Tax Act’1961,

Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter (Chapter of TDS) or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, [prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed:

Therefore, every person paying any tds has to furnish a statement in the prescribed form containing details of the tds deducted and paid.

The meaning of prescribed statement is given in Rule 31A of the Income Tax Rules’1962. Sub rule 4A of Rule 31A states as follows:

4A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3) or sub-rule (4), every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorised by the Director General of Income-tax (System) a challan-cum-statement in Form No. 26QB electronically in accordance with the procedures, formats and standards specified under sub-rule (5) within seven days from the end of the month in which the deduction is made.

Therefore, Rule 31A(4A), clearly prescribes that the Form 26QB by which Tds on immovable property is paid is not only a challan for the payment of tax but is also treated as a statement of tax deducted at source (i.e tds return in simple words).

Sec 234E:

Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.

(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.]

Therefore, as per section 234E, late fee of Rs. 200/-per day subject to the amount of tax is to be levied for late filing of any statement of tax deducted/collected at source.

Since form 26QB is treated as a statement prescribed u/s 200(3), therefore late filing of the same will attract late fee u/s 234E of Rs. 200/-per day.

Continuing with the above example, If Rs. 10,000 tax was deducted on 25th April 2014, same shall be deposited with the government account till 7th May 2014. But if the same is paid say by 7th June then, late fee will be calculated as follows:

No. of days from 8th May to 7th June’2014= 31 days

Late fee= 31*200= 6200/- or Rs.10,000 (amount of tax) whichever is lower

            = Rs. 6200/-

Therefore, to avoid interest and late fee, pay your TDS on immovable property timely.

Hope you find the above information relevant and useful in your daily practice

Author Bio

Qualification: CA in Practice
Company: Pratik & Associates
Location: New Delhi, New Delhi, IN
Member Since: 10 Jun 2017 | Total Posts: 52
Pratik Anand is the founder of youronlinefilings.com, an online startup for business registrations, annual business compliance services, Tax filings, book keeping, legal consultancy etc. He is a Chartered accountant by profession and has special flair and expertise in the area of direct Taxation. H View Full Profile

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Tags : CA Pratik Anand (52) Section 194IA (43) Section 234E (55) TDS (1024)

134 responses to “TDS on sale of Immovable Property- Beware CPC TDS issuing intimation for late deposit of TDS”

  1. Vardh Jain says:

    Sir,I purchased property after 1st June 2013 amounting more than 50 Lacs but i had not deducted the TDS on payments of said property purchased . Is now i am required to deposit the TDS on the payment made and Interest on same is required to be deposited from the date of payment till now(i.e deposit of TDS)?
    Or their is any other solution that can be done so that i need not to deposit the TDS on payment made
    Note: Payments for the property purchased are made in that year only i.e 2013

  2. Gopal says:

    I have purchased a property in chennai during Oct 2015. Value of the Flat is Rs.1.01 crore. During transaction / registration, we didn’t aware of TDS and fail to detect the 1% of total amount towards TDS and settled full amount to the seller. Understand that seller has deposited the amount in capital gain account.
    Now seller informed that he filed the IT return and same has been accepted and he can’t support anything on TDS payment.
    Kindly suggest is there any way to overcome my problem. So far I didn’t receive any notice from IT Department.
    Request your views and suggestions please.
    Thanks and Regards
    G.Gopal

    • PUSHPA JHA says:

      i HAVE PURCHASED A FLAT AND 1ST INSTALLMENT WAS MADE OF 10 LAKH ON 12th of Dec 17. but tds was not deposited. Total 8 installment has been paid, on 7th,8th,14th,(3 installment) 20 th, and on 21st. Till date.as the penalty has to be paid on 1st installment . can you suggest how to pay?

  3. Puneet Sachdeva says:

    Ques: Buyer was suppossed to deduct TDS @1% on a sale consideration of 82 lakhs (41000 in mother’s PAN and 41000 in daughter’s PAN since it was jointly owned property). However, he deducted only 1% on 82 lakhs on mother’s PAN. Now, how sould i file my ITR for both mother and daughter as buyer is not ready to rectify mistake? Please help.

  4. Vinod Kansal says:

    I purchased flat from builder who is a company. to deposit tds which challan to be filled in Form 26QB – 0020 or 0021?

  5. Pulak Gope says:

    I have gone through the thread and really appreciate the details you have shared. Still I have big confusion & need your expert suggestion.

    I have booked a flat in Dec-2013. The agreement was made on April 2014. The building is still under construction. I have started paying the installments since Dec-2013. All together 16 installment has been paid, only the last installment is balance.

    I probably I did a blunder, regarding not withholding & depositing the TDS. I have not withhold the TDS amount since beginning assuming that cost of my flat is below 50 lakhs.

    The break-up of cost is as below-

    Cost breakup head
    Flat Cost – 49,03,254
    Service Tax – 1,66,446

    Society Charges
    Share Money -600
    Society Formation Charges 20,000
    Building CAM Amount -59,454

    Other Charges
    Legal Charges – 20,000
    Infra Charges – 2,10,276
    Water Electric (Connection) – 27,500
    Club Membership Charges – 1,26,000
    Pipe Gas Charges – 7,500

    It was told to me initially that the flat cost only considered for the property value, society & other charges are not considered. But, now the builder is saying that I have to deposit the taxes of all the charges mentioned above, except the Service Tax.

    I wish to deposit the TDS, but I am confused how to proceed ahead and what are the interest & penalties to be paid.

    I need your valuable suggestion in this regard.

    Regards,

    Pulak

  6. Balchand says:

    Whether Service tax and Vat are part of total value of property for TDS purpose.?Suppose 48 Lakhs is sale value goes to Builder/ seller and 3 Lakhs goes as Vat and service tax to Govt.

    TDS applicable or not in above case?

  7. VG says:

    everywhere I read it’s mentioned that the TDS deducted on property purchase needs to be paid to the govt. within 7 days from the end of month in which TDS was deducted. However, on the home page of TRACES website under the heading 26QB filing it’s mentioned “TDS deducted u/s 194IA (TDS on sale of immovable property) shall be paid to the credit of the central government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum statement in Form No. 26QB as per Income Tax Rule 30(2A).”

    My query is: Is TDS to be paid within 7 days or within 30 days from the end of the month in which deduction is made?

  8. Nihar Samanta says:

    Hi,
    While paying builder I deducted tax of Rs.5000 on 19-04-2016 and paid through NSDL website on 04-06-2016. Can you help me find what would be the late payment fees I have to pay and how to pay ?

  9. vadake says:

    I want to join

  10. kush says:

    Hello sir,
    My father purchased a property worth Rs.36,90,000 in 2013.On 7th april he got a mail from cpc(tds) regarding filing of form 26QB as the property is worth Rs.50 lac.
    what should we do in this regard.?
    Is he required to file 61A or not?

    kindly enlighten me with your reply.

  11. yashwant bandwal says:

    Hi, I have got sms/emails (Defaults have been identified in the regular statement filed by you for the PAN and date of payment/credit 22-Feb-2016. Please check your traces inbox or email) from income tax in late deduction of TDS on sale of property in last week. I & my wife were the buyers.We both got notices.
    My payment date to seller was 22-Feb-2016 and I deposited tds on 08-03-2016 (one day late from income tax deadline date usually).
    TDS amount was 19125 and interest on late deduction has come as 382/- . There were 2 buyers and 2 sellers so 4 notices came with same interest amount of 382/-.
    Could you tell me now what should be the next steps?

  12. sandeep says:

    I went through the thread and really appreciate the details you have shared. I still need some more clarity on “Late Deduction Interest Computation u/s 200A and u/s 154 read with Sec 201(1A)”
    I made payment of 99000 to builder on 21st September 2015
    I did TDS Payment of 1000 on 6th October 2015

    I specified deduction date as 6th October 2015, can you please confirm if that was incorrect and I should have putted it as 21st September 2015?
    If yes, is there a way to rectify this?

  13. Swapnil Bagul says:

    I pay tds of rs 30894 against payment of 3089398 on 07/08/2015. I deduct TDS on 04/09/2015 yesterday I received mail from income tax dept saying to pay 620 rs for late deduction of TDS
    My Question is is this correct. Because as per my understanding I have paid amount befor 7th of next month.

    • Kapil Bajaj says:

      Date of deduction should be same as date of payment i.e 7/8/2015. Date of deposit can be 04/09/2015. Hope it clarifies …

  14. P N Rao says:

    Due to IT dept sending intimations, recently, based on Sub Registrar data, transactions which happened in 2013, and later are getting covered by these intimations. If these intimations are not properly responded there is a possibility of these recipients of notices to be treated as “Assessee in Default” exposing him to the danger of, in addition to payment of TDS, Interest and Fees u/s 234 E, the Penalty proceedings and prosecution possibilities. In each case the facts have to be seen before replying. There are grounds on which the assessing officer cannot treat the “Assessee in Default”. So facts of the issue is very important, which will be mostly unique to that transaction and the recipient of intimation has to deal it properly with a professional advice. The recipients should act quickly and respond to the intimations in a proper manner. Those who had transactions of Purchase of Immovable Property other than agricultural land and who have not received the intimation also, should take immediate action, one to reduce the the interest and penalty, if payable, and to avoid the penalty and prosecution possibilities. Unfortunately the Act has put burden on the Purchaser and not on the seller, most of whom are well equipped to deal with it. Normally the purchasers are individuals and are not exposed to the harsh provisions of Law and its Rules in this regard. P N Rao

  15. Saloni Choudhary says:

    I found a very useful and informative Article on this topic on TaxGuru, I got answer of my all questions related to this topic. I was searching the answer from last two months on Google, after visiting more than 100 web page this week i found this article which is very informative and covered all most every thing regarding this topic in simple words.Hopefully you will also get your Answer from following Article :

    https://taxguru.in/income-tax/notices-related-tds-immovable-property-purchase.html

    I got my answer after wasting 2 months time. So i think to share it to all of you and trying to post in every article where i visited in last two months.

  16. Saloni Choudhary says:

    Hopefully you will get the Answer from following Article :

    https://taxguru.in/income-tax/notices-related-tds-immovable-property-purchase.html

  17. Anurag Sharma says:

    Dear Experts,

    I have a query on TDS on purchase on property in case of joint ownership:

    I had booked a flat in sept 2012 with me and my wife as joint owners. We have been paying 1% TDS in either my name or my wife name depending on from whose account installment is paid to the builder (i.e. only one form 26QB per installment, but with full 1% TDS amount on installment).

    But i heard very recently that Online statement cum challan Form/ Form 26QB is to be filled in by each buyer for unique buyer-seller combination for respective share.

    Wanted to check with you that even in case of husband/wife as co-owners, we need to fill two form 26QB ? If yes, then how this can be corrected i.e. splitting form 26QB between me and my wife for the for TDS already paid.

    Thanks & Regards,

    Anurag

  18. Amruta says:

    Hi ,

    We are about to purchase the property worth 91,00,000 . We have done part payments of 4 lakh( nov 15 ) , 5 lakh( dec 15 ) and 18 lakh ( march 16 ) . we will do agreement in this month ( april 2016 ) and bank will disburse remaining amount. Till date we have not paid any TDS. And we are joint buyers. How should we pay the TDS now ?

    • P N Rao says:

      All 4 of you have to deduct TDS before making payment to the Builder and for all ready paid amounts it should be done at the earliest as it will reduce the penalty and interst. The Builder also might have advised you to remit the TDS and pay the balance to him and would have provided you with the Grude to TDS. Being joint buyers you people have to take a decision on whether you people individually pay and deduct TDS or one TDS amount for all, and what ever you decide must be acceptable to buyer also as he need to account for 4 form 16B’s he receives from you. Still you need any further clarification, you can contact me on 9449059050 or write to p_rao1956 @ yahoo .co. in

    • manoj kumar says:

      You have to break the tds amount and pay your share separately.

      for more clarification feel free to contact me
      manoj kumar
      9873318496

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