TDS on sale of Immovable Property- Beware CPC TDS issuing intimation for late deposit of TDS
We all are aware that, TDS CPC has issued intimation u/s 200A of the Income Tax Act’1961 to many tax defaulters on daily basis, but the main thing to note here is that now they have started issuing it to the deductors u/s 194IA as well 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.
(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 an installment of Rs. 10,00,000 on 25th March’2020, tax of Rs. 10,000 shall be deducted the same day ie. 25th March’2020 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 30 days from the end of the month of deduction.
For example: if Rs. 10,000 tax was deducted on 25th April 2020, same shall be deposited with the government account till 30th May 2020.
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.
Facility for verification of status of TDS deposit is also available at online services of TIN-nsdl.
In case, at the time of filing of Form 26QB, any error or mistake is incurred then now you have a facility of online correction through TDS CPC (TRACES) website.
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 30th 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 2020, same shall be deposited with the government account till 30th May 2020. 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).
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 2020, same shall be deposited with the government account till 7th May 2020. But if the same is paid say by 7th June then, late fee will be calculated as follows:
No. of days from 30th May to 7th June’2020= 8 days
Late fee= 8*200= 1,600/- or Rs.10,000 (amount of tax) whichever is lower
= Rs. 1,600/-
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
(The author is a CA in practice at Delhi and can be contacted at: E-mail: [email protected], Mobile: +91-9953199493)
Read Other Articles of CA Pratik Anand
(Republished with Amendments by Team Taxguru)
RELATED POSTS ON THE TOPIC
Author Bio
sir i have purchased flat on 18th jan 21
i will pay rs 55000 to government @1% as tds
i have a query that TDs is payable 1% on the flat purchase date or is it payable after i make payments to seller
i mean to say that tds is applicable on flat purchase date or on the time of making payments to seller
today i am going to pay the amount of tds to govt
is it attracts penalty or intrest as i have paid the tds after 108 days after execution of my agreement
please note i have paid to seller part payment on 12th april 21
please help
Hi,
I am purchasing a property worth 60 lakhs. For the same I had made some payments in the month of August 2020 (6 lakhs) and some in September 2020 (6 lakhs). I made a lump sum TDS payment on the whole 60 lakh amount on September 12, but have still received an initimation for late payment and am being asked to pay 440 INR. What am I missing?
Your response would be appreciated.
BR, Kriti
whether any relief of date extension under section 194IA read with rule 30 (2A) during the lock down
Addition to my comments dt 14.06.2020 is there any tax implication in case of GPA accorded by a wife to her husband
Worth valuable article in case of TDS on sale of immovable property and i want to know one more clarification in case of General power of Attorney accorded by wife to her husband a house property ((both r senior citizens) to deal correspondence with govt officials or anybody,to deal civil case in a
court or to sale the property
Apropos of the Comment posted on March 31, 2015, it is a matter of personal deep regret that on the implications of sec 194 IA all concerned, not barring the Revenue authorities are still left clueless; with no way forward. In that, as has been repetitively pointed out – refer related Pr. Posts- without plugging in the loopholes with the necessary correctives, sec 194- IA as it stands now, non-compliance therewith cannot be seriously faulted or defaulters cannot be proceeded with, with any success.
For MORE, if so interested, look up the 2 Articles on the topic (sec 194IA) , displayed on this website itself.
Incidentally, it calls for a special noting that, the said section, as oten canvassed before, provides an axe to grind/ additional ammunition, for battling, with possible success, against the GST levy on realtors in relation to the on-going (under-construction ) projects !
Suggest to look / diligently search for, and go through the related material (FEED- INput) in public domain- on inter alia the social websites of FB and LInkedin !!!
courtesy
FN: It calls for a specific mention that, despite attention having been drawn to, untiringly urging for remedial steps, the FM and the CBDT have sadly remained muted, thus far, for no reason easy to guess !?
Unless, the related issues havng been raised and disputed, are already pending a judicial decision (HCs / SC) in several writs heard to have been filed but pending disposal?!
courtesy
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
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
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.
I purchased flat from builder who is a company. to deposit tds which challan to be filled in Form 26QB – 0020 or 0021?
Thanks Mr.Pratik Anand for confirming that in case of the seller being a company(deductee) and buyer (deductor) being individual ,the 0020 corporate should be selected in Challan 280/281 for filing form 26QB TDS on property.
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
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?
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?
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 ?
I want to join
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.
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?
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?
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.
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
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.
Hopefully you will get the Answer from following Article :
https://taxguru.in/income-tax/notices-related-tds-immovable-property-purchase.html
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
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 ?