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)
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Hello,
I have received a late payment intimation u/s 200 for the late payment of TDS. Kindly guide me how do I pay this late fee please online?
Thanks
I Have received an intimation for interest on late payment and Late filing fee u/s 234E while processing of 26QB Statement (TDS on immovable property). Kindly guide me as to how to make the payment. Which form to use and how to fill in the details?
I don’t think one has to pay the late filing fee if one has filed an appeal within 30 days of receiving the order.
For filing an appeal, Rs250 has to be paid through challan 280 under self-assessment tax. Select others and not basic tax while paying Rs250.
To file an appeal against late filing fee, one needs to fill form 35 mentioning the details of the demand notice, your grounds of appeal and copy of the demand notice to file an appeal with Commissioner of Income Tax TDS in your city. In your grounds of appeal, you can mention that late filing fee was meant for employers and banks and not for the lay public, the tax authorities did not adequately inform the lay public regarding the late filing fee being applicable to TDS on property, the lay public does not have legal and tax expertise at their disposable and reasonable time should be allowed to them to comply with the new law. Interest on late payment is reasonable but late filing fee is unreasonable and unjust.
Dear pratik,
Please advise me which challan to be used for default notice u/s 200 A for late payment of TDS. A late fine and interest is imposed by ITD.Thanks in advance.
Regards,
Santanu Sen
Update:
I got a reply from TRACES regarding the payment
Dear Sir/Ma’am,
Thank you for contacting us, it is our pleasure to assist you.
In regards to payment of demand related to 26QB, you are requested to wait till last week of April, 2015. A new link will be available at tin-nsdl.com
for payments of Demand related to 26QB
Regards,
Team TDS CPC
Some of us might find it too difficult to pay these penalties while stretched to the limits arranging installments which already include so many taxes and levies(all that money goes out from your pocket; builder just includes in their pricing without affecting his profit margins). Why not approach your representatives in Parliament, at least your genuine voices will reach the Govt, otherwise who cares if you choose to suffer in silence.
Those looking to pay the demand raised by IT dept. u/s 200A for the late payment of TDS on sale of property, use Challan 280.
Under “Type Of Payment” select (400)TAX ON REGULAR ASSESSMENT
And on the tax payment page of your bank’s website:
– Enter the Interest part (i.e Sl.No 1, 2 and 3 of Defaults) in ‘Interest’ field, total rounded off
– Enter the Late Filing fee u/s 234E (i.e. Sl.No 4 of Defaults) in ‘Others’ field.
This information is correct to the best of my knowledge, however, please contact your CA or TRACES website to get it verified. This is what I could gather from all the posts on the net and from my CA
Has anyone filed the appeal to CIT TDS.
If we file the appeal and the due date of paying the late fee & interest fall before any response from CIT, should the payment need to be made.
Regads,
Vivek
Thanks pratik for this useful article. I just have a small query, I had paid the TDS after 2 weeks of the due date. I was not sure about the penalty clauses , so I didn’t pay interest and late fee. What should I do regarding this. Please reply .
Thanks Pratik for your advise. Can you please share some details on the process for appeal or request for correction. I am thinking of sending them an email but not sure how to articulate my point.
Thank you Rawal for your comment.
For a 50L property you paid 50K TDS and now need to pay another 50K as late fee because there was a delay in filing the TDS + the interest. This is very unfair. There was absolutely no info on how to pay for joint buyers, what property price to be used (incl. of car park, taxes, etc etc). No indication that you’ll be charged a hefty late fee. I think we must contest this decision. We are completely in debt already how can we afford this.
Mr. Abhi,
Appeal can be filed with CIT(TDS) having jurisdiction over your area. This appeal will be a normal appeal as all other income tax appeals.
@Abhi you cannot take ground of this reason that builder and bank dont support
Since liablity of 194IA is executed upon (1) Any person, being a transferee, responsible for paying to a resident transferor.
2nd reason that Rs 200 is not penalty it is Late Fee hence ground which available for penalty is not available in case of late feel
Although you can file appeal against order/notice but you have to tell us that under which section notice/order is issued so accordingly appeal will file
Hi Prateek – What is the way to appeal against this unjustified penalty, 200 per day for those of us who wanted to comply when there was no support from either the bank or builder and very little information available.. Thanks.
@santu
Please send SnapShot of order of payment of interest and latefe issued by department. on whatsapp
No.8963013175
Thanks
Can anyone please let me know how we can Deposit the Interest on late payment & Late Fee u/s.234E for delay in filing of 26QB challan cum statement u/s.194-IA_TDS on sale of Immovable Property.
Regards
Anurag
Pratik,
Is it possible to put zero TDS amount in 26QB form and pay late fees and interest rate.
Thanks
Pratik,
I have also got notice to pay late fees and interest rate. Can I fill form 26QB in which I can fill tax rate 0% and pay fees and interest only, because I have already paid TDS. Please confirm it. Thanks.
Dear Sir,
Please send procedure for Sale of Pproperty Interest Remittance. Site asking PROPERTY VALUE RATE AND TAX IN MANDATORY. BUT I NEED TO PAY ONLY INTEREST PORTION ONLY. HOW I MAKE PAYMENT ONLINE. WITHOUT FILING THAT TOTAL VALUE INTEREST AND TAX CANNOT BE PROCESSED. NOW I WANT TO PAY ONLY INTEREST AND FEES ONLY. PLEASE GUIDE TO ME ANY ONE
Thus it means that the due date of filing the TDS statement in these cases is 7th of the next month in which tds @1% was deducted ( minimum period is 7 days given if the person deducts TDS on 30th or 31st of the previous month . However in other sections, 192 or 194 or 195 for filing the TDS return there a minimum period of 15 days is given, if the TDS was deducted on last day of that quarter except in case of March quarter , where time limit of 45 days has been allowed. Thus if I have deducted TDS of Rs 20000/- on 1st April 2015 and deposited the same on 7th May 2015 , the due date of filing the TDS return is still 15th July 2015 ( Thus it means that The provisions are somewhere are not consistent with the rules made earlier for other Sections of Cheapter XVII-B.
These should be amended and relief should be given to these individuals also.
regards
DK
Pratik, thanks for the article. I too have received – defaults have been identified … etc. It comes out to be an hefty payment. One would not have defaulted, if regular communication / educating article on this subject would have been published by the government. All I remember is, asking the builder, for guidance and initial response was, he is also ignorant and asked me to pay fully (i.e. without deducting TDS). After, a number of installments, and regular follow-ups, he advised to deduct and pay the TDS for all the previous installments and regarding due date, I was informed, by the financial year end. Hence I was under the impression that the same has to be paid by the financial year-end. It is sad that, when enacting this rule, requiring the common people to deduct and pay tax, regular information could have been provided. For e.g. a circular with proper information sent to all builders, requiring them to educate their purchasers. Since, this enactment is recent, to charge such high interest and penalty is also very very sad. It is a very very costly way to learn that, one has to deposit with in 7 days of the end of the month in which payment was made!
It is the same feeling here. This is squarely disgusting.
On one side the Finance Minister defends his stance that he is not indulging in Tax Terrorism. These notices without any education to buyers, amount that.
In the notice there is no method, on how to pay, what is the appeal system, etc etc.
These laws are so convulated, that there is not option, but to pay. Even my wife will pronounce me careless and stupid, for this money that I have denied her some material possession.
Sad!
Uday
This is frustrating situation!! I got to pay 22000 rupees as fine for it.
Whom we can balme for this situation? This is autocratic law to apply hefty fine on taxpayers without properly educating the people. The goverment of india wants people to listen to parlimentary session on budget to make them aware of Rs200/day fine for non-compliance.
The basic question why the govement is putting more burden indivual taxpayer than on big fish. Why this tax is not paid by builder?
is he busy delveloping infrastracture for poor people of india to live?
Nobody cared to inform buyer about this situation. Builder were happy to recieve cheques and banks were happy to give them. I came to at the time of last installment that it is mandatory to pay this amounnt. By this time i had exhausted all my Cash and all other options. Bank did not to arrage this 1% money. I had to take Gold loan specially to pay this at last minute to take possesion of flat.
No one cared to inform it earlier. My wife blame it on me (whats the use of watching news channels?)
This fine of Rs200/day is too much for individual taxpayer who finally managed to get shelter from big shark builder.
Whom can i blame for this? it is me not watching TV? Shark builder for not inofrming me? Bank who paid no attention to it untill last cheque?
Hope they will make sense of this law!!
I am wondering how a Harvard educated Finance minister and bureaucrats which I thought are best brains in the country can fail to apply basic logic while framing laws/ regulation. It appears that over education can damage your brain!! This type of law can only exist in autocratic setup not in democracy. First it is highly unjustified that Govt is giving the responsibility of filing taxes for someone else’s income to ordinary citizens. In most cases the sellers are big real estate companies who can afford to have the staff, computer internet connection to pay their income tax. Second, sudden implementation without any plan to educate the affected people and test the system for issues , concerns etc. To make it worst the penalties now being imposed and then no review even when forums are abuzz with concerns.
Moreover NRIs did not have access to TRACES for long time after the implementation of this rule.(website was not accessible from abroad)
Now to make it worst, one sided communications without response to emails from customer care. Long live such democracy!
Please let me know how to pay late fee thru online method. It’s very urgent. Please do the needful
Hi Prateek
I along with my wife purchase a property in June 2014 , the total consideration was 66 lakh. We paid 55 lakh through our own source and bank finance after deducting 1% TDS . But the TDS I paid is from my account only although loan is in joint name , property is in joint name with equal share. I have to pay 10 lakh to builder as final instalment, kindly guide me how can I rectify my error.
Regards
Sanjeev
Hey Pratik,
I too have received the demand notice. I see, we have to make payment of late fee and interest through Form 26QB. Can you please elaborate steps to fill same? In my case, there were 4 challans earlier, since there were 2 buyers and 2 sellers. Do I have to make payment 4 times for late payment or can that be done in a single form. Also, what all fields do we fill now in the form – do we have to fill only the Interest and Fee fields or Total Amount Paid/Credited, Please enter TDS rate, Basic Tax (TDS Amount to be paid) etc fields as well?
Please let me know.
Thanks,
Maninder
Hi Pratik,
Can you please elaborate the steps to pay the late fees also. It would be really helpful.
Mr. Anil,
we can file appeal to CIT TDS first.
Consideration 75 lakhs on 25/03/2015
A- transferor
Transferee
B
C
D
Who will get benefit of TDS
B-75000/ or B C D individually 25000/-
advice requested
Can some one tell the procedure and format to challenge the TDS Late Payment u/s 234E Notice by Income Tax in High Court?
Dear Sir,
This seems undemocratic to me. Buying our needs is our right and not an offence that we are now being penalized. I will have to pay no less than 30000 because of this law even after I have deducted and paid TDS. Only fault is that I am not attending parliament proceedings so that i would know what laws are being passed or amended. I came to know of this bit late and builder kept raising demands asking to submit checque of full amount. At least govt could have made it obligatory on the builder to alert /educate the buyers. More over it came into effect from already signed agreements. I am talking about construction linked apartments.
Income is to the seller so he is responsible to pay tax on his income. Tomorrow if Govt applies such rules to items like your milk and bread or anything of your basic needs, would it be justified. Why cant they ask the builder to deposit the tax on his income. May be because builder need to relax while common citizen have all the burden to get govt vaults full.
The payment of late fee u/s 234E and Interest shall be paid through challan ITNS 280. Choose minor code 400 and input interest in interest column and late fee in others column. Once paid mail the acknowledgment to [email protected] giving reference of the 200A intimation and your 26QB filing acknowledgement no. This would constitute sufficient compliance.
Can this be challenged in court or a petition be filed against this notice? We understand that provisions have been mentioned clearly now(but nothing was clear when this law came into force 2 years back – that’s the reason we see so many defaulters), but does that make sense to charge the whole amount from someone as late fee, who has already paid the TDS(be it late) earlier, though charging interest on late payment is justifiable.
Please let me know.
Thanks.
Hi Pratik,
I made payment to the seller before 01-Jun-2013. Do i need to file TDS for that amount?
Very nice article indeed.
Please let us know the methods of payment for paying the interest and late filing fee u/s 234E. This has become the need of hour for many here including me. It is a pity that ITD has sent out the intimations for 26QB defaults without properly informing the ways to make the payment.
In my case.. it is under construction property, so I keep deducting TDS after every demand from builder…. now I realize that due to lack of knowledge, I had deposited TDS later than 7 days from end of the payment month and am getting default notices from Income Tax dept. so in my case, there are multiple such occasions and have received notices for default. is there a way to save this? if not, what is the process of paying these penalty amounts?? please advise? thanks
HI Pratik,
Nice article.
A friend received a notification for paying interest and late payment fees.
Can you please advise on the Challan to be used for paying these? Should it be Form 26QB or Challan 282?
Regards,
Anand
Hello Pratik,
Very good article indeed.
However I am facing one problem. I deposited TDS using 26QB in the year 2013 which was two days late and now I received a notice from IT to pay as following:
1. Short fall of deduction: 0.36
2. Late fees deposit: 400
3. Interest on late payment: 36
In that case could be able to let me know as how to make this payment to IT department online using which challan?
Thanks in advance!! regards, Ashok
Pratik…very well explained, thanks!
I am repeating one of the question raised on the forum, this is very good question & still unclear. Can you please share your views?
Will the provision u/s 234E apply if the purchaser of the property while making payment to the builder fails to deduct TDS (for want of knowledge) but subsequently files Form 26QB and simultaneously deposits TDS, which he failed to deduct earlier,from his own source to be adjusted against future installments due to be paid to builder.
In this case there is late deduction of TDS, but same is deposited immediately after deducting. What kind of interest & penalty will be applicable here?
Please advise me which challan to be used for default notice u/s 200 A for late payment of TDS. A late fine and interest is imposed by ITD.
regards
P sarkar
Pratik, please advise on what challan to use and the related entries for late payment
The TDS is attracted only if the consideration exceeds Rs. 50 lacs. A fresh example may be given, as the given example is for Rs. 10 lacs.
Hi Pratik, could you also layout the steps for paying the late fee (234E) online. That would be immensely helpful.
Article covers all the aspect of this section, especially the example quoted at the end of every section keep it up………..
Will the provision u/s 234E apply if the purchaser of the property while making payment to the builder fails to deduct TDS (for want of knowledge) but subsequently files Form 26QB and simultaneously deposits TDS, which he failed to deduct earlier,from his own source to be adjusted against future installments due to be paid to builder.
After depositing the tax with government , does an assessee have to file return of TDS in applicable quarter?
Suppose Mr.A purchased a flat from Mr B. of Rs.1 crore on 28.2.2015 and paid the amount. So on 28.02.2015 he deducted tax of Rs.1 lakhs and deposited the same to the government on 5th March 2015,
Is Mr.A liable to file return of TDS ???
and MR. A gets his accounts audited and according to the provisons of IT, act he has been issued TAN no. to deduct tax. But in this case Mr.A purchased property for his personal purpose?? So is he compulsorily liable t Quote his TAN No. in form 26QB or his PAN No.??
please reply.
Pratik:
Timely and well covered….
CA Ashok Deora
09840051184
Chennai
IMPROMPTU
According to a view as canvassed, with cogent reasoning, and,in one’s view -on sound logic, in a published article on this very website, in cases where the ‘immovable property’ is a ‘unit’ of a building, commonly known as Flat or Apartment, the requirement of TDS may be pressed to be not applicable. Despite drawing the attention of the Revenue to the seemingly unintended but obvious lacuna in the law, no remedial action is known to have been taken so far. Perhaps, this is an aspect which is worthwhile to be kept in mind, and if so pushed to, urged as a defense, after taking a competent professional (in practice)’s advice and with his assistance, if faulted to have failed to comply without a reasonable cause and sought to be treated as an “assessee – in-default” and visited with any of the consequences.