As per Finance Bill of 2013, TDS is applicable on sale of immovable property wherein the sale consideration of the property exceeds or is equal to Rs. 50,00,000 (Rupees Fifty Lakhs).

Section-194IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% or (  0.75% from 14/05/2020 to  31.3.2021) 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. Tax so deducted should be deposited to the Government Account through any of the authorised bank branches or  make E-payment online through internet banking.

Points to be remembered by the Purchaser of the Property:

1. Deduct tax @ 1% or (0.75% from 14/05/2020 to  31.3.2021)  from the sale consideration (depending upon the Date of Payment/Credit to the Seller).

2. Collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.

3. PAN of seller as well as Purchaser should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction.

4. Do not commit any error in quoting the PAN or other details in the online Form as there is no online mechanism for rectification of errors. For the purpose of rectification you are required to contact Income Tax Department.

5. If there is two or more seller then TDS will be payable by each seller on ownership ratio.

Points to be remembered by the Seller of the Property:

1. Provide you’re PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.

2. Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.

TDS on Sale of Immovable Property

Procedure for payment of TDS on Sale of Property and issue TDS certificate to seller.

1. Steps to fill form 26QB for payment of TDS.

1. Go to TIN NSDL website​ ( www.tin-nsdl.com ).​

2. Under ‘TDS on sale of property’, click on “Online form for furnishing TDS on property (Form 26QB)” or click here

3. Select the applicable challan as “TDS on Sale of Property”.

4. Fill the complete form as applicable.

(User should be ready with the following information while filling the form 26QB :

1. PAN of the seller & buyer

2. Communication details of seller & buyer

3. Property details

4. Amount paid/credited & tax deposit details

2. Submit the duly filled form to proceed. ​A confirmation screen appears. After confirming, a screen appears showing two buttons as “Print Form 26QB” and “Submit to the bank”. A unique acknowledgement number is also displayed on the screen. It is advisable to save this acknowledgment number for future use.

​​Click on “Print Form 26QB” to print the form if you want to make payment by depositing tax through authorized banks.

or

click on “Submit to the bank” to make the required payment online through internet banking. Then proceed to the payment page through internet banking facility of various banks.

For list of authorized banks, please refer https://onlineservices.tin.egov-nsdl.com/etaxnew/Authorizedbanks.html

On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment ​being made.

Steps to Download Form 16B after 5 days from www.tdscpc.gov.in site.

1. Register & login on TRACES portal ( www.tdscpc.gov.in) as taxpayer using your PAN.

2. Select “Form 16B (For Buyer)” under “Downloads” menu.

3. Enter the details pertaining to the property transaction for which Form 16B is to be requested. Enter the Assessment Year, Acknowledgment Number, PAN of Seller and click on “Proceed”.

4. A confirmation screen will appear. Click on “Submit Request” to proceed.

5. A success message on submission of download request will appear. Please note the request number to search for the download request.

6. Click on “Requested Downloads” to download the requested files.

7. Search for the request with request number. Select the request row and click on “HTTP download” button. ​​​​​

8. Open the file and sign the TDS certificate and issue to the buyer.

If Seller/Deductee is a Non Resident:

  • TDS is required to be deducted as per provisions of section 195 of Income tax Act, 1961
  • All details regarding the transactions related to TDS on Property are required to be furnished in Form 27Q statement as ‘Long/Short Term Capital Gain’. For 27Q, Buyer/Deductor need to apply for TAN
  • After depositing the TDS, the Buyer/Deductor of the property would also be required to issue Form 16A to the Seller of the property in respect of the TDS deducted and deposited in the central government account.

If More than 1 Buyer or 1 Seller

In case there is more than 1 buyer and the individual purchase price of each buyer is less than Rs. 50 Lakhs, but the aggregate value of the transaction exceeds Rs. 50 Lakhs, Section 194IA would be applicable and the TDS on Property would be required to be deducted and deposited with the govt before the due date.

Penalty for Non-Deduction/ Deposit of TDS on Property

Interest on Late Deposit of TDS on Property – In case the TDS has not been deducted, the buyer would be required to pay 1% interest per month on the amount not deducted. In case, the TDS has been deducted but has not been paid, Interest @ 1.5% per month would be applicable in such a case.

Penalty for Late Deposit of TDS on Property – The Income Tax Officer may also levy a penalty of upto Rs. 1 Lakhs for Late Deposit of TDS on Property.

Penalty for Late Filing of Form 26QB: In case of late filing of TDS Return, a penalty of Rs. 200 per day would be levied. However, the Penalty should not exceed the amount of TDS for which this Form has not been filed.

For any further clarification and information kindly contact author on kandareconsultancy@gmail.com or contact no. 7208663477.

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