Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land) for value  Exceeding Rs.50 Lakh

The Finance Act 2013 had provided that purchaser of an immovable property (other than agricultural land) worth over Rs 50 lakh is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor.  The rate at which tax is to be cut is 1%, but it would go up to as high as 20% if the seller does not disclose his permanent account number.  This amendment is effective from 1st June, 2013.

There is a statutory requirement under section 139A of the Income-tax Act read with rule 114B of the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to purchase or sale of immovable property for value of Rs.5 lakh or more. However, the information furnished to the department in Annual Information Returns by the Registrar or Sub-Registrar indicate that a majority of the purchasers or sellers of immovable properties, valued at Rs.30 lakh or more, during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to transfer of the property.

Under the existing provisions of the Income-tax Act, tax is required to be deducted at source on certain specified payments made to residents by way of salary, interest, commission, brokerage, professional services, etc. On transfer of immovable property by a non-resident, tax is required to be deducted at source by the transferee. However, there is no such requirement on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties. In order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time, it is provided  to insert a new section 194-IAwef 01.06.2013  to provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum.

In order to reduce the compliance burden on the small taxpayers, it was  further provided that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakh rupees.

For reducing the further compliance burden on the transferee, it is also provided that a simple one page challan for payment of TDS would be provided containing details (including PAN) of transferor and transferee and also certain details of the property. The transferee would not be required to obtain any Tax Deduction and Collection Account Number (TAN) or to furnish any TDS statement as this would be mostly a one time transaction.  The transferor would get credit of TDS like any other pre-paid taxes on the basis of information furnished by the transferee in the challan of payment of TDS.

The New Payment Challan for TDS requires the Property Purchaser to Furnish following details in the form for payment of TDS :-

  • Permanent Account No. (PAN) of Transferee(Payer/Buyer)
  • Permanent Account No. (PAN) of Transferor (Payee/Seller)
  • Category of PAN of Transferee
  • Category of PAN of Transferor
  • Full Name of the Transferee
  • Full Name of the Transferor
  • Complete Address of the Transferee
  • Complete Address of the Transferor
  • Complete Address of the Property Transferred
  • Details of amount paid/Credited
  • Tax Deposit Details

PAYMENT OF TDS U/S. 194IA

Payment under section 194IA can be made online by going on the link given below :-

Link to Pay TDS U/s. 194IA online on Purchase of Immovable Property for Value Exceeding Rs. 50 lakh

To Know more about Payment Procedure Please click the link given below :-

TDS on Property – FAQ , Payment Procedure & Points to Remember

Also Read –  TDS U/s. 194IA on Immovable Property to be paid by Form 26QB; TDS certificate in Form 16B

RELATED POSTS ON THE TOPIC

S. No. POST TITLE
1. CPC(TDS) releases Online Correction Facility for 26QB Statements
2.

Mandatory Filing of Form 26QB by Buyer of Immovable Property

3

CPC-TDS enables online correction in form 26QB

4.

Withholding tax Impact on Property transaction by Non-Residents Indian/Foreign Nationals

5.

TDS on sale of Immovable Property- Beware CPC TDS issuing intimation for late deposit of TDS

6.

TDS on sale of Immovable Property by Non-resident

7.

TDS- Sec.194IA – Payment on transfer of certain immovable property

8.

Transfer of Immovable Property & Income Tax – A Critical Analysis

9.

Procedure for TDS Payment (FORM 26QB) and Generation of Form 16B

10.

Tds On Purchase Of Immovable Property Effective 1st June,2013

More Under Income Tax

Posted Under

Category : Income Tax (25529)
Type : Articles (14986)
Tags : Section 194IA (41) TDS (924)

0 responses to “TDS on transfer of immovable properties wef 01.06.2013 & How to pay”

  1. atul says:

    hi,

    have purchased an under construction property from an investor.

    As per tri party agreement total agreement cost of 1.1 crore to be paid to investor, out of which 80 lacs will be paid to investor & 30 lacs to be paid to builder as per demand letter. Have spent 3 lacs in S Duty & 30,000 in Registration.

    Whether 1% TDS to be deducted on agreement value of 1.1 crore or on 1.133 crores (which includes registration + SDuty)

  2. Vidyadhar says:

    Investor purchases flat from builder against issue of allotment letter.

    No agreement for sale is executed.

    Investor shall be exciting from the investment after certain period of time on agreed terms and conditions by surrending the allotment letter.

    Under this circumstances is tax required to be deducted @ 1% on the invested amount u/s 194IA.

  3. jcgoel says:

    i have booked a flat with one of the builder at faridabad and made a payment of rs 13 lakh before june 2013 and 8 lakh in july 2013 the total value of the flat basic sale price is rs 65 lakh and about 20 lakh is other charges including servive tax . my query is wheather i have to deduct tds on payment made before june 2013 wheather the taxes and other charges are taxable in a col of totatl value of property what amount i have to show. one thing the builder buyer agreement was executed on 3rd sep 2013. kindly help me

  4. Prabakar says:

    Hello

    how to get generation Form 16B

  5. mahesh says:

    I am now retired. I would like to know the tax to be paid.

  6. Dipen says:

    What about agreements entered before 1-6-2013 & payments are made after 1-6-2013for undersonstruction properties?

  7. CA. M. Lakshmanan says:

    It is not applicable for sale of Agricultural Lands. But in the latest Finance Act the basic definition agri lands is changed and according to which most of the lands which are in the vicinity of towns or even villages, though agricultural operations are carried on, will not be exempted. To avoid confusions and litigation the government should immediately notify the non-agri. lands with reference to patta no./survey no. which are near towns/villages so that they purchaser will deduct tax at source.

  8. Pattabhi says:

    Sir,

    Is this TDS could be a reduction in payment of Capital Gain Tax?
    Is it so even the Capital Gain Tax is paid during subsequent assessment year?

    Kindly clarify.

  9. vswami says:

    Add-on:

    Another aspect of concern is the timing of withholding. In one’s view, if special regard be had to the purport of the provision, – to be precise,the clinching words used namely, “payment on transfer”, “consideration for transfer”,‘transferor’ and ‘transferee’, emphasis must be on the event of actual transfer. If so, withholding will, logically, be called for only at the time when the ‘transfer’ can be regarded to become conclusive in law. That is when the document of transfer is duly stamped and registered.

    Not being free from doubt, however,for the sake of uniformity in enforcing the requirement,a categorical confirmation by the CBDT might help; thereby avoid varying practices being followed by deductors.

  10. vswami says:

    Personal Reaction:

    Some of the comments posted herein (also in some other websites) pertain to compliance of the new TDS requirement in cases where the subject matter of ‘transfer’ is a ‘unit’ of a building, commonly known as Flat or Apartment. The concept of “unit” is a special concept, with entirely different legal significance and characteristics.

    The Explanation (b), u/s 194 IA provides that, for it’s purposes , – “immovable property” means any land (other than agricultural land) or any building or part of a building. To focus on, the term used is “part of a building”.

    The special concept of “unit”, however, is, – though often confused with, not only by common men but also by advising professionals, – not the same but is clearly distinct from “part of a building “referred to in the Explanation. The stated proposition, in one’s longstanding conviction, is indisputable ; and finds ample support in the very fact that is the reason why the government itself considered it necessary hence later amended the law so as to specifically bring within the tax net, the so called asset ,- “unit” of a building. Reference is to the amendments made way back, wef 1-4-1988.

    Those are to be found in the then introduced sub-clause (vi) of section 2 (47), and clause (iiib) of Section 27 (both required to be read with clause (d) of Section 269 UA). These are provisions for taxing income from /in respect of “unit” of a building, respectively under the head of capital gains and house property.

    On the premise that the foregoing observations do not suffer from faulty logic but are well reasoned, the noted omission to cover “unit” for the propose of section 194 IA, is patently unintended and a lacuna over sighted. If so, the government, if and when realised, may come out with a suitable amendment of section 194 IA to plug in the corrective. Till then, need not add, to that extent, the TDS mandated would remain in animated suspense.

    Now, it is for the stalwarts/law experts in the field, if not in agreement with the foregoing viewpoints, to volunteer and come out with an independent opinion. For, any such useful and purposeful guidance may help out the honest taxpayers and retrieve them from the quandary pushed into.

  11. Atul maheshwari says:

    A has made a booking for a flat with a builder and has paid 60 lacs till this date.
    He sells his booking for 62 lacs to B.
    b has to pay another 60 lacs to builder.

    Now for tds purposes who is the seller and who is the buyer. Who will deduct how much tds

  12. J. Rangarajan says:

    Kindly clarify the following :

    Whether the Buyer to deduct TDS 1 % on the total consideration of Flat, i.e. both UDS value and constructed value or 1% to be deducted on only UDS value which registered with SRO.

    Thanks & regards,

    J. Rangarajan

  13. Esteyak Ansari says:

    yes it is deductible from total tax liability.

  14. Esteyak Ansari says:

    TDS is payable on 1% of consideration payable to seller. Stamp duty & other charges are laibilities of buyer these all are not part of TDS payment.

  15. Esteyak Ansari says:

    it is 1% of consideration payable to seller and stamp duty & incidental charges are transferee’s obligation it should be not a part of TDS consideration

  16. ASHWANI says:

    Is this TDS deductible by the Seller in his Income Tax Returns

  17. L Harish says:

    A good move by the
    Government though it is late.

  18. Dhanesh says:

    Whether TDS @ 1% is to be deducted on the transfer prices (excl of stamp duty and other incidental exps.) or on the total purchase value of property (incl of stamp duty, registration exps. etc.)

  19. A K SARMA says:

    Sir,
    We have filed our revised return of form_26Q4 2012-2013 or correction in PAN of Deductee on 07.05.2013. till date the status is showing as “Under Process at CPC”. but the IT Rule says that Form_16A must be issued within 15 days from the due date of Filing of Return. the contact@tdscpc.gov.in is not respopnding our repeated requests other than an auto reply which is not useful. I am writing this problem to taxguru because taxguru is sending tax related updates to its customers. it became a mystery that to whom we can contact for customer problems of tdscpc.gov.in. it is requested to suggest a suitable way to solve the problem

    regards,
    A K Sarma

  20. Ashish says:

    Is the new TDS provisions applicable on purchase from builder?

  21. raghava says:

    If i purchase an apartment where land owner and builder is different where in triparty agreement is made, whom should we consider as transferor?

    And what is the definition of total value? Is it including carparking charges, Water & electrcity charges, service tax etc., collected by the builder or it is only basic value?

Leave a Reply

Your email address will not be published. Required fields are marked *