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TDS on transfer of immovable properties wef 01.06.2013 & How to pay

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

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

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

Categories: Income Tax

View Comments (21)

  • 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

  • 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.

  • 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)

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