TDS ON PROPERTY UNDER SECTION 194-IA OF INCOME TAX ACT

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APPLICABILITY OF TDS

Any person who is purchasing an immovable property (other than rural agricultural land) worth Rs. 50 lakh or more is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor.

This section covers residential property, commercial property, as well as land. However, transactions pertaining to the purchase of agricultural land, are not covered under this provision.

DEDUCTION OF TDS

The purchaser of the property has to deduct the TDS in two case,

  • At the time of executing the conveyance deed.
  • Or at the time of payment of advance in case any advance is being paid before the execution of the conveyance deed.

DUE DATE FOR PAYMENT OF TDS

Tax deducted needs to be deposited within 7 days of next month (In case of month of March due date is April 30). TDS should be deposited only through online payment. New challan cum statement form framed for payment i.e. 26QB.

PAYMENT OF TDS

The buyer has to furnish the particulars in Form-cum-challan No 26QB. If a property has more than one buyer and/or seller, you need to fill in separate Form 26QB for each set of buyer and seller. The details of all buyers and sellers, have to be submitted in each Form 26QB.

There is no requirement of obtaining TAN no as per Sec 203A for person responsible for deducting tax under section 194IA.

DETAILS REQUIRED FOR PAYMENT OF THE TDS

It is the buyer who has to comply with the requirement of deducting TDS and paying the amount to the central government. Generally, every person who is responsible for deducting TDS has to obtain a TAN (tax deduction account number). However, in case of TDS on immovable property, the buyer does not have to obtain the TAN. You need to provide following details of the seller as well as buyer, in Form 26QB :

  • Permanent Account Number (PAN) of Property Purchaser and Seller.
  • Address of the Purchaser, Seller as well as the Property being purchased
  • Financial/AssessmentYear will be populated on the basis of Date of Payment/Credit selected in the Form.
  • Major Head Code – To indicate the type of tax applicable viz; Tax on companies/Tax on other than companies
  • Value of Property
  • Date of agreement/booking
  • Amount Paid/credited (Transaction amount)
  • Rate of TDS
  • TDS Amount
  • Dates of payment/credit, deduction

The buyer should ensure that the PAN of the seller is correct. Otherwise, the seller will not be able to get the credit for tax deducted by the buyer, as the credit shall flow on the basis of PAN card details furnished in Form 26QB.

TDS CERTIFICATES (Form 16B)

The purchaser of property who has deducted TDS as per sec 194-IA need to issue TDS certificate in Form 16B within 15 days from due date of deposit i.e. by 22nd of next month in which tax has been deducted. At present there is no mechanism in place of issue of system generated TDS certificate as we have in case of form 16A and form 16, so you need to issue TDS certificate manually.

INTEREST FOR LATE DEDUCTION AND LATE PAYMENT OF TAX

Interest is payable at the rate of 1% for every month of late deduction of tax and at the rate of 1.5% for every month of late payment of tax deducted.

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