TDS ON SALE OF IMMOVEABLE PROPERTY
Written by gkkedia Dt. November 30th, 2021
From 1 June 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) for consideration exceeding or equal to Rs 50 lakhs, he shall deduct tax at source (TDS) while making payment of sale consideration. This has been laid out in Section 194-IA of the Income Tax Act.
TDS is deducted at the time of payment (including installment payments) or at the time of Credit of such amount to the account of seller, whichever is earlier.
Any sum deducted under section 194-IA shall be paid to the Government within thirty days from the end of the month in which tax was deducted along with the challan -cum -statement in Form No. 26QB.
Section 194-IA: This section states that any person, being a transferee responsible for paying to a resident transferor any sum (sale consideration of the property exceeding or equal to Rs. 50,00,000) by way of consideration for transfer of any immovable property (other than agricultural land), is liable to deduct tax at source under this section. The buyer has to deduct TDS at the rate of 1% of the total sale consideration.
If the payment is made in installments, then TDS has to be deducted on each installment paid, but total sales consideration need to be considered for threshold limit of Rs. 50 lakhs.
The buyer of any immovable property need not obtain a TAN (Tax Deduction Account Number) for making payment of the TDS on immovable property. Payment under this section has to be made through PAN of the buyer.
Buyer must collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.
Who is the Buyer: The buyer is any person, being a transferee, responsible for paying to a resident seller a sum by way of consideration for transfer of any immovable property exceeding or equal to Rs. 50 lakhs.
Who is the Seller: The seller is resident transferor of any immovable property.
TDS In case of Multiple Buyer and Multiple seller:
In case there is more than one buyer, then each buyer shall deduct TDS from his share of sale consideration. However for the purpose of eligibility of TDS provisions, total value of the property shall be considered.
Multiple seller: In case the buyer is purchasing property from multiple sellers, then TDS shall be deducted from the sale consideration being paid to all the sellers. However for the purpose of eligibility of TDS provisions, total value of the property shall be considered.
The Form 26QB return-cum-challan has to be filled by each buyer for every unique buyer-seller combination for their respective share.
Steps to Pay Tax
- Logon to the NSDL Website through the link www.tin-nsdl.com
- Click on TDS on sale of property under ‘Services’ Menu.
- Select applicable challan as Form 26QB Payment of TDS on sale of property
- Fill in the required details:
- Tax applicable – Corporation Tax in case tax payer is a company and Income Tax in case of a non corporate tax payer
- Status of the Payee/Seller/Transferor – Resident or non resident
- Other details – such as PAN No., name, address of transferor and transferee, property details.
- Amount paid and tax deposited details.
- Click on Proceed
- On confirmation screen, check the details entered and confirm.
- After Confirmation an acknowledgement will be generated.
- For making online payment through internet banking click on ‘Submit to Bank’.
- If the buyer does not want to deposit the TDS through internet banking, he may take the print out of Form 26QB and submit the same along with the payment at bank branch.
Once the payment is made, challan counterfoil is displayed containing CIN no. and payment details. This counterfoil is the proof of payment.
Every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No. 16B to the payee within fifteen days from the due date for furnishing the Form 26QB.
NOTICE OF NON-FILING OF FORM 26QB
The income tax department receives an Annual Information Return (AIR) from the registrar/sub-registrar office regarding the purchase and sale of property regularly. From this report, the department can figure out whether you have made a property transaction exceeding Rs.50 lakh or not.
If the buyer has not deducted tax at source at the rate 1% (or 0.75%) of the transaction amount or not filed TDS within the specified time, the IT department may send a notice to the buyer.
IMPLICATION OF NON/LATE FILING OF TDS STATEMENTS
For Buyer of property
In case of default on account of non/late filing of Form 26QB, a fee shall be charged u/s 234E of the Act.
The buyer would also be liable for defaults of Late Deduction, Late Payment and Interest thereon. Penalty under Section 271H may also be charged by the Assessing Officer.
PENALTIES APLICABLE ON NON-FILING OF FORM 26QB
Non-deduction of TDS-1% per month for the period from the date on which TDS was to be deductible to the date on which TDS is actually deducted.
Non-Payment of TDS- 1.5% per month for the period from the date on which TDS was deducted to the actual date of payment.
Late filing fee under section 234E @ Rs 200 per day – In case of default of non-filing or late filing of Form 26QB, the buyer shall be liable to pay Rs. 200 for each day during which such failure continues.
Penalty under section 271H- Assessing Officer may levy penalty under section 271H at his discretion. This section is applicable when a statement as required by the tax laws is not submitted timely. Penalty under this section must be more than Rs 10,000 and can extend to Rs 1lakh. However, if TDS is deposited with fee & interest and statement is submitted within 1 year of the time prescribed, no penalty shall be levied.