18 Nov

Is purchased property worth more than Rs 50 lakh Here is how to deposit the TDS amount

Is purchased property worth more than Rs 50 lakh? Here's how to deposit the TDS amount?

If a person buys real estate worth more than Rs 50 lakh, then according to the income tax rules, the buyer is required to deduct 1% tax on the sale and deduct the source tax (TDS) and remit the amount to the income tax department. This process can be done online

TDS or tax deduction is the process of collecting income tax on Government of India resources. From this, a kind of tax is deducted from the original sources of income. TDS is deducted as per the Indian Income Tax Act, 1961. TDS is regulated by the Central Board of Direct Taxes and is part of the Indian Revenue Service. TDS is an indirect way of collecting income tax. It is imposed on income from many financial products and transactions. For example

·        Fixed Deposits,

·        Incentives and commissions,

·        Dividends,

·        Payments for various services,

·        Sales, (business fee, work contract payment)

·        For rent

·        For buying real estate

These are just some of the sources of income with TDS applicable.

TDS deduction rate

The TDS deduction can range from 1% to 30% depending on your source of income.

Provisions under Income-tax Act, 1961 Property Purchase

Section 194IA of the Finance Act, 2013, which provides for deduction of tax in respect of payment of consideration for the sale of immovable property (excluding rural agricultural land) to a resident transferred person from 1 June 2013.

If the value of the transaction is If more than Rs.50 lakhs, the buyer is responsible for deducting the TDS. The buyer must deduct 1% TDS from the total payment and deposit it in the government account.

The property included in section 194 IA includes residential property, under construction or commercial property as well as land excluding agricultural land. When TDS is deducted, sometimes the total selling price, which is Rs.50 lakhs more than can be paid in instalments. The TDS in that case, no matter how small, should be deducted from each instalment.

Payment due date

The deadline for submission of TDS and time for payment of TDS for each instalment deducted must be submitted to the Income Tax Authority by return cum challan (Form 2Q QB) within 30 days of the month. The month in which the payment is made.

Example: If a taxpayer has paid for the sale in the month of February, the relevant TDS must be paid on or before March 30 (thirty days).

What is Form 26QB?

For TDS information on property purchase, the form available on the TIN website has to be filled in online form 26 QB. Generally, everyone responsible for deducting TDS has to get a TAN (Tax Deduction Account Number). However, in the case of TDS on real estate, the buyer is not required to take TAN. The buyer has to provide the name, address, PAN, mobile number and details of the seller as well as the buyer's email id 26 QB in the form. The full address of the property, the total value of compensation, date of payment etc. must also be provided along with the date of the contract. Buyers should also remember to submit Form 16B. This is taken from traces and sellers will not be able to take the tax credit for deducted TDS if they do not fill-up the form or submit Form 26QB late.

What is Form 16B?

Form 16B is a TDS certificate issued in respect of deductible (property seller) deductible (property seller) tax credited to government account.

Penalty/interest for non-compliance?

Failure to comply with the provisions of section 194IA will result in late payment of interest as well as penalty under section 271H of the Income-tax Act, 1961, which will attract up to one lakh (minimum Rs. 10,000 / -).

Interest will be 1% per month for non-deduction of tax under section 201 (A) and 1.5% for deduction of U / S 201 (IA) for non-payment.

The buyer will be liable to pay a late fee of Rs.200 per day as per 234E. However, the penalty should not be higher than the penalty for which TDS was required to be paid. If a person fails to pay the required deductible TDS in accordance with the provisions of Chapter XVII-B, he is liable to imprisonment for not less than three months under U / s 276B but may be extended up to seven years.

Points to note;

1.    Agricultural land transactions are excluded from the requirements of TDS provisions.

2.    If payment is made in instalments, TDS must also be deducted on each instalment.

3.    The total compensation is if more than  Rs.50 lakhs TDS will be deducted @ 1% on the total amount.

4.    If the seller does not provide PAN, TDS @ 20% is deducted



Santosh P


Alliance Tax Experts




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