As per Finance Bill
of 2013, TDS is applicable on sale of immoveable property (other than
agricultural land) wherein the sale consideration of the property is equal or
exceeds to 50,00,000 (Rupees Fifty Lakh). Sec 194 IA of the Income Tax Act,
1961 states that for all transactions with effect from June 1, 2013, Tax @ 1%
should be deducted by the purchaser/buyer of the property at the time of making
payment of sale consideration. Tax so deducted should be deposited to the
Government Account through any of the authorized bank branches.
Therefore, when you
are buying an immovable property exceeding Rs. 50 Lakh you have to deduct the tax on source and pay the tax to government.
This provision is
inserted with a view to keeping a track on the sale and purchase of the
immovable property where huge amount of capital gain tax is engaged. This provision
will help the department to cross-verify such cases and augment the revenue in
a timely manner. But it creates an extra burden to the purchaser to deduct and
payment the tax.
Now the Department
has started issuing intimations for interest u/s 200A to the detector i.e. he
buyer of the property for late payment of tax to the govt. Therefore, the property buyer should be cautious
in respect of deduction and payment of tax deducted at source u/s 194-IA in
time.
The various points
in this regards are mentioned below:
1.
TDS liability arises to the purchaser of the immovable
property if the value of the property is Rs. 50 Lakh or more.
2.
No tax in case of agricultural land.
3.
Tax to be deducted on the whole amount and not
on the amount exceeding Rs. 50 Lakh. E.g. if the value of the property sold is Rs. 80 Lakh tax to be deducted on Rs. 80 Lakh not on Rs. 30 Lakh.
4.
Rate of TDS is 1% of the value of property
if valid PAN is provided. Otherwise, TDS @ 20% to be deducted.
5.
The payee is a resident transferor of any
immovable property.
6.
Tax shall be deducted
at the time of credit of such sum to the account of the transferor or at the
time of payment of such sum in cash or by issue of a cheque or draft or by any
other mode, whichever is earlier.
7.
TAN is not required to
deduct tax in this case. The purchaser shall deduct tax and deposit the same against
his PAN.
8.
Any sum deducted under section
194-IA shall be paid
to the credit of the Central Government within a period of seven days from
the end of the month in which the deduction is made and shall be
accompanied by a challan-cum-statement in Form No. 26QB.
9.
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 Challan-cum-statement
in Form No. 26QB.
These are the rules for deducting and depositing tax u/s
194IA. The checklist for the buyer and seller of the immovable property is
given below:
Following are the
points to be remembered by the buyer of the property-
1:-Deduct TDS @ 1% on the total sale consideration.
2:-Collect the Permanent Account Number (PAN) of the Seller
and verify the same with the Original PAN card.
3:-PAN of seller as well as Purchaser/buyer should be
mandatorily furnished in the online Form 26QB (statement cum challan form) for
furnishing information regarding the sale transaction of valid PANs.
4:-Do not commit any error in quoting the PAN or other
details in the online Form 26QB (statement cum challan form) as currently there
is NO online mechanism for rectification of any error.
5:-Verify tax deducted and deposited from Part F of your
Form 26AS Annual Tax Statement.
6:-Note down 9 digits alphanumeric acknowledgment number
generated on filing of 26QB which is required for placing request of form 16B.
7:-Download form 16B From TRACES portal and issue it to the
seller of the property.
Following are the
points to be remembered by the seller of the property-
1:-Provide a copy of PAN Card to the Purchaser of the
property for furnishing information regarding TDS to the Income Tax Department.
2:-Verify taxes deducted by the Purchaser in Part A2 of your
Form 26AS Annual Tax Statement.
3:-Compare it with Form 16B issued by the Purchaser.
4:-Download form 16B from TRACES only.
Keep in mind the
above points and buy/sell property without harassment.
For consultancy on tax, accounts and related matters contact 8013160197.
