TDS on Property

Thinking of buying a land or flat or building or apartment? Before proceeding further, you must read this article to know about TDS on Property, it’s rate and everything else.

TDS on Property: –

For better understanding, first, we must discuss the TDS. TDS is short for Tax Deduction at Source. So whenever a person buys a land or apartment, he is liable to pay taxes on them. So every sale of immovable property attracts taxes that is payable to the government as per the law.

Section194 IA: –

According to the section 194 IA of Income Tax Act, 1961, any person who is buying any             immovable property will deduct taxes at the time of making payment to the seller of the property. This section is in effect from the date June 1, 2013.

Rate of TDS on sale of property: –

  • Sec 194 IA, also talks about the rate at which tax should be deducted. It is fixed at 1%.
  • On the top of TDS, no extra charges, surcharges or cess will be applicable.
  • PAN number of both the seller and buyer needs to be furnished with the Income Tax officials.
  • In case, the seller fails to provide his PAN number, then the deductible amount of TDS applicable to his consideration will increase to 20%.

TDS Limit: –

  • For the purpose of taxation, there is a limit on the total consideration on the sale of the property.
  • If the total consideration does not exceed the amount of Rs 50,00,000, TDS on sale of property is exempted according to sec 194 IA.

Who can deduct TDS?

  • Like in other cases, the it’s always the one who pays the consideration has to deduct taxes. In this case, it’s the buyer of the property who has to deduct TDS at the prescribed rate at the time of payment.

Deposition of TDS deducted: –

  • The buyer has the responsibility of depositing the TDS deducted by him with the government.
  • He has to do so within 7 days from the end of the month in which the tax has been deducted.

Form 26QB: –

  • This form is required at the time of depositing the taxes deducted by the buyer of the property.
  • A sample can be seen and availed by the buyer by visiting the TIN website here.
  • The buyer needs to fill in this form and submit the same at the time of making payment to the government.

Procedure for submitting TDS: –

  • The buyer of the property or deductor of taxes, needs to visit the TIN website.
  • On the home page itself, TDS on sale of property tag is available.
  • By going on the TDS on property page, one can find all the relevant details there.
  • Online Form 26QB is available there, fill in that form and furnish all the information asked and make the payment.
  • One thing to note here is that, payment in this case, can only be made electronically.
  • So either buyer himself can make the online payment of taxes or he can visit the authorized branch of listed banks and there he can get the payment done electronically.
  • Here, as the payment is done electronically, no challan will be issued.
  • Instead of challan, an acknowledgement number will be issued.
  • This acknowledgement number must be kept safely.
  • In case one forgets or loose the acknowledgement number, he can still excess it by visiting the TIN website and go inside the TDS on sale of property section.

Authorized banks through which e-payment can be made are mentioned below alphabetically: –

  • Allahabad Bank
  • Andhra Bank
  • Axis Bank
  • Bank of Baroda
  • Bank of India
  • Bank of Maharashtra
  • Canara Bank
  • Central Bank of India
  • Corporation Bank
  • Dena Bank
  • HDFC Bank
  • ICICI Bank
  • IDBI Bank
  • Indian Bank
  • Indian Overseas Bank
  • Jammu & Kashmir Bank
  • Oriental Bank of Commerce
  • Punjab and Sind Bank
  • Punjab National Bank
  • State Bank of India
  • Syndicate Bank
  • UCO Bank
  • Union Bank of India
  • United Bank of India
  • Vijaya Bank

Issuance of TDS certificate: Form 16B

  • TDS certificate on sale of property must be issued by the deductor or buyer within 15 days of filling up of Form 26QB or depositing the TDS amount with the government.
  • A sample of Form 16B can be seen on the TRACES website here.

Important Points related to TDS on property: –

  • PAN number of both the buyer and seller is required for the purpose of TDS on sale of property.
  • TAN registration is not required to have by the buyer to file TDS. Only PAN number will suffice.
  • While trying to fill in the online forms, try to avoid any mistakes in furnishing information such as PAN details and amount. As there is no online process to make any rectification.
  • Once the mistake has been committed, for any rectification of the same, one will be required to contact Income Tax Department.
  • The seller must verify the taxes deducted by the purchaser or buyer or deductor in his annual tax statement i.e. Form 26AS.
  • In he finds any discrepancy in his annual tax statement, then he can contact Income Tax Department for the rectification of the same.
  • If any seller has a valid reason to claim tax credit then he can submit an application with the assessing officer for consideration.
  • Assessing officer on proper verification, finds the claim to be true then he can issue a certificate to the seller to claim Tax credit or reduction, as the case maybe.

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