NOTE ON TDS TO BE DUDCUTED ON TRANSFER OF IMMOVABLE PROPERTY U/S 194IA OF INCOME TAX ACT, 1961 W.E.F. 01.06.2013
As per Finance Bill of 2013, TDS is applicable on sale of immoveable property wherein the sale consideration of the property exceeds or is equal to Rs 50,00,000 (Rupees Fifty Lacs).
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 of the property at the time of making payment of sale consideration.
Following are the conditions and operational mechanism as per Notification No 39/2013 dated 31.05.13 and Sec 194IA of Income Tax Act, 1961 :
Type of person covered: Purchaser and Seller may be anyone i.e. Individual / HUF / AOP / BOI / Firm / LLP /Company etc.
Tax Rate and Limit: Tax needs to be ducted @ 1% by buyer on purchase value where the sale consideration of the property exceeds or is equal to Rs 50,00,000. It means where the Sale consideration is Rs. 70 Lacs TDS to be deducted on Rs. 70 Lacs, not on 20(70-50) Lacs. If Seller doesn’t have PAN, tax needs to be deducted at 20% instead 1%.
Time of Tax deduction: Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration or at the time of booking in books of purchaser, whichever is earlier.
Due date of deposit of tax deducted: Tax deducted as above needs to be deducted within 7 days of next month. TDS should be deposited only through online payment. New challan cum statement form framed for payment i.e. FORM 26QB
Type of Property covered: Both residential and commercial property covered except agricultural land.
Requirement of PAN: PAN of seller as well as Purchaser should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction.
Issue of TDS Certificates: Every purchaser of property who has deducted TDS under the said provision 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.
In case of property financed through loan: A standing instruction shall be furnished to bank to remit the amount directly to seller after deducting TDS @ 1% of the total payment made and asked to deposit the same with government by them directly.
In case of purchase of property from seller with consideration to pay in installments, then TDS shall be deducted @ 1% on all the installments which are due on or after 01.06.2013