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Highlights of Section 194-IA (TDS On Sale/Purchase of IMMOVABLE PROPERTY)

Crux :

1.As per Finance Act of 2013, TDS is applicable on transfer of any Immovable Property(other than agricultural land), wherein the consideration of the property exceeds or is equal to Rs.50,00,000/-.

2. Tax @ 1% should be deducted by the buyer of the property at the time of making payment of sale consideration. (Whether by  Cash,  Cheque, Draft or by any other mode, whichever is earlier.)

3. Payment to credit of Central Government

Any sum so deducted under section 194 IA shall be required to 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 .

Penalty /Interest on default of Payment : Interest under section 201 of Income Tax Act,1961 will be payable if TDS is not paid within the date mentioned above and  such person who defaulted in deduction/payment of TDS  shall be treated as “Assessee In Default”.

If TDS has been deducted but not paid:  In this case one and one-half percent (1.5%) for every month or part of a month, on the amount of such TDS from the date on which such TDS was deducted to the date of actual payment.

If TDS is not deducted: In this case one percent (1%) for every month or part of a month on the amount of such tax from the date on which such TDS was deductible to the date on which such TDS is deducted.

4. Furnishing statement of TDS (26QB)

It should be filed with challan within a period of seven days from the end of the month in which the deduction is made.

In Case of Default,

Late Fees u/s 234E shall be levied T Rs. 200 per day of default subject to a maximum of amount of TDS deductibe for which statement was required to be filed.

Penalty u/s 271H : In addition to late filing fees, Deductor shall pay penalty of minimum Rs 10,000/- to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement, or for filing incorrect return.

5. TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account , within fifteen days from the due date for  furnishing the Challan-cum-statement in Form No. 26QB under Rule 31A.

Notes:

1. TDS has to be deducted on the entire amount of consideration and not only on amount exceeding   RS 50,00,000/-. Ex: If consideration is Rs.75 Lakhs, Tds has to be deducted on entire Rs.75 lakhs and not 25 Lakhs.

2. Buyer of the property is exempt to procure Tax Deduction Account Number (TAN) for Tax deduction and payment of TDS under this section.

3. Tax needs to be deducted at the time of payment either it is payment of entire amount or installment. If the payments are being made in installments then at the time every installment payment.

4. TDS has to be deducted on payment of consideration with effect from 1st June,2013. If some amount has been paid prior to that, TDS has to be deducted only from subsequent payments if total consideration touches the threshold.

5. In case of more than 1 buyer or seller,  Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share .

6. Agricultural Land: Agricultural land means agricultural lands in India, not being a land situated in any area referred to in section 2(14)(iii)(a)/(b).

A land shall not be treated as Agriculture Land, if:

a)  It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or

b)  It is situated in any area within below given distance measured aerially:

Population of the Muncipality

Distance from Municipal limit or Cantonment Board

More than 10,000 but does not exceed 1,00,000

Within 2 kms.

More than 1,00,000 but does not exceed 10,00,000

Within 6 kms.

Exceeding 10,00,000

Within 8 kms.

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