Purchase of Flat

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When purchasing a flat for over Rs. 50 lakhs, the buyer is responsible for deducting Tax Deducted at Source (TDS) and filing Form 26QB. In a scenario where a mother pays the full amount for a flat registered in her son's name, the son, as the legal buyer and transferee, must file Form 26QB. This form is crucial for remitting TDS under Section 194-IA of the Income Tax Act, 1961, and must be submitted within 30 days of the end of the month in which the transaction occurred.

DEBASISH BODHAK

DEBASISH BODHAK (Querist)
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09 July 2020 Mother paid the full consideration of Rs.55 lakhs to purchase a flat in the name of her son. Who will file 26QB, Mother of Son?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 July 2020 Son ,because he is the transferee.

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CA SAYANTAN BASU

CA SAYANTAN BASU (Expert)
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10 July 2020 Form 26QB is a return-cum-challan form for the payment of Tax Deducted at Source (TDS) to the government for deductions made under Section 194-IA of the Income Tax Act, 1961. This section of the Act specifically deals with transactions involving the sale of immovable property and the applicable TDS along with Form 26QB needs to be submitted within 30 days counted from the end of the month in which TDS was deducted. For instance, if the transaction occurred on 14th March then Form 26QB must be mandatorily submitted by 30th April.

The Income Tax Act, 1961 has laid out a few key rules regarding sale and purchase of immovable property. In such transactions covered under Section 194-IA, the buyer, also known as the deductor, is required to deduct TDS if the transaction value is more than Rs. 50 lakhs. Subsequently, the deductor will required to issue Form 16B to the deductee (seller).

All the requirements for Form 26QB have been listed under Section 194-IA. They are:

Under Section 194-IA, the buyer must deduct TDS at the rate of 1% of the total sale amount at the time of completing the transaction.
TDS u/s 194-IA is not applicable to transactions involving agricultural land.
TDS on immovable property sale is not applicable for transactions valued at less than Rs. 50 lakhs. For transactions beyond this limit, TDS is deducted on the entire transaction amount. For instance, if the property cost Rs. 52 lakhs then you have to pay TDS on Rs. 52 lakhs and not Rs 2 lakhs (Rs. 52 lakhs – Rs. 50 lakhs).
If the payment is made in installments then TDS is deducted proportionately on each individual installment.
The buyer does not need to obtain Tax Deduction Account Number (TAN) to deduct and deposit TDS. However, PAN is mandatory for both the seller and the buyer in case TDS deduction occurs using Form 26QB.
The buyer is supposed to deposit TDS and submit form 26QB within 30 days from the end of the month in which TDS was deducted.
In case there are multiple buyers and sellers involved in the transaction, the deductor will be required to submit multiple Form 26QB.

After deducting and depositing TDS, the buyer must furnish a TDS certificate to the seller within 15 days of the transaction in lieu of the tax deducted and deposited to the government.
The buyer must then obtain Form 16B and furnish it to the seller.

So in the present case the son being the buyer of the property will be liable to submit the form 26QB .

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