Tds on property
This query is : Resolved
Amish Maknojia
(Querist)
15 December 2018
Hi!
Mr.X is an NRI and doesn't have PAN in India, he wants to purchase property worth Rs.60 lakh, he is having NRO account. TDS is to be deducted on purchase of property. But since he isn't having pan how to proceed with TDS payment and return filing (26QB)?
Mr.X is an NRI and doesn't have PAN in India, he wants to purchase property worth Rs.60 lakh, he is having NRO account. TDS is to be deducted on purchase of property. But since he isn't having pan how to proceed with TDS payment and return filing (26QB)?
Nikhil Kaushik
(Expert)
16 December 2018
interesting that the person has a NRO account but not a PAN. Does RBI even allow this? anyway, he/she has to comply to the 1% deduction requirement and therefore needs to obtain PAN.
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17 December 2018
@ Nikhil
Yes, as per R-114B, PAN is required for opening an account, however where the assessee is not required to obtain PAN by virtue of S.139A, then he may submit Form-60 instead of PAN.
On a side note, S.194-IA requires deduction of tax at source by the transferee, but it did not mandated PAN nor did it over-ride S.139A whereas Form 26QB requires PAN of both the transferor and the transferee.
Therefore, indirectly, form-26QB, by virtue of Rule 30 & 31A, has mandated PAN and is not in consonance with S.139A of the Act and hence, in my understanding, is unconstitutional to this extent as it is over-riding the Act itself.
A similar ruling was provided by the Karnataka High Court in case of A.Kowsalya bai v. Union of India[2012] 22 taxmann.com 157 (Kar.), wherein S.206AA was held as unconstitutional to the extent of a requirement of PAN in cases where the PAN was not required by virtue of S.139A.
Anyhow, it is much simpler, cost and time efficient to apply for a PAN than filing for a writ petition to a High court challenging the constitutional authority of a provision which can be easily amended.
My recommendations would be to apply for PAN.
prateek63@yahoo.co.in
Yes, as per R-114B, PAN is required for opening an account, however where the assessee is not required to obtain PAN by virtue of S.139A, then he may submit Form-60 instead of PAN.
On a side note, S.194-IA requires deduction of tax at source by the transferee, but it did not mandated PAN nor did it over-ride S.139A whereas Form 26QB requires PAN of both the transferor and the transferee.
Therefore, indirectly, form-26QB, by virtue of Rule 30 & 31A, has mandated PAN and is not in consonance with S.139A of the Act and hence, in my understanding, is unconstitutional to this extent as it is over-riding the Act itself.
A similar ruling was provided by the Karnataka High Court in case of A.Kowsalya bai v. Union of India[2012] 22 taxmann.com 157 (Kar.), wherein S.206AA was held as unconstitutional to the extent of a requirement of PAN in cases where the PAN was not required by virtue of S.139A.
Anyhow, it is much simpler, cost and time efficient to apply for a PAN than filing for a writ petition to a High court challenging the constitutional authority of a provision which can be easily amended.
My recommendations would be to apply for PAN.
prateek63@yahoo.co.in
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Nikhil Kaushik
(Expert)
17 December 2018
Dear Z. very detailed and nicely structured reply. I, on the other hand, prefer to say what is finally to be done.
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