TDS on Immovable Property to be deducted by buyer at 1%

Seller to pay TDS on property

TDS on Immovable property

Section 194IA, is effective from 01.06.2013.  Accordingly on sale of immovable property Buyer has to deduct TDS @1% and deposit the same with the income tax department.

Key Highlights of TDS on Immovable property are mentioned below:

  • TDS is to be deducted by buyer @ 1% of value.
  • TDS is to be deducted only if property value exceeds Rs 50 lacs.
  • No TAN is required by buyer
  • Only PAN no of Buyer and Seller is to be mentioned filing depositing TDS.
  • TDS can be deposited online ,
  • TDS deducted by the buyer at the time of making the payment to the seller has to be deposited within a period of 7 days from the end of the month in which the deduction has been made.
  • Form 26QB has been prescribed for making such payment and the form for  doing the same has been uploaded on the following website of NSDL: https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp
  • Issue of TDS Certificate: The TDS Certificate shall be issued in Form 16B within 15 days from the due date of deposit.
  • In case the PAN Card No. is not given by the buyer to the seller, TDS would be required to be deducted @ 20% under 206AA

How to apply PAN

 

Already as per current Income tax provision on purchase and sale of immovable property PAN no is compulsory if value exceeds Rs 5 lac. The reason for introducing section 194-IA is for widening of tax base and to check tax avoidance measures.

Currently, if buyer is purchasing property from NRI, then he has deduct TDS under section 195.

Major Challenges expected due this new Section on TDS on Immovable property

In case seller wants to save tax on capital gain under section section 54, by investing in immovable property then he has to claim income tax refund.

Read more on: How to save income tax on sale of house property

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