The Central Board of Direct Taxes (CBDT) has notified the new provision under section 194IA, where 1% Tax Deducted at Source or TDS will be levied on sale/transfer of immovable property (other than agricultural land) exceeds Rs 50 lakhs. Here the buyer of the property needs to deduct the said TDS before making the payment to the seller. The buyer will be able to generate the TDS certificate from I-T department’s website and provide it to the seller.
Provisions Related to TDS Payment and Furnishing of TDS Certificate are;
1. Any sum deducted under section 194IA shall 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.
2. TDS payment U/s. 194IA shall be accompanied by a challan-cum-statement in Form No. 26QB. Download Form No. 26QB
3. Where tax deducted is to be deposited accompanied by a challan-cum-statement in Form No.26QB, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it electronically within the time specified in sub-rule (2A) into the Reserve Bank of India or the State Bank of India or any authorised bank.
4. Every person responsible for deduction of tax under section 194IA shall furnish the certificate of deduction of tax at source in Form No. 16B to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No. 26QB.
5. Form 16B is to be generated online from the web portal.
Note: Those selling immovable property without disclosing a valid Permanent Account Number (PAN) are required to pay higher TDS as government mandating a 20% tax deduction at source (TDS) in such transactions.
Other Points to be Noted;
1. Under the registry of property purchased, you have to mention the consideration paid along with required TDS deducted.
2. In case property is financed by the any financial institution or banks :
- 100% financed by the bank: Although it is not practically possible that any bank can finance the property 100% yet purchaser has to give standing instructions to the financing bank or institution for deducting the TDS out of the total consideration paid or to be paid, as the case may be & depositing the same.
- In case or promoter contribution case i.e. less than 100% finance by the bank:
In such cases, purchase can deduct the TDS out of the total sum to be financed by the himself & can deposited in to bank & Rest portion will be financed by the bank.
3. In case of installment system of payment is followed , TDS is required to be deducted on all such installments individually which fall due after June 1, 2013 & whose cumulative amount is more than 50 lakhs, but only on principal portion, not on the interest portion or penalty portion (if any).
4. Threshold limit of Rs 50 lakhs will be applicable to each & every property separately.
5. Property can be of residential or official purpose.
6. Transferor can be dealer, user of the property or salaried class employee.
7. Online Payment of TDS is mandatory. Online payment CHALLAN is available in TIN NSDL Website.