TDS for Real Estate Sale of Rs 50 lakhs; this was announced during budget 2013-14 and now it has come to an effect from June 1, 2013.

The Central Board of Direct Taxes (CBDT) has notified the new provision of Tax Deducted at Source or TDS on immovable property. You will now have to deduct tax when you make the payment to the seller if the cost of the immovable property (other than agricultural land) exceeds Rs 50 lakhs under section 194IA.

TDS on Sale of Property

In this case the person required to deduct TDS would not necessary to obtain TAX Deduction Account Number (TAN). The rate at which tax is to be cut is 1%, but it would go up to as high as 20% if the seller does not disclose his/her permanent account number. The provision will apply even when the property has been financed through a bank loan. SO the buyer will have to ensure either he himself or the bank deducts tax before disbursing the loan to the seller.

This provision would only apply to payments being made on or after June 1, 2013, and would not apply to payments made for the same property prior to June 1, 2013, when the relevant law was not in force. The provision will also apply in cases where buyer bought an under construction property prior to the provision coming into effect but has to make the balance payment after June 1, 2013.

Payment of such TDS requires mandatory quoting of Permanent Account Number (PAN), it also asks for address of the transferor and transferee along with the address of the property transaction. Further ePayment of such TDS is made available by CBDT.

The new form for TDS payment is available on TIN-NSDL which has to be filled online for: e-Payment of TDS on Sale of Property.

If a person does not have the facility to pay tax online, he can take the printout of the duly filled form and make payment on any authorised branch. The income tax authorities have done away with the mandatory requirement of Tax deduction and account number for buyers. The buyer will be able to generate the TDS certificate from I-T department’s website and provide it to the seller.