TDS on Sale of Immovable Property under sec 194 IA
According to the Finance Act, 2013 (Section 194 IA), When there is a trade of Immovable property i.e. Residential or Commercial immovable property except for Agricultural land, the buyer has to pay TDS (Tax deducted at source) at 1% of the total amount. If the transaction of sale of property is carried out between 14th May 2020 to 31st March 2021, the rate of TDS will be 0.75% of the total amount.
TDS is only applicable to the property which amounts to more than Rs.50 lakhs. After the budget 2019 amendment to Section 194 IA, the sale consideration would be the cost of property along with electricity, parking, and other bills; so the TDS of 1% will be based on the whole amount of sale consideration.
The TDS is deducted while making the payment to the seller, be it through bank or in instalments. TDS deduction will be subject to the whole amount so if it is made in instalments, the TDS amount of 1% will be payable on every instalment.
PAN of all the parties involved is important for filing of TDS, if not there then the rate of TDS will be 20% of the whole amount.
The purchaser needs to file Challan – Form 26QB within 30 days from the end of the month when the payment was made. After filing TDS, the purchaser has to provide the seller with the TDS Certificate – Form 16B. It has to be obtained by the buyer within 15 days of filing of Form 26QB.
Procedure to file Form 26QB & FORM 16B:
- The Form 26QB is to be filed on https://onlineservices.tin.egovnsdl.com/etaxnew/tdsnontds.jsp
- If the buyer is a corporate firm then they will select 0020, if not then 0021.
- After filling the necessary details, the buyer has to make payment either online or offline (by going to the bank branch). The challan will appear and can be printed once the payment is made. If the payment is made offline then the challan will be issued by the bank itself once the acknowledgment form is provided i.e. generated while filing the application form on the website.
- To get the Certificate Form 16B to provide it to the seller within 15 days, the buyer has to register in www.tdscpc.gov.in and go to the “download” section of the page and select “Form-16B”.
- By filling in the seller’s PAN and all other necessary details – proceed to the page.
- After proceeding, the buyer needs to verify the information printed and then submit the application.
- Once the application is submitted, it will be processed by the back end within a few hours. To check the status of the application, the buyer has to check on the same portal under the download section. If the application is available, then the buyer can print it by putting on the password (date of birth of the buyer – DDMMYY) in the downloaded file.
Notification and Sanction for non-filing:
- If the TDS has not been filed then the income tax department will send the buyer a notice regarding the same and let him/her know about the penalties.
- When the TDS is not deducted the penalty will be 1% of every month from the default till the TDS amount is deducted. When the TDS amount is deducted but not paid, the penalty amount will be 1.5% of every month from the default till the TDS amount is paid.
- Under Section 234E, Along with the interest the buyer will have to pay for late filing of Form 26QB i.e. Rs.200 for every day till the default continues. Under Section 271 If the penalty and interest is not paid within one year of TDS filing period, the income tax officer may levy a penalty of more than Rs.10,000 which can exceed up to Rs.1 lakh.
For smooth and timely filing of TDS connect straight with Myefilings team.