Very few people know that there is TDS applicability on sale and purchase of property in certain specified cases. People who are either selling or buying any property often ask the following questions from the Chartered Accountants and other Tax Experts:
- Who will pay TDS on sale of property?
- How can I avoid TDS on sale of property?
- Is TDS mandatory for property sale?
- What happens if buyer does not pay TDS on property?
- How to pay TDS for property above 50 lakhs?
- Can seller deduct TDS on property?
- Is TDS mentioned in sale deed?
In this article we will consider all the above questions and explain everything about the provisions relating to TDS deduction on sale of property.
TDS (Tax Deducted at Source) on the Sale of Property is a mechanism where the buyer deducts a certain percentage of the sale value and remits it to the Income Tax Department on behalf of the seller. This is governed by Section 194IA of the Income Tax Act, which mandates TDS at the rate of 1% on the sale of immovable property (other than agricultural land) valued at Rs. 50 lakhs or more.
Here’s a step-by-step procedure for TDS on Sale of Property in India under Section 194IA:
- Identification of the buyer and seller: The buyer must identify the seller of the property and obtain the necessary details such as PAN, address, and contact information.
- Calculation of TDS: The buyer must calculate the TDS payable as per Section 194IA, i.e., 1% of the sale consideration.
- Deduction of TDS: The buyer must deduct the TDS amount from the sale consideration payable to the seller at the time of making the payment.
- Payment of TDS: The buyer must deposit the TDS amount with the government within 30 days from the end of the month in which the deduction is made. The payment can be made online through the government’s NSDL portal or physically at an authorized bank. Online Payment can be made at the following link:
e-Payment for TIN (egov-nsdl.com)
5. Filing of TDS return: The buyer must file a TDS return in Form 26QB within 30 days from the end of the quarter in which the TDS is deducted. The return should contain details of the buyer, seller, property, TDS deducted, and other relevant information.
6. Issuance of TDS certificate: The buyer must issue a TDS certificate in Form 16B to the seller within 15 days from the due date of filing of the TDS return. The certificate serves as proof of TDS deduction and can be used by the seller while filing their income tax returns.
It is important to note that tax deduction on Sale of Property is only applicable to transactions above Rs. 50 lakhs. In case the sale consideration is below Rs. 50 lakhs, no TDS is required to be deducted. Additionally, TDS is not applicable on the sale of agricultural land.
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