Out of all the basic necessities of life clothes, food and shelter, the biggest aim of every person in todays world is to live in his own shelter. Be it small or big, we all dream of becoming an houseowner someday. And as other financial transactions are complemented by TDS rules, buying house property is also attached by TDS provisions.
Yes, if you purchase any immovable property (land or building or house property) from a resident Indian for Rs. 50 lakhs or more, you are mandatorily required to deduct TDS @ 1% on every credit or payment whichever is earlier. The TDS is to be deducted in accordance with provisions of section 194-IA.
Note:
For the purpose of this section, you are not required to obtain Tax-Deduction Account Number (TAN). Hence if you possess PAN, you shall deduct and deposit TDS under this section on purchase of house property of Rs. 50 Lakhs or more.
Cases where these provisions dont apply:
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In case of purchase of any rural agricultural land
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Where sale consideration of the property is less than Rs 50 Lakh
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Where purchase is made from non-resident person.
Mark a note of these points as well:
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If the seller doesnt have PAN then TDS will have to be deducted @ 20% instead of 1%;
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If price of property is more than Rs. 50 lakhs, TDS is to be deducted on whole amount, only not on the amount in excess of Rs. 50 Lakhs. (For e.g. if total price of property is 60 lakhs, TDS to be deducted = 1% of 60 lakhs i.e. 60,000)
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If payment is made in different instalments, TDS @ 1% is to be deducted on each instalment. (For e.g. if total price of property is Rs. 60 lakhs, but it is payable in 6 instalments of 10 lakhs each, TDS to be deducted = 1% of 10 lakhs i.e. 10,000 on each payment of instalment);
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TDS is to be deposited to Government within 7 days (30 days from 1st June 2016) from the end of the month in which TDS is deducted;
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Payment can be made online through TIN-NSDL website;
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Return is to be filed in Return-cum-challan form 26QB wherein details of both seller and buyer, details of property, total consideration, amount of TDS deducted & deposited, amount and date of payment etc. details are to be mentioned;
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Form 16-B is to be downloaded within 15 days after submitting 26QB and it is to be provided to seller for his records.
Consequences in case TDS is not deducted or deposited on time:
If you dont deduct TDS at time of payment/ credit whichever is earlier or dont deposit TDS within 7 days (30 days from 1st June 2016) from the end of the month in which TDS is deducted, then you have to pay interest on amount of TDS.
In case of non-deduction of TDS, interest @ 1% of TDS amount is to be paid from the date on which TDS should have been deducted to the date on which TDS has been deducted;
In case of non-timely deposition of TDS, interest @ 1.5% of TDS amount is to be paid from date of deduction of TDS to date on which TDS has been deposited.
Failure to file/Late filing of Form 26QB:
If the buyer fails to file Form 26QB or in the case of late filing of Form 26QB, the buyer will have to pay a fees of Rs 200 for each day till such failure continues subject to maximum of TDS amount.
Tax Credit to Seller
The seller will be eligible to claim tax credit for the TDS deducted by the buyer at the time of filing of his Income Tax Return. This amount will also be reflected in 26AS of the seller as well as buyer.
So before buying house property, ensure that you are well versed with the relevant tax provisions. Write to us in case of any query/ feedback and well ensure that you duly comply with all provisions so that you can enjoy your dream house without any worry!
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15 responses to “Buying house property of Rs. 50 lakhs or more? Dont forget to deduct TDS on payment!”
What is the percentage of TDS to be deducted when a property is purchased from NRI and which form is to be filed?
First, you need to ascertain the residential status of the transferor as per the Income-tax Act, 1961. If he is Resident then TDS will be applicable @ 1% as per the section 194IA. However, if he is Non-resident then it will depend on a number of factors like the country of the transferor, capital gain in the hands of transferor etc. For a customized opinion, you can write us at support@tax2win.in or call @ 9660-99-66-55.
I hv booked under construction flat of a total cost of Rs.45 Lakhs under CLP plan.
I’m paying all my Dues well before time. Last 6 month back I hv upgraded my unit in a bigger size in same project and due to upgradation, my flat Value has rise from 45 Lakh to 52 Lakh. As per the rule, 50Lakh and above, 1% TDS to be deducted.
In my case, I hv made 2 payment to my builder against the demand note without deducting 1% TDS.
Pls advice, at what amount I hv to deduct TDS my balance payment or entire Payment.
Regd,
Rakesh
Sir, If i am a ignorant and want to pay now whether there is any process is there. Can i go ahead and pay the TDS 1% now as i come to know now only. Please suggest.
Hi Lizaa,
Thanks for writing to us. We appreciate your query.
Any sum deducted under section 194-IA 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 and shall be accompanied by a challan-cum-statement in Form No. 26QB.? ?For failure to pay or for late payment of any TDS,? the deductor (buyer of the property) is deemed to be an assessee in default. The consequences of late deduction and deposition include interest u/s 201 as well as late fee u/s 234E of the Act.
Interest is levied under two scenarios;
a) If tax deducted is not deposited by the 7th of next month of the month of deduction, but is paid at a later date?,? then @ 1.5 % per month or part of the month.
b) If the tax is not deducted at all then @ 1% per month or part of the month.
In addition to above interests, a late fee of Rs. 200 per day u/s 234E will be levied subject to the amount of tax is to be levied for late filing of TDS statement i.e. form 26QB.
Hence, in your case, you must deduct and deposit the TDS now but the liability towards interest u/s 201 and fees u/s 234 E would arise. For customized opinion and safe tax planning, you can connect with us at support@tax2win.in or at 9660996655.
If I am selling a residential plot for 50 lakhs, how much tax should I pay.
if i want to pay should I pay before selling or after selling and after how time after selling.
If I am selling a residential plot for 50 lakhs, how much tax should I pay.
if i want to pay should I pay before selling or after selling and after how time after selling.
and if i have doubt jow can i contact you…
Dear Sir,
Income Tax on sale of property [capital assets] is depend upon the amount of the Net Capital Gain. Therefore, first we need to calculate the Capital gain amount and then tax amount will be calculated. For the purpose of calculation of Capital Gain, certain details needed like Purchase Cost, Sale Price, other related expenses, date of purchase and sale etc. Further, tax amount needs to be paid as per the provisions of advance tax i.e. after the sale executed at specified dates. [https://blog.tax2win.in/advance-tax-what-why-when/] For customised opinion and safe tax planning, you can connect with us at support@tax2win.in or at +09660996655.
Dear Sir,
Income Tax on sale of property [capital assets] depend upon the amount of the Net Capital Gain. Therefore, first we need to calculate the Capital gain amount and then the tax amount will be calculated. For the purpose of calculation of Capital Gain, certain details needed like Purchase Cost, Sale Price, other related expenses, date of purchase and sale etc. Further, tax amount needs to be paid as per the provisions of advance tax i.e. after the sale executed at specified dates. [https://blog.tax2win.in/advance-tax-what-why-when/] For customised opinion and safe tax planning, you can connect with us at support@tax2win.in or at +09660996655
Hi,
I made 5 Transactions in Dec-Jan-Feb (18-19) for my property purchase costing 50 L.
But i deducted TDS i.e 50K on whole amount i.e 50L in Feb and submitted Form 26QB as well. As i get to know, it should be deducted for every transaction.
What next step i need to do for the same.
Dear Mr. Yogesh,
As per the provisions of section 194-IA, TDS required to be deducted and deposited earlier of credit or payment. Therefore, TDS required to be deducted on the payment of each instalment. However, in your case, you have deposited it at the time of final payment. In this case, you may receive the notice from the income tax department to pay the interest for delay in deduction and deposition of TDS. For more information in this regard, you can connect with us at support@tax2win.in or at +09660996655.
Hi Vadivelu,
Income Tax on sale of property [capital assets] is depend upon the amount of the Net Capital Gain. Therefore, first we need to calculate the Capital gain amount and then tax amount will be calculated. For the purpose of calculation of Capital Gain, certain details needed like Purchase Cost, Sale Price, other related expenses, date of purchase and sale etc. Further, tax amount needs to be paid as per the provisions of advance tax i.e. after the sale executed at specified dates. [https://blog.tax2win.in/advance-tax-what-why-when/] For customised opinion and safe tax planning, you can connect with us at support@tax2win.in or at +09660996655.
we had sold our ancestral property for Rs. 61 lacs 20 thousands only. we were 6 beneficiaries ( 5 sisters 1 brother ) the distribution was decided on 50- 50 percent ( 5 sisters will receive 50 % and 1 brother will receive 50 % ) but the buyer was not aware of this 1 % tds deduction neither the seller. buyer paid entire amt ( 61.20 ) to seller now buyer is asking for this 1 % from seller’s. problem is that 1 brother is agreeing to give back 1% from his part of proceeds but the 5 sister’s are not agreeing to give back 1% since they claim that this was not disclosed to them earlier by buyer neither it was mentioned in sale agreement. So what remedy in this situation ? buyer is asking help from brother who received 50% of the sale proceeds ( 30 lacs 60 thousands ) but brother says he is ready to give 1 % from his part but if 5 sister’s are not agreeing then buyer has to take that responsibility. Your comments on this.
Dear Mr. Rajendra,
As per the provisions of the law, if you sell any immovable property for Rs. 50 lakhs or more, the buyer is mandatorily required to deduct TDS @ 1% on every credit or payment whichever is earlier. Thus, the Buyer has to deposit the one per cent to the Government as a TDS. At the same time, the seller can claim the credit of the same at the time of filing the ITR. Therefore, in your case, you can give the PAN of all of you as per the respective shares and the buyer will file the necessary details accordingly. By following this way, all sellers can get the credit of the same. Also, we recommend to file your ITR correctly so as to avoid the Notice from the Income Tax Department. For more information and customized opinion in this regard, you can connect with us at support@tax2win.in or at +09660996655.
I have planned to purchase an office premises and paid an advance of Rs.5,00,00 by cheque. The cost of the premises (A) before registration is about 72 lakhs and (B) after registration is about 80 lakhs. The seller is a registered Indian Company. Should I deduct 10% TDS for the Cost of premises A or B?
I have not deducted for the advance of Rs. 50000/- made a week ago. Is that right?