Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property (i.e. building or part of building or any land other than agricultural land) is liable to deduct tax at source u/s 194-IA.
In simple words, as per this section the buyer has to pay TDS and not the seller.
Time of deduction: At the time of payment or credit to the transferor in the books of transferee, whichever is earlier.
Rate of TDS:
a. In case of PAN of Deductee is available -1%
b. In case of NO PAN of Deductee is available -20%
Limit: No TDS is to be deducted when consideration is less than Rs 50, 00,000.
What is Immovable Property, Agricultural Land?
Immovable property means any land (other than agricultural land) or any building or part of a building. Agricultural Land means any land situated in India but not including land situate
1. in any area which is comprised within the jurisdiction of a municipality or a cantonment board and which has a population not less than 10 thousand.
2. in any area within the distance, measured aerially,
- not being more than two kilometres, from the local limits of any municipality or cantonment board and which has a population of more than ten thousand but not exceeding one lakh; or
- not being more than six kilometres, from the local limits of any municipality or cantonment board and which has a population of more than one lakh but not exceeding ten lakh; or
- not being more than eight kilometres, from the local limits of any municipality or cantonment board and which has a population of more than ten lakh.
- CBDT vide its notification no. 39/2013 dated 31st may 2013 has prescribed the rules regarding mode of deduction, deposit and issuance of TDS certificates in respect of deduction made
Provision of TAN not applicable.
Immovable property means any land or building or part of building. Such may be situated in India or may be situated out of India.
Issue of TDS Certificates:
The purchaser of property who has deducted TDS as per sec 194IA need to issue TDS certificate in Form 16B within 15 days from due date of deposit i.e. by 22nd of next month in which tax has been deducted. At present there is no mechanism in place of issue of system generated TDS certificate as we have in case of form 16A and form 16, so you need to issue TDS certificate manually.
The purchaser of property who has deducted TDS as per sec 194IA need to issue TDS certificate in Form 16B within 15 days from due date of deposit i.e. by 22nd of next month in which tax has been deducted. At present there is no mechanism in place of issue of system generated TDS certificate as we have in case of form 16A and form 16, so you need to issue TDS certificate manually.
No TDS Return:
No need to file TDS return separately on a quarterly basis as TDS challan cum statement i.e. Form 26QB shall need to use for remitting TDS amount to the government which covers all the details as required to be furnished under TDS return. Interest for late deduction and late payment of Tax: Interest is payable at the rate of 1% for every month of late deduction of tax and at the rate of 1.5% for every month of late payment of tax deducted.
PLEASE READ FOLLOWING VIEWS/OPINION ALSO:-
1. Under the registry of property purchased, we have to mention the consideration paid along with required TDS deducted.
2. In case property is financed by any financial institution or banks :
a. 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.
b. In case or promoter contribution case i.e. less than 100% finance by the bank:
In such cases, the purchase can deduct the TDS out of the total sum to be financed by himself & can be deposited into 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 instalments individually which fall due after 01.06.2013 & whose cumulative amount is more than 50lacs. but only on principal portion, not on the interest portion or penalty portion (if any).
4. Threshold limit of Rs 50 lacs 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. TDS under section 194IA is to be deposited on CHALLAN cum Statement on Form 26QB.
8. Online Payment of TDS is mandatory. Online payment CHALLAN is available in TIN NSDL Website.
9. TDS certificate must be issued to deductee (buyer) in Form 16B within 15 days from due date of deposit.
The author can also be reached at sandeeprawatca@gmail.com
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