As per section 194 IA of Income tax Act, 1961, TDS is applicable on sale of immovable property, if the consideration of property exceeds or equal to Rs. 50,00,000/- (Rs. Fifty lakhs). The rate of tax under the above section is 1% which is to be deducted and need to be deposited by buyer.
Steps to be taken by buyer, if he purchases property of Rs. 50,00,000/- or more
- He must have PAN (Permanent Account Number) issued by income tax department.
- He must collect PAN (Permanent Account Number) from the seller of property.
- Buyer needs to deduct tax @1% of the total sale consideration before each payment, doesn't matter payment has been made on lumpsum (One time) or in instalment. Example Mr. A purchased property of Rs. 60,00,000/- from Mr. B then following scenario can be made:
- Mr. A go for lumpsum (One-time payment) then Mr. A will pay Rs. 59,40,000/- to Mr. B after deducting 1% tax on the total consideration amount i.e. 1% of Rs. 60,00,000/- & will deposit tax of Rs. 60,000/-
- Mr. A wants to pay the consideration amount in instalment, say in 6 instalments (6 instalment of Rs. 10,00,000/- each), In this scenario Mr. A will pay Rs. 9,90,000/- to Mr. B after deducting 1% tax on the consideration amount i.e. 1% of Rs. 10,00,000/- & will deposit tax of Rs. 10,000/- at each payment.
- If Mr. A go for home loan (Alternative 1) for 80% of the total consideration amount and rest pay form own funds, then bank will disburse Rs. 48,00,000/- & Rs. 12,00,000/- shall be payable by own fund. Under this scenario for loan portion, Mr. A will tell his bank to disburse Rs. 47,52,000/- (i.e. Rs. 48,00,000/- less Rs. 48,000) to Mr. B & Mr. A will deposit total tax of Rs. 60,000/- (i.e. Rs. 48,000/- & Rs. 12,000/-) and will pay Rs. 11,88,000/- to Mr. B
- If Mr. A go for home loan (Alternative 2) for 80% of the total consideration amount and rest pay form own funds, then bank will disburse Rs. 48,00,000/- & Rs. 12,00,000/- shall be payable by own fund. Under this scenario for loan portion, if bank disburse Rs. 48,00,000/- to Mr. B. Then in this case Mr. A will still deposit total tax of Rs. 60,000/- (i.e. Rs. 48,000/- & Rs. 12,000/-) and will pay Rs. 11,40,000/- (i.e. Rs. 12,00,000/- less Rs. 60,000/-) to Mr. B
(Always remember banks pays on behalf of buyer & under this act it's buyer responsibility to deduct the tax.)
- Time limit to deposit the tax is 30 days from the end of the month in which deduction has been made, for example if Mr. A pays the consideration amount on 5th April, 2023 after deducting tax then Mr. A need to deposit the tax by 30th May 2023. If Mr. A pays the consideration amount on 30th April, 2023 after deducting tax in this case the due date shall be still 30th May 2023.
(The concept of depositing tax by 7 days from the end of the month is not applicable for this section)
- The tax needs to be deposit under form 26QB which is a challan cum return form.
Steps and process to deposit tax under form 26QB under new E-filing portal
Earlier the form were filed at NSDL website (https://onlineservices.tin.egov-nsdl.com) now the said facility of payment has been migrated under 'e-Pay Tax' portal of Income Tax Department on https://www.incometax.gov.in. Steps to file form 26QB and deposit of tax is given below:
- Login at E-filling portal with your PAN and password (This is the same portal which is being used for filing income tax return).
- Select the option of e-pay tax available on the e-file tab.
- Under the option of new payment, select the form 26QB (TDS on sale of property)
- Your personal details (PAN, Name, Category of PAN, contact details etc.) will be auto filed as per your profile details under the portal.
- In case of co-buyer then separate form will be filed.
- Then after enter the seller details (Only PAN) the name of the seller will be auto fetched in masked form (Like this SXXXR) in case of individual seller, Aadhar no. shall also be fetched in masked form.
- You need to enter seller details manually, in case of co- seller then separate form shall be filed for each seller.
- Then after enter the property details (Type of property, date of agreement, total value of consideration & address of property) Type of payment shall also be asked (Instalment/lumpsum)
- Then enter the consideration amount, tax on that will be auto calculated, payment of interest shall also be available if u deposited the tax late (i.e. after 30 days from the end of the month)
- After that proceed to pay the tax with multiple options of payment (Internet banking, UPI, Cards etc.) option of pay at counter (Bank) is also available.
- On successful payment either through online mode or pay at counter mode, the challan as well as statement of TDS in form 26QB shall be generated with unique Acknowledgement Number (like AJ01234567, BJ01234567 etc), Remember the generated acknowledgement number is very important to download TDS certificate.
- The challan shall also be available at email registered with PAN
- After 5 days of payment, certificate shall be available at TRACES portal.
- Kindly note that in case the seller is Non-Resident then form 27Q shall be filed instead of form 26QB (which as per normal TDS rules)
Steps and process of downloading TDS certificate from TRACES
- Go the TRACES portal (https://contents.tdscpc.gov.in) Login (Register yourself, if you are using it at first time) at Taxpayer/PAO (i.e. by PAN).
- Go to the "Downloads" Tab
- Select form 16B from the drop down.
- Select from 26QB, Assessment year, Acknowledgement number (As discussed above) and PAN of the seller after that proceed.
- After few hours the same shall be available under requested download.
- The password of the certificate will be the date of birth of the tax payer in DDMMYYYY format.
Kindly note the payment and tax information will be also be updated at buyer's 26AS as well as AIS portal
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