Get a Free Quote
Our expert will call you back within 24 hours
TDS on Sale of Property
Introduction
Under section 194-IA, a buyer buying any immovable property like house, apartment, building, land (except agricultural land) must deduct Tax Deducted at Source (TDS) on the payments made to the seller of the property. The amount of TDS deducted is 1% of the sales consideration or the stamp duty value, whichever is higher.
What is Section 194IA?
Section 194IA provides for TDS on sale of immovable property. The person who is buying the property should deduct TDS and pay the remaining amount to the seller. 1% of the selling price is deducted under this section. Please note that TDS here is not deducted on the capital gains, but on the entire selling price. If the stamp duty of the property is less than Rs. 50 lakhs, no TDS needs to be deducted.
Requirements of Section 194IA
- The buyer has to deduct TDS at 1% of the total sale amount. Please note, the buyer is required to deduct TDS, not the seller
- TDS is required to be deducted only if total purchase value is Rs 50 lakh or more
- If the payment is made by instalments, then TDS has to be deducted on each instalment paid.
- ‘* Consideration for immovable’ property shall include all charges like nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of the immovable property.
- Buyer of the property need not obtain a TAN (Tax Deduction Account Number) for depositing TDS with the government. You can make the payment using your PAN.
- For the purpose of depositing TDS, buyer will have to obtain the PAN of the seller, else TDS must be deducted at 20%.
- TDS is deducted at the time of payment (including instalment payments) to the seller.
Exceptions for Section 194-IA
- When the government has acquired any immovable property from you for core infrastructure and development activities, it falls under the ambit of compulsory acquisition. In such cases, the government deducts TDS under section 194LA.
- When you sell a land which is classified as an rural agricultural land as per the income tax provisions, then no TDS needs to be deducted. This is because the rural agricultural lands are not considered as capital assets, thus exempted from capital gains.
What is Form 26QB?
Form 26QB is the challan cum statement filed by the buyer of immovable property except agricultural land to the government providing details of the buyer, seller and the total value of sale consideration.
- The TDS on the immovable property has to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.
- After depositing TDS through e-tax Payment option (Net banking) or any of the authorized bank branches to the government, the buyer is required to furnish the TDS certificate in Form 16B to the seller. This is available around 10-15 days after depositing the TDS on the TRACES portal.
- PAN of the seller, as well as Purchaser, should be mandatorily furnished in an online form (Form 26QB) for furnishing information regarding the property transaction. Facility for furnishing information regarding the transaction of sale of immovable property and payment of TDS thereof is available on the NSDL website.
Consequences of Non-filing of Form 26QB to the Seller
If the buyer doesn’t file Form 26QB, the seller cannot claim TDS amount while filing his Income Tax Return as it will not reflect in Form 26AS. It may lead to paying tax again for the same amount by the seller. Also, while reporting capital gain for the financial year, the seller cannot claim the TDS credit and has to pay again to the Income Tax department.
What Our Clients Say
Real stories from real clients. See how YourTaxEase made a difference!