TDS on Property

Amount of Property Transaction & Rate of Tax: The purchaser of an immovable property (other than rural agricultural land) worth Rs 50 lakh or more is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor that is seller. 

Who is Liable to Pay TDS on Property: According to rules in respect of tax deducted at source, buyer of the property would have to deduct the TDS and deposit the same in Government treasury. 

What is Form 26QB: The online form available on the TIN website for furnishing information regarding TDS on property is termed as Form 26QB. Payment has to be made electronically using internet banking.

What is Form 16B: Form 16B is the TDS certificate to be issued by the deductor (Buyer of property) to the deductee (Seller of property) in respect of the taxes deducted and deposited into the Government Account. Form 16B will be available for download from the website of Centralized Processing Cell of TDS (CPC-TDS) www.tdscpc.gov.in

Is TAN Required? Buyer or Purchaser of the property is not required to procure Tax Deduction Account Number (TAN). The Buyer is required quote his or her PAN and sellers PAN. PAN of the seller is mandatory. The same may be acquired from the Seller before effecting the transaction.

Due Date of Payment: The due date of payment of TDS on transfer of immovable property is thirty days from the end of the month in which the deduction is made. Deduction shall be made from each and every payment or part payments.

Example: If a taxpayer has made payment of sale consideration in the month of February, then corresponding TDS should be deposited on or before (thirty days) March 30th

Joint Parties that is joint buyers or joint sellers: Online statement cum challan Form/ Form 26QB is to be filled in by each buyer for unique buyer-seller combination for respective share. E.g. in case of one buyer and two sellers, two forms have to be filled in and for two buyers and two seller, four forms have to be filled in for respective property shares

Payment of tax on subsequent date when immediate payment was not done after filing Form 26QB: Using Subsequent payment date facility deductor (Buyer) can furnish the details online and make the payment of taxes subsequently either through net-banking account or by visiting any of the authorized bank branches. Remember Interest and Penalty would be applicable in case date of payment exceed due date.

Payment Procedure: TIN system will direct you to net-banking facility of your bank. You will have to log on to the net banking site of your bank using your login ID and password/PIN provided by the bank. The particulars entered by you at TIN website will be displayed again. Your bank will process the transaction online by debiting the bank account indicated by you and generate a printable acknowledgment indicating the Challan Identification Number (CIN). You can verify the status of the challan in the “Challan Status Inquiry” at NSDL e-Gov-TIN website using CIN after a week, after making payment.

Points to be remembered by the purchaser of the property

  1. Deduct tax @ 1% from the sale consideration.
  2. Collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.
  3. PAN of seller as well as Purchaser should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction.
  4. Do not commit any error in quoting the PAN or other details in the online Form as there is no online mechanism for rectification of errors. For the purpose of rectification you are required to contact Income Tax Departmen

Points to be remembered by the seller of the property

  1. Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
  2. Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.

Under Construction Property: If you make a payment towards the purchase of immovable property for an amount of Rs. 50,00,000 or more than you have to deduct tax @1%. Hence, in case even if the property is under construction you are essentially making a payment towards the purchase of the property