Learn the essentials of Section 194IA. Know all about TDS on Sale of Property. Here we are providing complete details regarding Payment of TDS on Property, What is Form 26QB.
TDS on Sale of Property – Under Section 194IA
While announcing Union Budget 2013-14, Honorable Finance Minister P. Chidambaram introduced TDS on Property (other than Rural agricultural land) at the rate of 1% on all Immovable Property Transactions over Rs. 50 Lakhs under Section 194IA. As per the Section 194IA of the Income Tax Act, 1961 states that for all transactions wef June 1, 2013, Tax @ 1% should be deducted by the buyer of the property at the time of making payment of sale consideration(When property worth is Rs. 50,00,000/- or more). According to Section 194IA in respect of TDS, the purchaser of the would have to deduct the TDS and deposit the same deducted amount in Government treasury.
The Individual buying the property is liable to deduct TDS, but need not to furnish any TAN details. The reason behind the introduction of this provision was to eliminate the under-reporting or undervaluation of the transaction related to property. Under Income Tax Act 1961, any TDS deducted shall be deposited with the government on or before the specified due date of deposit of Tax Deducted at Source.
TDS Rates – TDS on Sale of Property
The PAN details of the seller are mandatory. The same may be acquired from the Seller before effecting the transaction. PAN of the seller, as well as Purchaser, should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction. Let us take a look at TDS rates for Sale of Property Sale.
|Nature of the Furnishing return||TDS Rate|
|If PAN details furnished||1%|
|If PAN details not furnished||20%|
Must Read: TDS Rates for FY 2015-16
Documents for TDS Filing- Section 194IA
Form 26 QB, which is a challan-cum statement, has to be filled online furnishing all the details related to property while making payments concerning the purchase of assets exceeding Rs. 50 lakhs. The details include the amount of consideration, names and address of buyer/seller, property location, PAN details, date and the amount of deduction and deposit of TDS, etc. The purchaser additionally required to furnish TDS certificate in Form 16B within 15 days of furnishing Form 26QB, and this form should be sent to the transferor/s. The prerequisite to avail online services is to have Net Banking Account with any of the authorized banks.
What is Form 26QB?
The online form available on the Tax Identification Number (TIN)website for furnishing information regarding TDS on the property is termed as Form 26QB.
- Acknowledgment number (Ack No) for the Form 26QB furnished is available in the Form 26AS of the Deductor (i.e. Buyer/ Purchaser of property).
- The taxpayer can also click the option ‘View Acknowledgment’ hosted on the TIN website. The taxpayer needs to enter PAN of the Buyer and Seller, Total Payment and Assessment Year (as mentioned at the time of filing the Form 26QB) to retrieve the Acknowledgment Number.
Download: Form 26QB
The TDS certificate Form 16B is to be issued by the Buyer of property to the Seller in respect of the taxes deducted and deposited into the Government Account.
Download: Form 16B
Penalty for TDS Late Filing
Under Section 201 of the Income tax Act, 1961
Once the taxpayer is deemed to default as per the Section 201, interest shall be levied at the rate of 1% per month. In part from the date on which tax was deductible till the date of actual deduction and 1.5% per month or part from the date of deduction till date of actual payment.
Under Section 234E of the Income tax Act, 1961
This section involves penalty in case of failure to file TDS statements within the prescribed time limit. The Penalty is imposed at Rs. 200 per day for the number of days till the default continues or TDS amount whichever is lower. The Penalty amount cannot exceed the TDS amount.
Exemptions Under Section 194IA
Let us take a look at Exemptions of Section 194IA here.
- Section 194IA is not applicable if payment is made to NRI citizen. All the transactions come under the purview of section 195 of the Income tax Act. So, upper limit is not applicable here.
- TDS for Nonresident will be deducted as per rate prescribed Chapter XVIIB or 20%+Education Cess+Secondary Higher Education Cess(whichever is higher) on the sale consideration. Surcharge at the rate of 10% will be applicable if the amount paid exceeds Rs. 1crore.It is important to consider the Double TaxatioTAA provisions of the relevant country if any.
Must Read: TDS on Non-Resident