TDS on Sale or Purchase of Property Under Section 194IA.
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The Central Borad of Direct Taxes (CBDT) has notified the new provision under section 194IA, where 1% Tax Deducted at Source or TDS will be levied on sale / transfer of immovable property (other than agricultural land exceeds Rs.50.00 lakh).
This new TDS section is brought into effect from 01/06/2013, while making payment for purchase of immovable property other than Agricultural land in rural area in India. Here below some common questionnaire we can face while sale/purchase property.
1: Type of Person Covered : -
Purchaser and seller
may be anyone i.e. either
individual/HUF/AOP/BOI/Partnership firm/LLP/Company/Artificial juridical person.
2: Rate of Tax Deduction : -
Tax needs to be
deducted at source @1% on purchase value of
immovable property if the same exceeds Rs.50 lakhs per property. If seller
doesn't have PAN no., tax needs to be deducted @ 20% instead of 1%.
3: Who are Liable to Deduct TDS : -
Here the Buyer of the property needs to deduct TDS before making the payment to the seller.
4: Time of Tax Deduction : -
Tax needs to be
deducted at the time of payment to seller or at the time of booking in books of
purchaser, whichever is earlier .
5: Due Date of Deposit of Tax Deducted : -
Tax deducted as above
needs to be deposited within 7 days of next month. TDS should be deposited only through online
payment. New challan cum statement form framed for payment i.e. 26QB.
6: Type of Property Covered : -
Both residential and
commercial property covered under the
provision.
7: Whether TAN required for Purchaser : -
No need to register
for TAN no. with department. You can use your PAN no. to deposit tax deducted
from payment made to seller.
8: Issue of TDS Certificate : -
Every purchaser of property who has deducted TDS under the said
provision 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. Right now 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.
9: What if Property Finance Thru Loan : -
A standing
instruction shall be furnished to bank to remit amount directly to seller after
deducting TDS @1% of the total payment made and asked to deposit the same with government
by them directly.
In case of purchase of property from seller with consideration to pay in
installments, then TDS shall be deducted @1% on all the installments which are
due on or after 01.06.2013
10: TDS Return : -
No need to file TDS return separately on quarterly basis- TDS challan cum
statement i.e. 26QB shall need to use for remitting TDS amount to government
which covers all the details as required to be furnished under TDS return.
11: Exemption Limit : -
No TDS required to be
deducted where consideration is less than Rs.50 lakhs. The limit of Rs. 50
lakhs is per property and not aggregate value of consideration of all
properties during the year. There are various clarifications still remained unresolved.
Hope government will come out of circular for effective implementation of the
said section.
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