TDS on transfer of Immovable Property came into effect from 1st June 2013 with the introduction of Section 194-IA by the Finance Act 2013. The law was introduced to keep track of real estate transactions which are either not brought under the purview of taxes or shown at a lesser value than it is actually done.
The section applies to transactions where the sale value of the immovable property located in India or abroad is Rs.50 lakhs or more. The seller should be a resident Indian. Tax need not be deducted if the land is an agricultural land situated in rural India.
Rate of TDS on Sale/Transfer of Immovable Property
Tax should be deducted by the buyer of the property @ 1% of the price paid to the seller. Remember tax should be deducted on the entire sale consideration and not on the amount exceeding Rs.50 lakhs. If the seller does not furnish his Permanent Account Number(PAN) then tax should be deducted @ 20% on the transaction value.
Usually in case of TDS, the deductor should get a TAN (Tax Account Number)and deposit the tax deducted to the Government through his TAN. The deducted tax then gets credited to the account of the deductee. But in case of TDS on transfer of Immovable Property, no TAN is required.
Procedures, Forms and Filing
Generally TDS should be deposited to the Government by the buyer within the 7th of the succeeding month in which tax is deducted. Online Form 26QB should be filed by the buyer which can be accessed as follows:
Step1 – Go to www.tin-nsdl.com
Step2 – Click the option “TDS on sale of Property”
Step3 – Select the option “Online form 26QB” and click Form 26QB
Step4 – Fill the form, make the payment and submit the essential requirements for filling the form are the PAN of the Buyer and Seller, Name and Address of the Buyer, Seller and details of the property involved. Where there is more than one buyer for the property each buyer should file Online Form 26QB separately and deposit the proportionate TDS as applicable.
Payment of Tax
While Form 26QB is available in the online mode only, payment can be made both online and offline. If online mode is selected, the buyer should have a Net-Banking facility with any of the authorized banks mentioned in the tin-nsdl website. Online payment should be made and form should be submitted. The Acknowledgement number generated should be noted for generating Form 16B and issuing to the seller.
Where offline payment is to be done, the form should be filled accordingly and submitted. The Acnowledgement number will be generated anyway and it should be produced to the bank for making the payment of TDS. Form 16B can be downloaded by the buyer only from the website www.tdscpc.gov.in by logging in as a taxpayer.