TDS ON IMMOVABLE PROPERTY

December 17, 2021
MSAadmin

As per section 194IA, the buyer of the immovable property (i.e. a building or part of a building or any land other than agricultural land) will be liable to have TDS deducted on any sum paid or payable under consideration to the seller at the rate of 1% on the date of payment/ credit whichever is earlier. The said section will be applicable only if such consideration is 50 Lakhs or more. Such TDS u/s 194IA will be deposited within 7 days of the next month in which deduction has been made.

However, there is no limit on number of buyers or sellers for purchase of property. In sense, if the consideration of the property is 50 Lakhs or more, the buyers will be liable to deduct and deposit TDS on their specific shares. This section is made property wise and not buyer or seller wise.

The requirements of this section are:

  • The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.

  • No TDS is deducted if sale consideration is less than Rs 50 Lakhs. If installments are being paid TDS has to be deducted on each installment.

  • Tax is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55 Lakhs, you have to pay tax on Rs 55 Lakhs and not on Rs 5 Lakhs (i.e. Rs 55 Lakhs – Rs 50 Lakhs). This is applicable even when there is more than 1 buyer or seller.

  • If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.

  • If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.

  • This TDS has to be deposited along with Form 26QB within 7 days from the end of the month in which TDS was deducted.

  • After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.

  • Thus for paying TDS the seller is required to obtain Form 16B and the buyer is required to obtain Form 26QB.

 A land is not treated as agricultural land if:

  • It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000 or

  • It is situated in any area within below given distance measured aerially:

Well, that was all about the TDS on immovable property, if you have any queries please get in touch with us.

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