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Under section 194IA, 1 percent TDS on the Property Purchase

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Posted In LEGAL GUIDANCE
Under section 194IA, 1 percent TDS on the Property Purchase

It’s not new information that black money is involved in most of the property transactions in India. Hence, to overcome the issue, the government of India has introduced a law that mandates the property purchaser to deduct the tax at the source while paying the seller for his property.

Section 194IA of income tax Act requires the buyer to deduct a tax at the rate of 1 percent of the sale consideration if the value of the sale is more than Rs 50 lacs or more. It covers residential property, commercial property as well as land. However, transaction regarding the agricultural land is not covered under this section.

The buyer has to deduct the TDS at the time of execution of the deed or at the time of payment of the advance money. The buyer has to deposit the TDS to the credit of central government within 30 days from the end of next month in which the tax is deducted. To pay the TDS the buyer has to fill the challan form number 26QB. If the property has more than one buyer or property is brought jointly, then each buyer has to fill out the form 26QB separately. The details of all the buyers and the seller need to be submitted in each form separately.

Details required for the payment of TDS:

The buyer has to comply with the following requirement for deducting the TDS and paying the amount to the central government. The details for the same can be found at the website http://www.incometaxindia.gov.in/Pages/tds-sale-of-immovable-property.aspx

Every person who is responsible for deducting tax has to provide Tax Deduction Account Number (TAN). In case of immovable property, the buyer does not have to provide the TAN number. They have to provide details like address, name, PAN number, phone number, email address etc. buyer also has to provide the complete address of the property and the date of the agreement, total price paid for the same, date of payment and deed etc.

The buyer should ensure that the PAN number of the seller is right or not else the seller will not be able to get the credit for the tax deducted by the buyer as the credit flows on the basis of the PAN card details.

The challan can be paid online or offline to the authorised bank. The bank will then update the details on the IT department’s website. Once the challan has been deposited, the buyer will have to download the certificate from the IT website.

In some cases, the payee can approach the IT officer to issue the certificate, so that the payer shall deduct the TDS at a lower rate or in some cases the payee can furnish the declaration for nil TDS. However, no such provision is provided for the buyer of the immovable property.

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