When a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than Rs 50 lakhs, buyer has to deduct tax at source at 1% under section 194IA of the total sale amount when he pays the seller.
i]. If the payment is made by instalments, then TDS has to be deducted on each instalment paid.
ii]. Consideration for immovable’ property shall include all charges like nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of the immovable property. This is applicable for immovable property purchased on or after 1 September 2019.
iii]. Buyer of the property need not obtain a TAN (Tax Deduction Account Number) for depositing TDS with the government. You can make the payment using your PAN.
iv]. For the purpose of depositing TDS, buyer will have to obtain the PAN of the seller, else TDS must be deducted at 20%.
v]. The TDS on the immovable property has to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.
vi]. After depositing TDS to the government, the buyer is required to furnish the TDS certificate in Form 16B to the seller.
I. Steps to fill form 26QB:
1. Log on to website e-filing portal ( https://www.incometax.gov.in/iec/foportal/ ).
2. Under ‘e-file’, click on ‘e-Pay tax’
3. Then Click on ‘New Payment’
4. Select ‘Proceed’ under ‘26 QB (TDS on Sale of Property)’ field
5. Fill the complete form as applicable.
(User should be ready with the following information while filling the form 26QB :
a.Residential Status of seller
b.PAN of the seller & buyer
c.Communication details of seller & buyer
d.Property details
e.Amount paid/credited & tax details
6.After submitting, the next page will ask to select the mode of payment i.e.,:
a.Net banking;
b.Debit Card;
c.Pay at Bank counter;
d.RTGS/NEFT; or
e.Payment Gateway.
7. Select the appropriate payment mode and click on continue to make the payment.
8. On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.
Proceed to TRACES portal ( www.tdscpc.gov.in) after 5 days to download Form 16B.
II. Steps to Download Form 16B:
1.Register & login on TRACES portal ( www.tdscpc.gov.in) as taxpayer using your PAN.
2.Select “Form 16B (For Buyer)” under “Downloads” menu.
3.Enter the details pertaining to the property transaction for which Form 16B is to be requested. Enter the Assessment Year, Acknowledgment Number, PAN of Seller and click on “Proceed”.
4.A confirmation screen will appear. Click on “Submit Request” to proceed.
5.A success message on submission of download request will appear. Please note the request number to search for the download request.
6.Click on “Requested Downloads” to download the requested files.
7.Search for the request with request number. Select the request row and click on “HTTP download” button.
FAQ on TDS on Property Sale:
- Who deducts TDS on property sales?
The buyer of the property is responsible for deducting TDS on the sale consideration. They must deposit the deducted amount to the government on behalf of the seller.
- What is the threshold limit for TDS on property transactions?
TDS is applicable if the sale consideration exceeds Rs 50 lakhs. This applies to both residential and commercial properties.
- How TDS on sale of property is used by NRI?
Non-Resident Indians (NRIs) are also required to deduct TDS on property sales, just like Indian residents. They must obtain a TAN (Tax Deduction and Collection Number) before making the payment.
- What is TDS on sale of property for joint owners?
Joint owners are required to deduct TDS on their share of the property. Each owner must deduct TDS on their respective share, and they must submit separate TDS returns.
- Is TDS applicable when buying agricultural land or rural property?
No, TDS is not applicable on the purchase of agricultural land or rural property. However, it is important to note that this exemption is only available for properties used solely for agricultural purposes.
- Is there a difference between TDS on property purchase and TDS on property rent?
Yes, there is a difference between TDS on property purchase and TDS on property rent. TDS on property purchase is 1%, while TDS on property rent is 10%.
- What is Lower deduction or nil deduction of TDS?
Under certain circumstances, the buyer can apply for a lower deduction or nil deduction of TDS by submitting Form 13A. This form requires details of the transaction, the seller’s PAN, and proof of payment.
