1% TDS rule on sale of immovable property #TDS #Property #Saleofproperty

The 1% TDS rule on sale of property was introduced in Budget of FY 2013-14 to put a check on tax evasion in property deals and to ensure that sellers don’t avoid taxes on the capital gains they make.

In effect since 1^st June 2013, the regulation mandates that for any sale of immovable property equal to or exceeding Rs. 50 lakhs in India, a tax of 1% has to be deducted on every payment made to the seller upto the total sale consideration.

In case, the property is purchased in installments, 1% TDS has to be deducted and deposited with every installment if the total sale of consideration is equal to or exceeding Rs. 50 lakhs even if transaction amount is less than Rs. 50 lakhs. This must be done within 7 days from the end of the month in which TDS is deducted.

The buyer must then deposit this 1% tax deducted to the Government through Form 26QB available online on tin-nsdl.com website. PAN of both the buyer and seller must be compulsorily specified while filling.
 Buyer can also choose to deposit this amount offline by filling up Form 26QB, taking print out of the Acknowledgement form and submitting the same to the listed Banks.

Please note, this rule does not apply on sale of agricultural land.

What is the procedure to deposit TDS?
  1.    Fill up Form 26QB on tin-nsdl.com website.

  2.    Make the payment Online or Offline.

          a.    For Online payment, a challan is generated along with the acknowledgement number which must be noted down as it will be useful in future.

          b.    For Offiline payment, Acknowledgement Receipt is generated and same can be printed out and challan amount can be deposited in the listed banks.

  3.    The payment after processing will be reflected on the seller’s Form 26AS under the head Part F within 7 days.

  4.    The buyer is then required to furnish a TDS certificate ‘Form 16B’ to the seller which the buyer can download by giving a request at the TRACES website.

Steps for downloading Form 16B from the TRACES website are:

1. For this, register on the TRACES website with your PAN of Buyer and challan number.
2. Click on “Request for Form 16B” under Downloads menu.
3. Once the request is processed, Form 16B will be available in Requested Downloads under ‘Downloads’ menu.

How is this shown on the seller’s income tax return?

Capital gains made from the sale of property along with the TDS information present in the Form 26AS will have to reported in the seller’s income tax return.

When can the seller claim a refund of the 1% TDS?

If the seller made a loss on the sale of the property, the seller can claim a refund of the 1% TDS in his income tax return.

I purchased a property for 60 lakh from a builder. But I have paid only 10%, that is, 6 laks to the builder. Do I need to deduct and deposit TDS ?

Yes, You need to deduct 1%, that is, Rs. 6000 and deposit it. You will receive an Acknowledgement number which you should note down.

When you make the second payment say of 10%, that is, Rs. 6 lakh, deduct and deposit another Rs. 6000 through tin-nsdl.com website where another link is available to deposit TDS under the same acknowledgment number

My seller is not giving me the PAN, how should I deposit TDS?

PAN  of the seller is mandatory to file Form 26QB, without it you will not be able to deposit tax.

I deposited 0.5% tax instead of 1%. What should I do?

You can use the acknowledgement number that you received when depositing 0.5% tax and deposit rest 0.5% tax through the link available at tin-nsdl.com website.

Bought a property for over Rs.50 lakhs and need help with the TDS deposit?

Write to us at contact@munim.in or visit munim.in and leave a message on the contact page and our tax experts will help you.