TDS on Immovable Property u/s. 194IA

A new section 194 IA has been inserted under Income-tax Act, 1961 with effect from June 1, 2013.

This section requires deduction of tax at source @ 1% on sale of Immovable property, in case the transaction value is  exceeding Rs. 50 lakhs or more.

Immovable property means any land (but not an agricultural land situated in rural area) or building (Shops, apartments, flats, bungalows, etc.) acquired by a Resident.

The important points are:

1. There is no need to obtain TAN. Tax can be deposited as well as return can be filed, by using Permanent Account Number (PAN) of taxpayer under this section. 
2. Under this section, the purchaser of immovable property, who will make the payment to the seller, is required to deduct tax.
3. Rate of deduction is fixed at 1% of transaction value, but if the seller does not have PAN, then the rate of deduction will be at a higher rate of 20%.
4. Transaction value means the price which is mutually decided by the seller and the purchaser or price as per the government valuation, whichever is higher.
5. Tax is to be deducted on the date of credit of such amount or date of payment, whichever is earlier. Interest shall be payable at 1% p.m. for late deduction of tax and 1.5% p.m. for late payment of tax.
6. Tax deducted shall be deposited to the Government within 7 days from the end of the month in which tax deduction is made.
7. Online tax payment can be done by selecting Form 26QB (return cum Challan form) which is available on the website www.tin-nsdl.com under “TDS on Sale of Property” tab. The Form 26QB serves both the purposes, viz., payment of tax as well as filing of return for tax deducted and paid.
8. Once the deducted tax is deposited and return is  filed using Form 26QB, the purchaser of property is required to issue TDS certificate in Form 16B within 15 days from the due date of furnishing return cum challan in form 26QB. If there is delay in filing Form 26QB, late fee of Rs. 200 per day is levied for the period of delay. The late fee cannot exceed the amount of TDS deductible.
9. Form 16B will be available for download from the website of Centralized Processing Cell of TDS (CPC-TDS) www.tdscpc.gov.in. The acknowledgement of Form 26QB is also required to be produced at the time of registration/transfer of property in the name of Buyer.