TDS on Sale of Immovable Property Section 194IA
Applicability-
TDS on sale of Immovable Property comes under section 194IA, is inserted by Finance act 2013 w.e.f. 01.06.2013. If any person purchased any immovable property (other than agricultural land) is required to deduct TDS from the amount payable to the seller, if the property value is greater than Rs. 50.00 lakhs. The seller should be “Resident in India”.
There is no requirement for obtaining Tax deduction account number (TAN) to the buyer. Only PAN of the buyer is required for filing form 26QB.
Rate of TDS-
If the property value is greater than Rs. 50.00 lakhs then the TDS will be deducted as the rates below-
• TDS will be deducted @ 1% on the amount payable to the seller.
• If the seller has no PAN, then the TDS will be deducted @ 20%.
(If the property value is greater than Rs. 50.00 lakhs)
Example 1- (If seller has PAN number)
Mr. Ram sells the Residential House to Mr. Sham, at a consideration amount of Rs. 65.00 lakhs. Whether TDS will be applicable, if applicable what is the amount of TDS?
Answer-
Yes, the TDS will be charged @ 1% on Rs. 65.00 lakhs i.e. come to Rs. 65,000/-
(TDS will be charged because the property value is exceeding to Rs. 50.00 lakhs and the seller has PAN so, TDS will be deducted @1%)
Example 2- (If seller has NO PAN number)
Mr. Ram sells the Residential House to Mr. Shyam, at a consideration amount of Rs. 65.00 lakhs. Whether TDS will be applicable, if applicable what is the amount of TDS?
Answer-
Yes, the TDS will be charged @ 20% on Rs. 65.00 lakhs i.e. come to Rs. 13.00 lakhs.
(TDS will be charged because the property value is exceeding to Rs. 50.00 lakhs and the seller have No PAN so, TDS will be deducted @20%)
(If the property value is Less than Rs. 50.00 lakhs)
Example 3- (If seller has PAN number)
Mr. Ram sells the Residential House to Mr. Sham, at a consideration amount of Rs. 45.00 lakhs. Whether TDS will be applicable, if applicable what is the amount of TDS?
Answer-
No, TDS will be charged because the property value is below to Rs. 50.00 lakhs.
WhenTDS under section 194IA is not applicable-
• Where section 194LA regarding compulsory acquisition is applicable.
• If the seller is non-resident or NRI then TDS is to be deducted under section 195 on basis of capital gains.
Time of Deduction-
TDS will be deducted at the time of credit of such sum to the account of the payee or at the time of payment whichever is earlier. If the payment received in installments, TDS will be deducted at every installment not at final installment.
Due date of payment of TDS-
The purchaser of the property should deposit the deducted amount of TDS on Form 26QB, within 30 days from the end of the month in which payment is made.
TDS Certificate-
The buyer has to provide TDS certificate in form 16B to the seller within 15 days from the day of filing Form 26QB.
Interest charged under section 201-A- The interest amount will be calculated on monthly basis not day to day basis, part of month will be calculated as full month.
1. Non-Deduction of TDS- 1% per month from the date on which TDS was due till the date it was deducted.
2. TDS deducted but not deposited- 1.50% per month from the date of deduction till the date it was deposited.
Example 4-
If you have failed to deducted TDS of Rs. 10,000 on 05.07.2017 but deducted on 12.10.2017 and deposited on same day, you have to pay interest of 4 months @ 1% i.e. comes to Rs. 400/- for non-deduction of TDS.
Example 5-.
If you have deducted TDS of Rs. 10,000 on 05.07.2017 and deposited on 12.10.2017, you have to pay interest of 4 months @ 1.50% i.e. comes to Rs. 600/- due to not deposited in time.
Penalty for Delay or Non-filling of Form 26QB-
1. Late filing Fees- Under Section 234E, the buyer has to pay Rs. 200 per day for late filling of form 26QB till the date default continues. The penalty should not exceed the total amount of TDS.
2. Non-Filling Fees- Under Section 271H, the buyer has not filled form 26QB within one year from the due date, the penalty should not be less than 10,000 or more than Rs. 1,00,000.