A complete guide on how to make TDS payment on Property sale. In brief, mention the due date, the portal through which the payment can be made, and then the points to be remembered by the property buyers and owners. After this, the steps for filing 26QB Form. And finally, the steps for downloading form 16B.
Overview
Tax Deduction at Source (TDS) is one of the most commonly used economic terminologies. Whether you are an employee or you own a business, these deductions have emerged to become an integral part of your transactions. However, the concept of TDS is unclear for most individuals, especially those belonging to non-finance backgrounds. TDS on Property Purchase – As a result, people wonder why there is hard-earned money being deducted even before they receive the amount in totality during property sales.
Here is some highly crucial information concerning TDS payment of property sales. It will help you understand the intricacies and significance of the process, enabling you to better cooperate with the legalities.
A Guide To TDS on Property Purchase
The concept of TDS in the tax system was introduced to collect tax from the very source of income. Under TDS, a person (deductor) who is liable to make payment of specified nature to another individual (deductee) shall deduct tax at source and remit the same into the Central Government’s account. The deductee would be entitled to get the credit of the amount so that the deductor issues a deduction based on Form 26AS for the TDS certificate.
Section 194 of the Income Tax Act deals with the requirement of TDS deduction by the buyer during the time of purchase of the property. TDS has been deducted at the rates prescribed by the tax department.
How to Calculate TDS on Purchase of Property?
Understanding the calculation of TDS on property purchases is essential. Let’s illustrate with an example:
Scenario
Mr. A buys a flat from Mr. B for ₹ 80,00,000 on August 15, 2023.
Mr. A pays ₹ 20,00,000 as an advance on August 1, 2023, and the remaining ₹ 60,00,000 at registration on August 15, 2023.
TDS Calculation
Mr. A needs to deduct TDS at 1% of ₹ 80,00,000, which amounts to ₹ 80,000.
He deducts ₹ 20,000 when paying the advance on August 1, 2023, and ₹ 60,000 when paying the balance on August 15, 2023.
TDS Deposit Schedule
He deposits ₹ 20,000 by September 30, 2023, and ₹ 60,000 by October 31, 2023, using Form 26QB online.
Form 16B Issuance
Mr. A issues Form 16B to Mr. B within 15 days from the due date of depositing the tax.
Understanding these steps and timelines is crucial for accurate TDS calculation and timely compliance with regulatory requirements.
Documents Required for TDS Filing
Typically, you should possess documents containing the following details:
- PAN numbers of both the buyer and the seller
- Category of PAN for both the buyer and the seller
- Full names of the buyer and the seller
- Comprehensive address details of the buyer and the seller
- Accurate address details of the purchased property
- Information on the amount paid or credited
- Date of agreement or booking
- Date of payment or credit
- Mode of payment
- TDS rate and amount
TDS Rates on Purchase of Property
When acquiring immovable property in India, the Tax Deducted at Source (TDS) comes into play. TDS is applicable if the sale consideration or stamp duty value of the property amounts to ₹ 50,00,000 or more. In such cases, the property buyer is required to deduct 1% of the sale consideration as TDS. This deducted TDS must be deposited with the government within 30 days from the end of the month in which the deduction is made. This mechanism ensures compliance with tax regulations in real estate transactions, providing a transparent and accountable framework for property purchases.
Due Date To Pay TDS
TDS must be paid on the transfer of immovable property within 30 days from the end of the month from which the deduction is made.
Exemptions From TDS on Purchase of Property
Certain exemptions are granted from the Tax Deducted at Source (TDS) payment requirements for property purchases. Here’s a breakdown of these exemptions:
Threshold Exemption
No TDS deduction under section 194-IA is required if the consideration or stamp duty value for the transfer of immovable property is below Rs 50,00,000.
NRI Transactions
TDS is not applicable when transferring any immovable property from one Non-Resident Indian (NRI) to another through inheritance or gift.
Government Property Transactions
TDS exemption is granted if the residential house is purchased from the state, central government, or any authority constituted by them.
Financial Institution or Housing Finance Company
Purchasing a property from a recognised financial institution or housing finance company exempts you from TDS obligations.
Purchase from Indian Resident Relative
TDS is not applicable when buying a residential house from an Indian resident relative, provided the consideration is below ₹ 50,00,000 and stamp charges are less than ₹ 50,000.
Transfer of Agricultural Land
TDS does not apply to the transfer of agricultural land, providing relief in cases involving agricultural property transactions.
A Guide To TDS Payment Of Property Sale
Online TDS payments can be made through the portal authorised by the tax department. It is a hassle-free and instant way to make the online payment of TDS. However, make sure that you fill in the details correctly.
TDS on Property Purchase: Steps For Filing 26 QB
In TDS 26QB is a return-cum-challenge form for the payment of TDS. As per Income Tax Act, any company or person making a payment is required to deduct tax at source if payment exceeds a certain threshold limit.
- Visit the site: https://www.tin-nsdl.com/.
- Click on the Services option e-payment: Pay Tax Online.
- Click on the “Proceed” option under ‘TDS on Property (Form 26QB)’.
- Fill out the form by providing the relevant details asked. Make sure you possess the following details before filling out the form.
- PAN details of both buyer and seller.
- The Property details.
- Communication details of both buyer and seller.
- Tax deposit details.
- The amount that has been credited/paid in the transaction.
After Completing the above Procedure,
- Select the “Submit” button in the form.
- A confirmation screen will be displayed. After confirmation, the two options that will appear on the screen, The ‘Print Form 26QB’ and the ‘Submit to the bank’. A unique acknowledgement number will also be displayed. Make sure you note the number.
- Next, click on the option ‘Print Form 26QB’.
- Next, click on the ‘Submit to the bank’ button.
- Next, you should make the payment through internet banking. Then you will be redirected to the payment page of the bank you choose to make the payment.
- After the payment has been made, a challan is displayed with the bank name, payment details, and CIN. The challan will be considered as proof of the payment made.
After making payment proceed to the TRACES portal( www.tdscpc.gov.in) after five days to download Form 16B
Steps to Download Form 16B
Form 16B is an indicator of the amount of money that has been paid as property Tax Deducted at Source (TDS).
- First, register & login on to the TRACES portal ( www.tdscpc.gov.in) as a taxpayer using your PAN.
- Select the option “Form 16B (For the buyer)” under the “Downloads” menu.
- Enter the details required for the property transaction for which Form 16B has to be requested. They are the Assessment Year, Acknowledgment Number, PAN of Seller, and then click on “Proceed”.
- A confirmation screen will appear. Click on “Submit Request” to proceed.
- A success message on the submission of the download request will appear. Do note the request number to search for the download request.
- Next, click on the “Requested Downloads” option to download the requested files.
- The last step, search for the request with the request number. Select the request option and click on the “HTTP download” button.
Being aware of tax procedures and paying them on time is one of the top prioritised duties of every citizen. TDS online portal helps one pay tax with a single click at their doorsteps.
Steps to Pay TDS through challan 26QB and to obtain Form 16
Here’s a comprehensive guide on paying TDS through Challan 26QB and obtaining Form 16B for the seller:
e-Payment through Challan 26QB (Online)
Step 1: Log in to your Income Tax e-filing portal account.
Step 2: Select e-File and click on e-Pay Tax from the dropdown.
Step 3: Click on ‘+ New Payment’ and proceed to ’26QB- TDS on Property.’
Add Buyer’s Details
Your details will auto-fill, and you can make changes if needed. Click ‘Continue’ after entering the details.
Add Seller’s Details
Add Seller’s PAN, address, and other required information.
Add Property Details
Enter property details, type, address, and sale details. The tax amount will be calculated automatically. Click ‘Continue’ when done.
Add Payment Details
Select the payment mode and complete the payment. A challan will be generated after successful payment.
Register in TRACES
If you’re a first-time user, register on TRACES as a Tax Payer using your PAN Card Number and the Challan number registered during payment.
Check Form 26AS
Seven days after payment, check Form 26AS under ‘Details of Tax Deducted at Source on Sale of Immovable Property u/s 194(IA).’
Download Form 16B
- Log in to TRACES, go to the Download tab, and click on ‘Form-16B (for the buyer).’
- Enter PAN of the seller and acknowledgement number details.
- Verify details and click on ‘Submit a request.’
- After processing, check the Downloads tab for the ‘available’ status.
- Download the ‘.zip file’ with the password as the deductor’s date of birth (DDMMYYYY).
- Print the Form 16B from the .zip file.
Process of Registration and Downloading TDS Certificate
To register and download the TDS certificate (Form 16B) after paying TDS on property purchase, follow these steps:
- Register on TRACES (TDS Reconciliation Analysis and Correction Enabling System) as a taxpayer using your PAN and other details.
- Log in and navigate to the ‘Downloads’ tab, then choose ‘Form 16B (For Buyer)’ from the drop-down menu.
- Enter transaction details like the assessment year, acknowledgement number, and PAN of the seller. Click ‘Proceed.’
- Check the status; if it’s ‘Available,’ click the download link for the Form 16B in PDF format. If it’s ‘Submitted,’ wait for processing. Monitor the status under ‘Requested Downloads.’
- After downloading, open the Form 16B with your date of birth as the password in DDMMYYYY format.
- Print or save the Form 16B for your records.
Consequences of Delaying or Defaulting on TDS Payment on Purchase of Property
The repercussions of delaying TDS payment on property purchases are significant and include:
Interest Penalty
Buyers face an interest penalty of 1% per month or part thereof for the period between the deduction date and the actual payment date.
Example: If TDS is deducted on January 15, 2023, and paid on March 10, 2023, interest is levied for two months at 1%, amounting to ₹ 1,000 for every ₹ 1,00,000 of TDS.
Late Fee
- Buyers must pay a daily late fee of ₹ 200 for each day of delay in submitting Form 26QB.
- The late fee is capped at the TDS amount.
Example: A ten-day delay for a TDS of ₹ 50,000 incurs a late fee of ₹ 2,000 (₹ 200 x 10 days), which is less than the TDS amount.
Penalty
- The income tax department can impose a penalty ranging from ₹ 10,000 to ₹ 1,00,000 under Section 271H of the Income Tax Act.
- This penalty can be avoided by paying TDS, interest, and late fee within one year from the due date of filing Form 26QB.
It is crucial for buyers to adhere to TDS provisions on property purchases to steer clear of legal complications and financial losses. Timely compliance ensures a smooth transaction process and prevents these adverse consequences.
Points to Be Remembered by the Owner and Buyer
Following are some of the significant points to be considered by the owner and buyer concerning TDS payment of property sales.
- The buyer must deduct the tax to pay the government on property purchases above INR 50 lakhs.
- The power and responsibility of deducting the TDS are with the buyer, but not the seller.
- If the buyer does not discharge this duty, they can be penalised by the tax authorities.
- The buyers are responsible for filling out form no.26QB to credit the TDS.
Additional And Basic Information You May Want To Know
A layperson is often found to be perplexed with the basic information and details regarding TFS payment of property sales. Here are a few questions that you would like to know the answers to.
- Who pays TDS tax?
The buyer pays TDS tax when the payment crosses the prescribed limit made while purchasing the property.
- Can TDS be paid online?
Yes, It can be paid online in a government authorised portal.
- What is the due date to pay TDS?
TDS must be paid on the transfer of immovable property within 30 days from the end of the month the deduction is made.
- What are the consequences of not paying TDS on time?
A person or entity is penalised under section 234E of the Income Tax Act for not paying TDS on time.
Conclusion
TDS on Property Purchase – We at VakilSearch are a tech-savvy team of professionals who strive to assist small and well-established entrepreneurs in understanding their legal obligations to the kind of business they are operating. Visit our website to learn more about us and keep legal complications at bay.
Frequently Asked Questions
How to pay 26QB with an acknowledgement number?
To pay 26QB with an acknowledgment number, log in to the Income Tax e-filing portal, select e-File, and choose e-Pay Tax. Click '+ New Payment,' proceed to '26QB- TDS on Property,' and provide details. After payment, register on TRACES for Form 16B.
What is stamp duty value for property in Form 26QB?
The stamp duty value for property in Form 26QB is the higher of the consideration amount or the stamp duty value as per the state's Stamp Act. It is crucial for calculating the correct TDS amount on property transactions.
What are the TDS rules for property?
TDS rules for property mandate the buyer to deduct TDS at 1% on the sale consideration above ₹50 lakhs. The buyer must deposit TDS using Form 26QB and provide Form 16B to the seller. Non-compliance may result in penalties and interest.
