Following is a detailed guide on the current rate of TDS present on the property sale. Keep reading to know more.
The real estate sector is one of the most profitable sectors in our country. Additionally, the budget for 2022 was also about capital investments. Knowing your specific tax obligations is crucial if you’re intending to buy a house. It’s fascinating to know that, as the buyer in a real estate transaction, you are required to withhold from the seller’s payment a specified amount of Tax at Source. TDS on the Sale of Property, however, is only applicable when the value of the property is ₹50 lakhs or higher.
Who Needs to Deduct the TDS?
The buyer must deduct the TDS at a one percent rate if the sale consideration is at least ₹50 lakhs or more. It was applicable after 1 April 2022. TDS will be required to be deducted if the stamp duty of the property value is also ₹50 lakhs or above.
It means that TDS must be removed if the stamp duty value of the property or sale consideration goes beyond ₹50,00,000. It was deducted on all the properties, regardless of whether you are buying the residential or commercial flat building, industrial property, or a vacant plot except the agricultural land.
How Has the Budget Impacted the TDS?
Following a modification to the Income Tax Act, Budget 2022 suggested that 1% TDS would apply on non-agricultural immovable property over ₹50 lakhs based on the sale price or the stamp duty value, whichever is larger. The new modification will take effect on 1 April 2022.
How Can You Pay TDS Through Challan 26 QB and Get Form 16?
With the help of the online portan for TDS payments; TRACES, you can pay TDS seamlessly with just the click of a few buttons –
- You can visit the official portal of TDS (TRACES) and choose the option from the ‘Service’ tab and click on the ‘e-payment’ option. You can pay the taxes online.
- Choose the option to proceed on the tab TDS on the property. A new screen would appear
- Now we have to select the code 0020 if you are a corporate payer, and if you are a non-corporate payer, then you have to choose the code 0021. You must fill in the details like assessment year, and financial year payment type
- Fill all the details, including the resident or non-resident pan number of the buyer, the pan number of the seller, the complete address of the transferee, and the transferor. Once you fill in all the essential details, the last tab will be the payment info. There are two modes of payment available here
- The e-tax payment instantly through the net banking facility and
- E-tax payment on the subsequent date when you visit any of the bank branches. You can choose the one which you prefer and click on that option
- If you go for net banking, you need to log in to your bank and pay online. The bank will allow you to print challan 280 with a tick on 800 after you have made the payment. You have to take this printout and save it for future reference
- The online receipt on Form 20 6 QB would be generated with special acknowledgement if you cannot pay online.
Register in TRACES
- You must register with your pan card number and the challan number
- You will be able to obtain the approved form 16, which is the TDS certificate, once you register, and you can issue this as the form to the seller
- After the payment, you can check your form 26 AS. You can see that the payment is reflected as per the details of tax deducted at the source on the sale of immovable property
- PART F will give you the details like the TDS certificate number, name, and pan of the deductee besides transaction date and amount acknowledgement numbers, date of deposit, and the TDS deposited.
Download Form 16 QB
- You must log in to traces after completing your payment in form 26 AS. You have to visit the download tab and click on form 16 B
- You must verify all the details once and click on submit the request
- Your request will be processed after a few hours. You must click on the downloads option and select the request downloads from the drop-down menu
- You must be able to see the status of your form 16 before the download request should be available
- If the status says it is submitted, wait a few hours before repeating the last step
- Download the ZIP file, and the password to open the ZIP file would be the date of birth of the deductor, and the form would be available inside that file. You have to take this printout.
Our TDS calculator simplifies how to calculate TDS on salary. Get accurate TDS interest calculation results online.
What Are the Consequences of Non-payment of TDS?
Under some law provisions, the buyer is expected to deduct applicable TDS from the transaction value and submit them to the government duly. Buyers can use the pan details in the document as having a TAN is not compulsory in that case.
Buyers who fail to pay the TDS to the government within the stipulated timeline can be made to pay the penalty in the form of interest, even a sentence to regress imprisonment of at least seven years. You need to know that even though the seller might be forced to make the payment, the buyer would face this penalty.
Homebuyers need to deduct at least 1% on TDS of the property purchases based on the stamp duty value or the actual price, whichever would be higher as per the announcement made by the finance minister of India, Nirmala sitharaman, in the budget 2022.
Conclusion
To know about the intricate details of the TDS on the sale of property, getting in touch with the real estate legal experts is essential. Hence, you can get in touch with Vakilsearch. Our legal professionals have in-depth knowledge about every single aspect in this field along with years of experience.
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