The purchaser needs to settle taxes, notwithstanding, while at the same time acquiring the property, the purchaser is responsible for deducting and paying the taxes.
The purchaser needs to settle taxes, notwithstanding, while at the same time acquiring the property, the purchaser is responsible for deducting and paying the taxes. Section 194IA arrangements with the necessity of TDS deduction by the purchaser at the hour of acquisition of the property online.
TDS Rate on Property Sale
TDS on property online sale must be deducted at 1% if the property value exceeds ₹50 lakhs. If the property transaction value exceeds ₹50 lakhs, this TDS must be subtracted for all transactions after 01 June 2013. This applies to all properties except agricultural land.
It is also worth noting that 1% TDS is only applicable if the seller is a resident of India. If the seller is not a resident of India, that is an NRI, and the TDS rate will change.
TDS would be levied even if the transaction value was less than ₹50 lakhs in the case of non-resident selling property.
The method of levying TDS on the sale of property by a resident Indian is detailed below.
Amount from which TDS is to be deducted
TDS of 1% will be subtracted on all property transactions exceeding ₹50 lakhs. This TDS is levied on all types of property transactions, regardless of whether the property in question is a flat, a building, or a vacant plot. TDS must be deducted irrespective of whether the property is residential, commercial, or industrial. TDS is required on all property transactions except agricultural land.
This TDS is to be subtracted at a flat rate of 1%, regardless of whether there are Capital Gains or Capital Losses on the property sale.
Even if the seller wants to claim any Capital Gain Exemptions on the Sale of Property, TDS of 1% must be deducted.
TDS is subtracted from the whole amount paid to the Seller minus GST. This can be illustrated with the following example:
Property Purchase Transaction Value ₹80,00,000
GST on the above property (if under construction) is ₹9,60,000 Total amount to be paid ₹89,60,000
In the preceding example, TDS would be subtracted from the Transaction Value of Property, ₹ 80 Lakhs, rather than the GST levied on Property Sale. As a result, the TDS to be deducted would be 1% of ₹80 lakhs, or ₹80,000.
(Pro tip: The calculation of GST on property sales may differ depending on whether the developer claims GST Input Tax Credit or not.)
This TDS is expected to be deducted in all cases regardless of the Capital Gains emerging to the seller. If the seller is of the assessment that abundance TDS has been deducted, he can guarantee a refund of the overabundance TDS Deducted while recording the annual expense form.
It is to be noted that the purchaser/merchant can’t make a difference for the lower derivation of TDS in the previously mentioned case. The TDS would be deducted @ 1% of the Total Property Transaction Value.
In the case of a Home Loan, the TDS would be deducted when the instalment is made to the seller and not when the EMI is paid to the bank.
Vital Point About TDS on Property Sales
- If there are more than one buyer and one seller, Form 26QB must be completed separately for each buyer-seller combination. For example, if there is one buyer and two sellers, two forms must be submitted, and if there are two buyers and two sellers, four forms must be required to submit for their respective property shares.
- The PAN Card of both the Purchaser should be mandatory in Form 26QB for providing information about the TDS on the property and the sale transaction. If the seller does not have a PAN Card, TDS will be deducted at 20% of the total transaction value.
- The above regulations only apply to TDS on Property purchases. These provisions will not apply to Rent for Property payments. The provisions of Section 194I apply to TDS on Rent, and TDS at 10% is deducted in such a situation.
- The buyer and the seller must file an income tax return in the year of purchase. Although this is not required, failure to file a return may result in the income tax department issuing an auto-generated query.
- It is always a good idea to include the details of the TDS Deducted in both the Sale Agreement and the Deed of sale.
- You can correct it online if you make an error when filling out Form 26QB.
Procedure for Depositing TDS on Property With the Government
TDS on the property must be deducted from the property’s purchase price and deposited with the Income Tax Department by the buyer. Form 26QB must be filled out completely, including the following information:
- Permanent Account Number of the Buyer
- Permanent Address of the Buyer
- Permanent Account Number of the Seller
- Residential Status of the Seller
- Address of the Seller
- Address of the Property moved
- Payment date
- Sum Paid
- Agreement date
- Complete Transaction Value
Once all the information is entered, the form will ask for the choice for TDS on property deposit with the income tax department. You can pay the TDS on Property online using net banking; if you choose this option, this Form 26QB will instantly redirect you to the e-payment gateway.
Likewise, the buyer may deposit the TDS Deducted on Property offline through banks. If the buyer wants to deposit the TDS on the property offline through banks, he must select this option in Form 26QB, print it and finalise it along with the payment to the authorised bank branches.
Also, it is important to note that there is no way to fill out Form 26QB manually; instead, all of these details must be entered into the online form 26QB, which the buyer can print and submit with the payment to the bank.
It’s also worth noting that Form 26QB can only be implied if the seller is a resident of India. If the seller is a foreign national, then Form 26QB cannot be used, and the buyer must file Form 27Qs case.
Conclusion
In this article, we have talked about TDS Deduction for purchasing a property from Resident Indians only. The manner of levy of TDS on Property online has also been explained in detail in this article. Before making any decision, it is important to gain complete knowledge about the process.
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