Section 194-IA: TDS on Immovable Property, A Boon to people

Last Updated On: Aug. 29, 2020, 8:38 p.m.
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SECTION 194-IA- TDS ON IMMOVABLE PROPERTY 

Insertion of Section 194-IA has provided relaxation to many people who have bought the immovable property. As per Finance Act, Section 194-IA refers to that TDS is applicable to the transfer of an immovable property (other than agricultural land), where the consideration of the property exceeds or equal to Rs.50 Lakhs.

                            

Deduction of Tax Deducted At Source:

  • The payer can be any person, being a transferee who is responsible to a resident transferor to pay consideration of transferring an immovable property other than agricultural land.
  • The payee must be a transferor(resident) of immovable property other than agricultural land.
  • Tax @ 1% should be deducted by the buyer of the property if the above conditions are met, at the time of making payment of sale consideration w.e.f  01st June 2013.
  • This Section is only applicable in cases where payment is made on or after 01st June 2013. The payment can be in any form like Cash, Cheque, Demand Draft, Bank Transfer, or even a Bank Loan.
  • The tax so deducted should be deposited to the Government treasury through online payment or by filling up a Challan in any of the authorized bank branches.
  • The sum deducted under section 194-IA is required to be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made.
  • The payment should be done along with Form 26QB which contains the details of the party, like the PAN Number, Place of residence, Purchase Consideration, Date of Payment, etc to name a few.
  • After filing the online form and making the tax payment, the TDS certificate in Form 16B is required to be issued by the buyer of the property to the seller.
  • If in case the purchase consideration of the property exceeds Rs. 50 Lacs then TDS will be applicable even if the amount paid after 01st June 2013 is less than Rs. 50 Lacs.

In case if the amount is paid in installments:

  • As per Section 194-IA, TDS is to be deducted at the time of making the payment. So the payer/ purchaser of the property is required to deduct TDS every time he makes a payment to the payee/seller. So in cases where the property is under construction or in cases where payment is made in an installment basis, TDS has to be deducted on payment of every installment.
  • In case where TDS is not deducted: As explained earlier, TDS is to be deducted and paid to the credit of central government within a period of thirty days from the end of the month in which the deduction is to be made, in cases where TDS is not deducted then interest @ 1% shall be payable for the period of delay from the date such TDS was supposed to be deducted to the date on which such TDS is actually deducted.
  • In case where TDS is deducted but not paid: In cases where TDS is deducted but not paid then interest @ 1.5% shall be payable for the period of delay from the date such TDS was deducted to the date on which such TDS is actually paid.

 

CONSEQUENCES OF NOT DEDUCTING TDS/TDS NOT PAID:

 In cases where the TDS return/ Form 26QB is not filed on time, u/s 234E late fee @ Rs.200/- day shall be levied on the deductor/ purchaser of the property for every day of delay from the last date of furnishing the return. Such a total late fee cannot exceed the total amount of tax deductible.

under section 271H penalty can be separated/ additionally levied on the deductor for non-filing of TDS Returns or for filing incorrect returns. This penalty ranges from Rs.10,000/- to Rs.100,000/- which is upto the discretion of the Assessing Officer.

Please note that the penalty is in addition to the Late Fee, whereas the late fee is mandatory and has to be paid before filing the returns and without which the returns cannot be filed, the penalty is upto the discretion of the Assessing Officer and can be levied by him separately.

 

Steps to pay TDS through challan 26QB and to obtain Form 16

Step 1: Payment through Challan 26QB (Online and Offline)

Go to https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
 

 

  • Click on Form 26QB and select 0020 if you are a corporate payer and 0021 if you are a non-corporate payer. Fill in all the necessary details.

  • There are 2 modes of payment at the bottom of the page: e-tax payment immediately through net banking facility and e-tax payment on the subsequent date e-payment of taxes by visiting any of the Bank branches. 

  • If you choose net-banking, you will be able to login to your bank and pay online. After you have paid, the bank lets you print Challan 280 with a tick on 800 payment of TDS on sale of the property 
  • If you cannot pay online, an online receipt for Form 26QB with a unique Acknowledgment Number is generated for you. This is valid for 10 days after generation. You can take this to one of the authorized banks along with your cheque. The bank will proceed with the online payment and generate your challan.

 

Step 2: Register in TRACES 

  • You have to first register on TRACES as a Tax Payer with your PAN Card Number and the Challan number registered during payment.

  • Once you register, you will be able to obtain approved Form 16B (TDS certificate) and you can issue this Form to Seller. Check your Form 26AS seven days after payment. You will see that your payment is reflected in Part F under “Details of Tax Deducted at Source on Sale of Immovable Property u/s 194(IA)  Part F information is not available for Claim in ITR of the buyer.
  • This gives you details such as TDS certificate number which TRACES generates, name and PAN of deductee, transaction date and amount, acknowledgment number which is the same as the one on your Form 26QB, date of deposit, and TDS deposited.

 

Step 3: Download your Form 16B

  • After your payment in Form 26AS has been reflected, login to TRACES. Go to the Download tab at the tab and click on “Form-16B (for the buyer)”.

  • To finish this process, fill PAN of the seller and acknowledgment number details pertaining to the property transaction for which Form-16B is to be requested and click on “Proceed”.

  • Verify all the details once and click on “Submit a request”.

  • After a few hours, your request will be processed. Click on the Downloads tab and select Requested Downloads from the drop-down menu.

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