TDS on Sale of Property 

TDS is required to be deducted on sale of property and the rate on which it is being deducted is stated below.

As per provision of section 194-IA of Income Tax Act, it is required to be deducted by the buyer when he buys any property having a value of Rs.50 Lakhs or more @ 1% of Sale Consideration. It is required to be deducted at the time of making the payment or credit whichever is earlier. There is no obligation to deduct TDS if the amount of consideration is less than Rs.50 Lakhs.

When is TDS required to be deducted if consideration is paid in installments ?

It is required to be deducted each time the payment is made in installment.

What is included in Sale Consideration of property ?

Following is included in the amount of Consideration :- 

• Advance Fee.
• Fee for Club Membership.
• Fee for Electricity Facility.
• Fee for Water Facility.
• Any other charges which are incidental to the purchase of Immovable Property.

Whether TDS is required to be deducted on the whole amount or on the excess amount ?

As per the provisions of the Act TDS is required to be deducted on the entire amount of Rs.50 lakhs or more.

Whether PAN is required while deducting TDS under section 194-IA ?

Yes, PAN is mandatory while deducting TDS if PAN is not furnished by the seller then it is required to be deducted @ 20%. There is also an obligation on the buyer to furnish PAN details.

What is the procedure to get a TDS property Certificate ?

Step-1. Go to the NSDL website www.tin-nsdl.com.

Step-2  Click on the online form of furnishing TDS Certificate.

Step-3  Apply for challan on TDS of sale of property.

Step-4  Following is the list of pre-requisites of filing this form

PAN requirement for both the parties i.e. seller and buyer.

Contact details of both buyer and seller.

Details of Property sold and purchased.

Details of 

• Amount paid.
• Amount credited. 
• Tax deposited.

Step-5  Submit the form.

Step-6  Print the form.

Step-7  Submit to the bank.

Step-8  After 5 days Form 16B will be generated which needs to be downloaded for future reference which will be issued by buyer.

What are the Consequences of non-filing of form 26QB ?

As the registrar and sub-registrar provides the Income Tax department with Annual Information Return hence the department can easily trace the transactions of Rs. 50 lakhs or above. The department will issue notice to the assessed.

What is the time period within which TDS need to be deposited to the credit of the Central Government ?

It is required to be paid to the credit of the Central Government within 7 days from the end of the month in which TDS was deducted from the purchase or sale made.

What will be the penalty for non filing of TDS Statements ?

Penalty in case of BUYER.

Fee under section 234E with Rs. 200/- per day till the default continues and penalty under section 271H in the form of late payment , late deduction and Interest can also be levied in addition to the penalty under section 234E.

Penalty in case of SELLER.

The claim of TDS credit will not be available.

Penalty for non-deduction of TDS under section 194-IA and if deducted but not deposited to credit of the Central Government.

Particulars Penalty

Non-Deduction of TDS :1% p.m. from the due date of deduction till the date of deduction.

TDS not deposited  :1.5% p.m. from the date it should be deposited till the date it has been deposited.