The buyer has to pay different types of taxes. Basically TDS on sale of property is applicable when someone buys a property such as land, building or a small part of a building. Section 194IA deals with the TDS deduction by the buyer at the time of purchase of a property.
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What is Property Tax ?
Property Tax is a type of tax which is paid on property owned by an individual. Property Tax is based on the value of the owned property. The loan owner pays the tax which is calculated by the local government where the property is located. This tax is also called House Tax. This tax is used for the maintenance of the local public facilities of the rea such as roads, parks, lighting or any other services.
What is TDS on Sale of Property ?
Here, a tax must be deducted at the source by the buyer on the basis of value of the property. TDS on sale of property is charged @1% on the negotiation of all properties where the total transaction is more than Rs. 50 Lakhs.It must be deducted from all types of properties except the property of agricultural land. The buyer of immovable property (costs more than 50 lakhs) is required to deduct TDS while paying the seller.
What is the rate of TDS on Sale of Property ?
The rate of deduction on TDS of sale of property is 1 %.
Requirements of Section 194IA :
- TDS is deducted by the buyer at the rate of 1%. TDS has to be deducted by the buyer not the seller.
- No TDS is required if the transaction is less than 50 lakhs.
- If the payment is made in instalments, then TDS will be deducted on each installment.
- Pan Cards of both purchaser and seller are required on TDS on sale of property deduction.
- TDS on property should be paid on the full amount of sale and not only the sum above 50 lakhs. For example, if the purchaser buys a property of value 80 lakhs, TDS will be calculated on Rs. 80 lakhs and not Rs. 20 lakhs.
- From September 2019, charges such as club membership, car parking, electricity fee, maintenance fee etc. have also been included under “Consideration for immovable property”.
- For making a payment of TDS, the buyer has to obtain the PAN Card of seller otherwise TDS is deducted at 20%.
- The TDS on the immovable property should be paid using Form 26QB in 30 days from the end of the month when the TDS was deducted.
- After submitting the TDS to the government, the buyer should have to present the TDS certificate in the Form 16B to the seller.
Penalties on Non-filling of TDS :
- Under the Section 234E that is the late filing fee, buyers will have to pay INR 200 till TDS return filing is done.
- Under Section 201, the buyer has to pay the interest of 1% per month (if the tax is not deducted).
- In Section 271H, the buyer who fails to file to TDS has to pay a minimum penalty of INR 10,000.
How to claim TDS ?
- From June 2013, whenever a buyer purchases an immovable property(more than 50 lakhs), he/she must deduct tax .
- This act comes under the Section 194IA of the income tax act.
- The buyer who buys the property obtains Form 16B and has to present it to the seller.
- The retailer has to provide the PAN card to the buyer who will fill the form online and submit it to the Income Tax Department.
- The property retailer has to verify that the buyer has deposited the taxes and reflecting in Form 26AS.
