TDS on sale of property means the buyer of the property is required to deduct TDS before making payment to the Seller at the rate prescribed in the act. Our Tax Specialists help you in Payment of TDS on Sales of property and to get Challan 26QB, Form 16B and TDS Certificate. Schedule Appointment with Our Experts
When it comes to selling a property, many people are unaware of the tax implications involved in the transaction. One important aspect to consider is the TDS on the sale of property, specifically under section 26QB of the Income Tax Act. In this article, we will delve into what TDS is, how it applies to the sale of property, and what you need to know to ensure compliance with the law.
TDS stands for Tax Deducted at Source, which is a type of advance tax that is deducted by the payer at the time of making a payment. The deducted amount is then remitted to the government on behalf of the payee. TDS is applicable on various types of payments, including salaries, interest, rent, and even the sale of property
As per Section 194IA of Income Tax Act ”TDS on Sale of Property”, a buyer of the property is required to deduct tax at the rate of 1% of the Sale Consideration only if the Sale consideration is equal to or more than Rs.50 lakhs. If the sale consideration is less than Rs.50 lakhs then no TDS is required to be deducted. Any transferee (buyer) is responsible for paying to a resident transferor (seller) any sum in the name of sale consideration for the transfer of immovable property is required to deduct TDS at the time of credit of such amount or at the time of payment whichever is earlier. If the sale consideration is paid in installments then TDS is to be deducted at the end of each installment.
‘Consideration for immovable’ property shall include all charges like nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of the immovable property. This is applicable for immovable property purchased on or after 1 September 2019 as per Budget 2019.
Section 26QB specifically deals with the TDS on the sale of property. Under this section, the buyer is required to fill Form 26QB and make the TDS payment within 30 days from the end of the month in which the deduction was made. Failure to comply with this provision can attract penalties and interest under the Income Tax Act.
An Annual Information Return (AIR) is obtained by the Income Tax Department from the registrar/sub-registrar office regularly. From this report, the IT department can figure out the property sale transaction exceeding Rs.50 lakhs. So if a buyer does not deduct TDS at 1% or if he does not file the TDS return and deposit it to the government within the specified time then a notice will send to the buyer by the income tax department.
IF default continues for more than one year then an additional penalty of Rs.10000 to Rs.100000 is to pay under Section 271H.
The Form 26QB challan has to be filled by each buyer for every unique buyer-seller combination for their respective share. So if there are 2 buyers and 2 sellers’ four separate forms have to be filled. A seller of the property can claim the TDS deducted on an immovable property at the time of filing their income tax return. In a case where a refund arises due to TDS on sale of a property, the refund can be claimed through an ITR filing.
In conclusion, understanding the TDS provisions on the sale of property, particularly under section 26QB, is crucial for both buyers and sellers. By ensuring compliance with the law, you can avoid unnecessary penalties and legal consequences. If you have any doubts or questions regarding TDS on the sale of property, it is advisable to consult with a tax professional for guidance and advice.
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When a property is sold in India, the buyer is required to deduct TDS at the time of making payment to the seller. This TDS is applicable on the consideration amount paid for the property and is deposited with the government. The buyer is responsible for deducting the TDS and issuing a TDS certificate to the seller.
The buyer is responsible for deducting TDS at the rate of 1% on the sale consideration paid to the seller under section 26QB.
Failure to comply with the TDS provisions can result in penalties and interest being levied under the Income Tax Act.
Yes, the seller can claim the TDS deducted on the sale of property while filing their income tax return. They need to mention the TDS amount in their ITR to avail the credit.
If the buyer fails to deduct TDS on the sale of property, they may be liable to pay interest and penalties. It’s crucial for both the buyer and seller to ensure compliance with the TDS provisions to avoid any legal repercussions.
