TDS ON IMMOVABLE PROPERTY

Property Tax.
TDS on immovable property

TDS stands for Tax deducted at source. As per the Tax ACT, 1961, TDS (Tax Deducted at Source), is a method of indirect tax collection made by the Indian authorities.  The main motive behind bringing this rule in the picture is to track all the high priced realty transactions that are not registered.

CBDT (Central Board of Direct taxes) that comes under the IRS (Indian Revenue Services) is responsible for managing TDS on property. And the purpose of collecting TDS on purchase of the property, is to keep stable the income source for the Government throughout the year.

TDS has to be deducted on an every immovable property like Villa, Shop, Bungalow, Plot, House, Pent House etc. except the agricultural land.

From 1st June 2013, Section 194IA came into effect and it clearly states that it is mandatory to deduct TDS at the source from the value paid to the transferor or the seller of the immovable property. The person who is buying an immovable property has to deduct TDS on purchase of property but it is not compulsory to provide TAN (Tax Deduction and Collection Account Number) details.

The main motive behind introducing this provision was to remove the under reporting and undervaluation of the transaction related to a particular property.

It is the responsibility of the sub-registrars to check that the transactions do not take place without including TDS documents. And it was decided to educate the sub-registrar’s regarding the provision of TDS on purchase of property, in the workshop that was organized by IT department and Stamp and registration department.

Sub-registrar’s always make sure that the permanent address and the PAN details of the immovable property seller is available, because many a times it happens that the seller is not traceable by the department. Under the section of 194IA, it is necessary to mention the PAN details in every transaction. And now a format has been introduced for the TDS on property, which is to be strictly followed. This format has made it easy for the departments to track cases.

Facility for TDS payment on Property:

In past decades, the real estate sector in India has seen an epic change and has made all the realty registrations computerized in a well-organized manner, thus reducing the manual paper work to an extreme extent.

TDS (Tax Deduction at Source) is one such process in realty factor that has gone under many twists and turns.

And to reduce the tedious paper works the TDS payment facility is made online.

The buyer of the immovable property has the option to pay the TDS tax online through the e-tax payment option immediately or at a subsequent date. He can also make the payment by visiting any authorized bank Branch, which is another alternative for TDS payment. However, the e-tax payment made by these branches is done without the digitization of any Challan. The bank will get the Challan details from the online form filled on www.tin-nsdl.com

How to pay Tax (Tax Deduction at Source) online via E-tax Payment option?

For e-tax payment online the buyer should have a net banking account with the authorized banks. And to check whether your bank is authorized or not, go to TIN website, it will provide you a list of authorized banks.

After that follow the give procedure below,

TDS payment page

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  • You will get an option of ‘Furnish TDS on Property’, click on the option.
Furnish TDS on Property

Furnish TDS on Property

  • You will be redirected to a page where you have to select ‘Form’ for the payment of TNS on buying a property.
    Form for payment of TDS

    Form for payment of TDS

  • After the you select the form you will be directed to a screen where you have to fill up certain details that are listed below

PAN (permanent account number) detail of the buyer and the seller of the property.

Address of the seller, Buyer and the also of the property that is being purchased.

Year of purchasing the property.

Price of the property.

Date on which the Agreement or booking was done.

Transaction amount

TDS Rate

TDS Amount

Date of payment and deduction.

At last select the option ‘Payment of taxes immediately’

Form 26QB

Form 26QB

Before clicking on proceed button, ensure that the PAN number of both the buyer and the seller is mentioned correctly.

  • After you have filled up all the details correctly, click on ‘Proceed’ button, after which the system will examine the PAN Validity. If the validation fails i.e. the PAN that you have entered is unavailable in the Income Tax Department’s Database then you will not be allowed to proceed further with the tax payment process. And if the validation is successful, the TIN system displays all the details that you have entered, along with the ‘Name’ that appears in the Database of the Income Tax Department with respect to the PAN that you entered.
  • Now you can check and verify the details that you have entered and if there is mistake in any of the details, you can correct it by clicking on the ‘EDIT’ Button. Once you verify and the details are correct according to Income Tax Department, click on ‘Submit’ button. After this, a nine digit alpha numeric ACK no. (Acknowledge number) is generated and then you will be directed to your net banking site that you have provided.
  • Be ensured that the status and Name of PAN is according to the Income tax Department PAN Master and verify the name properly before you make payment. Also confirm that the PAN that you have entered, is not having any variation. If the name is incorrect as per PAN Master, and you want to make changes, it can be done by filling the change request form for PAN. Once you have verified everything and satisfied by all the details entered by you, click ‘Confirm’ button.
  • You will get an option ‘Submit’ to submit the form to the authorized bank. Click on the button and login to the net banking site by entering the user ID and password that is provided to you for net banking process by the bank. Fill up the payment details on the Bank site.

After the successful payment, a property TDS Challan Counter Foil will be displayed on the screen that contains name of the bank via which the e-tax payment has been done, details regarding payments and a CIN (Corporate Identity). This Challan Counter will act as your proof for the TDS payment being done on sale or purchase of a property.

TDS on Agricultural lands:

Agricultural Lands are the Lands used for agriculture purpose only. And agricultural lands are free from TDS tax payments. But a land has certain limits for being an agricultural land.

A land is not an agricultural land, if it has

  • Population more than 10, 000 and less than 1, 00, 000 and is within the distance of 2km from municipal limit.
  • Population more than 1, 00, 000 and less than 10, 00,000 and is within the distance of 6km from municipal limit.
  • Population more than 10, 00, 000 and is within the distance of 8km from municipal limit.

Hence the land which satisfies any of the above limits is applicable for TDS payment.

Advantages of Tax Deduction at Source:

TDS acts as helping hand for both the government and the tax payers. TDS has following advantages:

  • TDS helps in preventing the Tax Hold backs by the tax payers.
  • Widens the base of tax collection for Indian government.
  • It acts steady, stable and secure earnings for the government.

 

The above information about TDS, online procedure for TDS payment and its advantages will help you better understand the concept of TDS which in turn will help you in stress free payment of TDS on purchase or sale of the property.

3 Comments

  • omkar says:

    certain queries were ther in my mind realted to TDS on immovable porperties..but after reading this article now i m very clear about each and every point related to TDS payment…thank you so much.

  • prathamesh says:

    nice and very helpful blog for the property buyers….very well written…good.

  • kritika says:

    very well explained the procedure for TDS payment…great blog…thanks for sharing with us…

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