TDS (Tax Deducted at Source) on transfer of immovable property has been inserted with effect from 01st
June 2013 in Finance Act 2013 by inserting a new Section called 194 IA.
1. Applicable to all
the transfers of the Immovable properties except the transfer of Agricultural Land.
2. Applicable only in
case the Transferor is a Resident.
3. If the Transferor is resident of India, the provisions of Sec. 194IA are applicable irrespective
of the situation of the property, whether situated in India or outside. But this Section as stated above is not
applicable if the property in question is Rural Agriculture Land as explained
above.
4. It is not applicable
in case the transfer is covered under the Sec.
194LA (TDS on Payment of compensation on compulsory acquisition of certain Immovable property).
- At the time of credit of such amount to
the account of the transferor, i.e., booking in the books; or
- At the time of credit of payment such
sum in cash or by issue of a cheque or draft or by any other mode. Whichever is earlier.
There is no requirement
of obtaining TAN number as per Sec. 203A for person responsible for deducting
tax under Sec. 194IA.
Immovable property
means any land (other than agricultural land) or any building or part of a
building.
Agricultural Land means
any land situated in India but not including land situate:
1. In any area which is comprised within the
jurisdiction of a municipality or a cantonment board and which has a population
not less than 10 thousand.
2. In any area within the distance measured
aerially
- Not being more than two kilometers, from
the local limits of any municipality or cantonment board and which has a
population of more than ten thousand but not exceeding one lakh: or
- Not being more than six kilometers, from
the local limits of any municipality or cantonment board and which has a
population of more than one lakh but not exceeding ten lakhs; or
- Not being more than eight kilometers,
from the local limits of any municipality or cantonment board and which has a
population of more than 10 lakhs.
CBDT vide its
Notification No.39/2013 dated 31st May 2013 has prescribed the rules
regarding mode of deduction, deposit and issuance of TDS Certificates in respect of deduction made.
Tax should be deducted at the rate of 1% by the purchaser of
the property on the value of the consideration received on transfer of
immovable property.
If the seller doesn’t have a PAN, then Tax needs to
be deducted at the rate of 20% as
per Sec. 206AA instead of 1%.
No TDS is required if
the value of the consideration received doesn’t exceed Rs.50 Lakhs.
Tax deducted as above
needs to be deposited within 7 days of next month (In case of month of March
due date is April 30). TDS should be
deposited only through online payment. New Challan-cum-statement form framed for payment, i.e., 26QB.
- Tax so deducted should be remitted to
the Government through any of the authorized bank using the e-tax payment option available at NSDL.
- PAN of Seller as well as Purchaser
should be mandatorily furnished in the online Form for furnishing information
regarding the sale transaction.
- Do not commit any error in quoting the
PAN or other details in the online Form as there is no online mechanism for
rectification of errors. For the purpose
of rectification you are required to contact the Income Tax Department.
The Purchaser of
property who has deducted TDS as per Sec.194IA need to issue TDS Certificate in
Form 16B within 15 days from due date of deposit, i.e., by 22nd of
next month in which tax has been deducted.
At present there is no
mechanism in place of issue of system generated TDS Certificate as we have in
case of Form 16A and ? Form 16, so you need to issue TDS Certificate manually.
No need to file TDS
return separately on quarterly basis as TDS Challan-cum-statement, i.e., Form
26QB shall need to use for remitting TDS amount to Government which covers all
the details as required to furnished under TDS return.
Interest is payable at
the rate of 1% every month of late deduction of tax and at the rate of 1.5% for
every month of late payment of tax deducted
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