All About TDS on Immovable Property u/s 194-IA

With effect from 01.06.2013, TDS (Tax Deduction at Source) will be applicable on the transactions which involve sale or transfer of immovable properties other than agricultural land.  This section was introduced in the Budget 2013 to monitor the transactions in the Real Estate Market and curb the black money involvement. 

Rate of TDS

When the sale consideration is Rs.50 lakhs or more, the purchaser is liable to deduct TDS either at the time of making payment or credit the sum to the account of the seller.  TDS should be deducted at the rate of 1% on the sum provided the seller has furnished his PAN (Permanent Account Number) otherwise the TDS is to be deducted at the rate of 20%.  Deduction should be made even the amount paid in installments and TDS is to be deducted on each installment.

Some Relaxations for the Purchasers

This section is not applicable to the transactions u/s 194LA where the sum in the nature of compensation on account of compulsory acquisition is paid.

The provisions of section 203A were also not applicable, where the deducted has to obtain TAN (Tax Deduction Account Number).  So, the purchaser need not to obtain TAN as it is one time transaction.  The purchaser is also relieved from filing the TDS Returns.

Payment of TDS through Online

The amount of TDS can be paid only online.  The purchaser has to fill up the online Form 26QB with the transaction details and pay the TDS amount through online banking facility.  The purchaser can also approach the authorized banks to make e-payment. Deduction should be made on the whole amount of sale consideration. PAN of both the purchaser and the seller should be mentioned in the Form 26QB.

TDS Certificate for Immovable Property Transactions

The deducted (the purchaser) has to give Form 16B to the seller; it is the TDS certificate for these transactions.  The Form 16B can be downloaded from the website of Centralized Processing Cell of TDS (CPC-TDS).

Note:

• The ‘immovable property’ includes any land or any building or part of a building except agricultural land.

• When the buyer and/or seller is more than one person and the sale consideration is lesser than Rs.50 lakhs for each buyer and seller but the aggregate value exceeds Rs.50 Lakhs then TDS to be deducted on all such amounts.