TDS on Property Sale is one of the progressive steps to regulate the real estate sector. Last decade or so has seen lot of reforms in Real Estate sector like computerization of land records, it’s now mandatory to quote PAN for property transactions & historical judgement by Supreme Court to ban all property transactions through Power of Attorney. Despite all such efforts still 40% property transactions don’t carry PAN details & almost all property transactions are undervalued / under reported. To fix this anomaly, In 2013-14 union budget Govt introduced section 194IA. Under this section w.e.f. June 01, 2013 for all immovable property transactions over Rs 50 lac, It is compulsory to deduct TDS on Property Sale @ 1% of Total Transaction Value. Agriculture land in notified Rural areas is kept out of this provision. This Tax is called Withholding Tax.
The biggest hassle or concern raised was that to deduct TDS & deposit TDS with Govt, buyer need to obtain TIN as it is mandatory to quote TIN for deducting & deposit TDS with Govt Treasury. Later Govt introduced sub section (3) under section 194IA that to deduct TDS on property sale & deposit the same, it is not mandatory to obtain & quote TIN. The seller or builder will get the amount net off TDS on Property Sale from Bank/Buyer. Buyer will deposit the TDS with Govt without TIN.
TDS on Property – Critical Points
1. The responsibility to deduct TDS on Property Sale rests solely with the Buyer even if it is financed by Home Loan or property is purchased from the builder. In some cases, Bank can deduct TDS on property from disbursement and help in depositing TDS on buyers behalf but they are not obliged to do so. You have to give written request to Bank for the same.
2. TDS on Property Sale should be deposited with Govt by the Buyer within 7 days from the end of the month in which the TDS is deducted.
3. While depositing TDS on Property Sale, it is mandatory to Quote both Buyer and Seller’s PAN.
4. Non-deduction of TDS or Non Deposit of TDS may attract a heavy penalty.
5. TDS should be deducted at the time of payment to the seller. If the payment is in installments than TDS should be deducted with each installment. If the entire amount is paid in single installment than entire TDS amount should be deducted at the time of making complete payment.
6. TDS on Property Sale can be deposited with Govt by filing Form 26QB Challan.
7. All details related to property transaction should be furnished in form 26QB
8. You can deposit TDS online through following link
https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
9. After depositing TDS on property sale with Govt, the buyer needs to issue TDS certificate to the Seller. TDS Certificate is referred as form 16B. It is available online after 10-14 days from the date of deposit of TDS. TDS certificate can be downloaded online from following link
http://contents.tdscpc.gov.in/
Penalty for Delay in TDS Filing
1. Penalty u/s 201
(a) 1% interest for the delay of every month i.e. Late deduction of tax from the date the tax was deductible to the date the TDS is deducted.
(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS was deducted till the actual date of payment.
* Interest calculated will be simple interest. The fraction/part of the month is considered as full month.
2. Penalty u/s 234E ##
(a) Late fee penalty of Rs 200 per day for late filing of the statement of Tax Deducted at Source. Late fee penalty will be lower of TDS Amount or Delay in No of Days X Rs 200. For example, if TDS Amount is Rs 15,000 and delay are of 100 Days then the late fee is 100 X Rs 200 i.e. Rs 20,000. Lower of Rs 15,000 and Rs 20,000 is Rs 15,000 therefore max late fee penalty is Rs 15,000. In Short, max late fee penalty cannot exceed TDS Amount.
## Added on Mar 30, 2015 post clarification / intimation from Income Tax Department.
FAQ’s
(A) Question: One of my reader Mrs. Rajput signed sale agreement on April 14, 2013 i.e. before June 01, 2013. She asked me, Is the new provision applicable in her case also?
Answer to this query is that this provision is linked to the date of payment, not to the date of agreement. If the agreement is signed before June 01, 2013 but either full payment or even part payment is due/made on or after June 01, 2013 than also she need to deduct TDS on property sale & deposit with Govt. This applies to under construction property also, on the payment/amount due on or after June 01, 2013. Please note that TDS is applicable only on amount due/payable on or after June 01, 2013 but not on the amount already paid before June 01, 2013.
(B) Question: Mr. Sunil Parte bought property worth 1.5 Cr in Oct, 2010 and his amount due on or after June 01, 2013 is just 40 lacs i.e. less than 50 lacs. Is he liable to deduct Withholding Tax?
Answer is Yes, even if amount due is only 40 Lacs which is less than 50 lacs on or after June 01, 2013 but since total property value is more than 50 lacs i.e. 1.5 Cr, the buyer is liable to deduct TDS on property sale and deposit with Govt. TDS will be deducted only on 40 Lacs instead of 1.5 Cr i.e. only on the amount payable on or after June 01, 2013.
(C) Question: Ms. Namita Khurana is an NRI and recently she purchased the property in Gurgaon, She asked me, whether she also needs to deduct TDS on Property Sale and deposit with Govt.
Answer is Yes, Section 194IA is applicable for Seller who is Resident Indian. In this case, the buyer is NRI but the seller is Resident Indian therefore TDS u/s 194IA is applicable.
(D) Question: Mr. Rajpal is planning to buy an independent house in Haryana and his seller does not have PAN than what he should do?
Answer is Mr. Rajpal should deduct TDS @ 20% as per section 206AA of Income Tax Act If the seller does not have PAN.
(E) Question: What if multiple buyers or sellers involved in property transaction
Answer is TDS on property sale is deducted on total consideration irrespective of No of Buyers or Sellers & their respective contribution in the property. If the property value is more than 50 Lacs than irrespective of No. of Buyer or Sellers, TDS will be deducted by Buyer/s. All Buyers/Sellers will fill/receive separate forms/TDS certificates.
For the benefit of my readers, i have downloaded E-Tutorial from NSDL Website on how to make online payment of TDS on Property Sale. You may download the same from following link
E-Tutorial TDS on Property Sale
Update March 30, 2015: Recently, CPC-TDS has issued intimation u/s 200A of the Income Tax, 1961. This intimation is an imposition of penalty for the delay in filing of TDS on Property u/s 194IA. As i mentioned in my post that interest penalty u/s 201 is levied for the delay in filing of TDS on Property. In the latest intimation, CPC-TDS has also imposed a penalty of Rs 200 per day for the delay in TDS filing u/s 234E. This penalty is a shocker for late payers. I am flooded with queries on penalty. As i studied the Income Tax intimation in detail, i am sharing the justification / clarification of penalty u/s 234E by IT department.
Justification / clarification of Penalty u/s 234E by IT Department: Penalty u/s 234E is levied for late filing of the statement of TDS / TDS Return. As the name suggests Form 26QB is referred as Challan. Therefore, common understanding was that only interest penalty u/s 201 is applicable for the delay in filing of challan. While imposing penalty CPC-TDS has invoked Rule 31A(4A) of IT Act, 1961, Which mention that Form No 26QB for filing of TDS on Property is not only a Challan but challan cum statement of TDS u/s 200(3) i.e. 26QB is Challan cum TDS Return.
In Short, besides Challan form no 26QB is also treated as Statement of TDS / TDS Return therefore besides interest penalty, late fee of Rs 200 per day u/s 234E is applicable on delay in filing of TDS on property u/s 194IA. Late fee penalty cannot exceed TDS amount.
Update May 01, 2015:
To pay the penalty, a link is available on the TDS payment page as shared by me under point no 8. The link heading is “Demand Payment“. This link is only for the payment of demand against the TDS on Sale of the Property. You need following details to pay the penalty
(a) PAN of a Buyer
(b) PAN of a Seller
(c) Acknowledgement No. of the Challan
(d) Assessment Year
Copyright © Nitin Bhatia. All Rights Reserved.
I think TDS will come in to picture if the total sales consideration in Sales Deed is 50 Lakhs or more….( sales deed sales consideration in most of the cases are based on guidance value, not on market value)
As i mentioned in my post, TDS is based on total Sale Value not Sale deed value. If Sale Value is 75 Lacs and Sale Deed value is 45 Lacs (Based on Govt Guidance Value/Circle Rate) than the TDS will be deducted on Sale value i.e. 75 Lacs. If buyer is not deducting TDS by taking into account sale deed value than he/she be ready for taxman knocking at the door shortly.
I have a situation where I have sale agreement signed 6 years ago mentioning 49 lakhs as the flat amount
Now I am going for registration of my flat
But the guidance value has increased over the period of 6 years and now it is more than the sale agreement and comes to more than 50 lakhs
The builder is telling me not to pay 1% TDS as the sale deed is going to be around 49 lakhs
But the registration value would. E more than 50 lakhs
Should I pay TDS is my big question
Please clarify
TDS is not applicable in your case but difference amount between registration value and 49L will be taxed as income from other sources to you.
What about filling 26Qb form for multiple buyer and sellers? There is only one option to fill name so does it mean if there are 2 buyer and 2 seller then need to fill 26QB – 4 forms (i.e. A to c, A to d, B to c, B to d)? If so what purchase value need to be mention in form i.e. for 50 lacs property need to fill 12.5 lacs each on one form ?
As i mentioned in my post also that in case of multiple buyers and sellers, Buyer/Seller need to fill/receive multiple forms/challan. In the challan there is an option to select whether transaction involve multiple buyer or multiple sellers. In your case both the options will be YES i.e. there are multiple buyer and multiple sellers.
In all the challan’s property value to be mentioned is total value of the property but Buyer will deduct the TDS in proportion of share in property i.e. if total TDS to be deducted is 2 Lacs and both buyers have equal share in property than each buyer will deduct 1 Lac each.
Similarly if each seller has equal share than each of them will receive TDS Certificate of 1 Lac each. A can deduct TDS for either C or D. Only point to note is that PAN should be quoted correctly in all the challans i.e. if in challan 1 Person A is deducting TDS for Person D than the Challan will carry PAN of Person A (Buyer) and Person D (Seller).
For 26QB will not be filled by Person C and Person D who are sellers. They will receive TDS certificates from Person A and Person B (who are buyers)
In case the shares of buyer and seller are not equal in property than you need to fill multiple forms to adjust the amount deducted by buyer and TDS certificate received by sellers in same the proportion as the share in the property.
If you can share exact details than i can suggest how it should be done as it is bit complicated.
Hi Nitin,
I have spoken with couple of banks. Some of them talk about 1%TDS while others don’t.
Is it that some of the banks don’t need copy of the TDS before loan disbursal.
Is it not mandatory?During what stage of the loan, is it required?
Regards,
Sonu.
Home Loan Lender/Bank has no role to play in this process. As i mentioned in my post also that responsibility of deducting TDS rests solely with the buyer. Bank may help you to deduct TDS from disbursement and depositing the same on your behalf but not obliged to do so.
TDS receipt is not required for loan disbursal and it is not mandatory in Home Loan process. You need to deduct TDS at the time of making payment to the seller. If bank has not deducted than you can deduct from your contribution else you may request bank to deduct TDS from Home Loan disbursement.
Thanks Nitin.The person from whom I am planning to buy house is resisting this tax component. So, I would like to know what happens if this TDS is by-passed? Will it become tax evasion issue on me? What if owner directly pays all his taxes when it is due, will it still be an issue?
As PAN is now mandatory for property transactions therefore IT deptt. can easily catch if will not deduct and deposit TDS.
It has nothing to do with current owners tax liability. If you have checked my post, it is the responsibility of buyer to deduct and deposit.
You can show Govt ruling to him regarding TDS, whether he agree or disagree, TDS has to be deducted on total property transaction value.
Another option is you increase transaction value and pay TDS from your pocket. Seller will get the amount as you both have agreed e.g. if your property value is 50 Lacs & you need to pay same amount to seller. In this case you increase transaction value to Rs 5050505/= TDS will be Rs 50505/= and net you will pay 50 lacs to seller.
Hi Nitin, I am planning to book an under construction property and pay 20% booking amount . The Bank should disburse the loan for the remaining part and will pay the builder directly. Can I deduct 1% TDS on the entire amount from the 20% that I pay to the builder as booking amount ?
No, the TDS is deducted only at the time of making payment. You deduct TDS on 20% booking amount now and give a written request to Bank that payment/disbursement should be released to builder after deducting 1% TDS i.e. Bank should deduct TDS on your behalf.
Hi Nitin,
Thank you for such informative post.
I do have below questions :
1 . For under construction property/flats if loan is taken by buyer , Can Buyer Deduct lumpsum TDS at one go right after property registration , in stead of deducting it in each installment /Payment to seller/builder
2. Do builder get tax exemption in his yearly tax filing if he has 16B certificate from buyer ?
1. As per rule, the TDS should be deducted at the time of making payment so technically it should be deducted with every installment/payment to builder or seller.
2. There is no tax exemption for seller. 16B TDS certificate is just a receipt that TDS deducted by buyer from sellers payment is being deposited with Govt treasury by the buyer.
but if buyer not deducted TDS at earlier payment in case some payment was done in 2012 , and some was done after July 2013 – and TDS not deducted in these payment , can it be done now , is there any penalty to that for not deducting it at time of payment ?
As i mentioned in my post, the TDS needs to be deducted only for payments on or after 1st June, 2013. You need not to deduct any TDS for payments made before 1st June, 2013. Its better to deduct TDS now for all the payments made after 1st June, 2013. Currently it is not clear whether there is any penalty, if TDS not deducted at the time of payment but i will recommend to deduct and deposit TDS for all payments made on or after 1st June, 2013 immediately.
Hi Nitin
I have been researching for buying house & your website till date stands out on each of the topics. I have few questions with respect to this TDS
1. If seller quoted overall price as “x” (Say 1 Cr) , is it implicit that buyer should pay only .99x to seller & deposit .01x (1%) as TDS ? Can Seller claim that 1% back from Income Tax dept if he got no capital gain as part of this transaction ?
2. You said in below FAQs that 1% is based on “market value” & not “Sale Deed” value. Is that right ? For E.g if i am buying property for 1 Cr but registering for 60 L (Guidance Value) , income tax dept expects buyer to deduct 1% on 1 Cr ? How would things be if 60 L was shown as white and rest 40 L is given as Cash (Technically Black money)
3. Does do we (as buyer) validate Seller PAN ? He could show us a fake PAN right ?
On different note , is Karnataka allowing registrations using GPA (General Power of Attorney) ? I see from your article here that Supreme court has barred those.
Thanks
Sreenath
Thanks for liking the blog…To answer your queries
1. Yes, 0.1x will be deducted as TDS by Buyer and Seller will get only 0.99x. Seller cannot claim refund of 1% from IT deptt even if there is no capital gain. This tax has nothing to do with long/short term capital gain tax. As i mentioned, its being introduced to bring transparency in property transactions.
2. Yes, the TDS should be on property transaction value i.e. 1 Cr. I don’t suggest/recommend my readers to deal in cash as it is not legal in India. If your property transaction is for 60 Lacs then TDS will be deducted on 60 Lac.
3. Yes you should verify, You may verify the seller PAN details through following link. You just need PAN and DOB of seller to verify.
https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html
These are 2 different things. GPA holder can register the property but As per honorable supreme courts order, no property transaction should be based on GPA i.e. without registration in sub registrar office. Example, i execute GPA in name of my sister if i am not present at the time of registration. She can execute the registration in my absence as my GPA holder but property should be registered in sub registrar office.
Thanks.
on GPA – I gave a GPA to my dad using a certain format and got it registered in Sub registrar office so that he could get property registered in my name with out me but apparently banks who give loan doesn’t seem to honor thought text says he can execute loans on my behalf. They are asking for GPA in their own format which i believe should be registered again in India before we register the property right ?
Unfortunately bank is right and you need to get Bank’s GPA format registered. Bank has to safeguard its financial interest due to rising NPA’s.
Hi Nitin,
I have sold my property for 77 L in Feb 14, registration is on 3rd March. It was a joint property registered in my and my spouse name, so sale deed will be in my and my spouse name. Buyer issued all the cheques including bank loan DD in my wife’s name.
Buyer also deducted 1% withholding tax i.e 77K on 27th Feb and provided me a copy of online Challan – (800) TDS on Sale of Property. My three questions:
(1) Does copy of online Challan is enough or should I ask Buyer to provide me Form 26-QB or Form16B also?
(2) Challan mentioned my PAN number but all the cheques and DD issued in favour of my spouse. Is it OKAY to have any PAN details or it should be my spouse PAN details mentioned in TDS challan?
(3) Do my spouse to deposit this TDS challan to her bank where we are depositing the sale amount? Also as we are planning to re invest sale amount in buying a new property in next 6 months, Can I claim back this TDS of 77K and what is the procedure for the same?
Thanks for all your help.
Regards,
Shashank
1. You also need TDS certificate i.e. Form 16B. It will be available online after 10-14 days so you may ask buyer to share the same after 2 weeks from date of TDS
2. TDS should have been deducted for all the sellers in the propotion of their share in property i.e. if you and your wife has equal share than TDS deducted should be 38.5k each for both of you through 2 different challans.
3. You need not to deposit TDS certificate with bank until unless they ask for same. TDS deducted is non-refundable even if you buy another property to save LTCG tax. Its sort of tax.
Hi Nitin,
This TDS is applicable only if the registration amount crosses 50L or it will be applicable even in sale agreement crosses 50L. Because the sale agreement will be given to bank, to get the loan. the value written on that may be above 50L but while registration, the value written on the stamp paper might be less than 50L. please advise
TDS is applicable on Sale Agreement Value i.e. Total consideration amount. If sale value is more than 50 Lacs and registration value is less than 50 Lacs, the TDS will be applicable in this case.
TDS is applicable on consideration / Sale agreement value not on Registration value. If sale agreement value is more than 50 Lacs than you need to deduct and deposit TDS @ 1% of consideration value.
Hi Nitin,
If there are three Sellers & three buyers, than how many Form-26QB & in which manner there TDS amounts will be calculated?
As i mentioned in my post, all buyers will deduct TDS for all sellers in the proportion of ownership. e.g. if 100 Rs TDS needs to be deducted and all buyers and sellers have equal share in property than 3 buyers B1, B2 and B3 will deduct Rs 33.33 each as TDS. Now each buyer has to deduct for each seller (S1, S2 & S3) i.e. 11.11 Rs for S1, 11.11 Rs for S2 and 11.11 Rs for S3. Similarly B2 & B3 will also deduct TDS for each seller.
There will be 9 challans / Form 26QB in your case.
Hi Nitin,
Total cost (Basic + Amenities) of my flat is around 59 Lacs and 95% amount has been paid to builder from my side (all payment is made after 1-Jun-13).
Here the question is on TDS part, builder is saying TDS is not applicable in my case because they will register flat as per guidance value of BBMP and same amount will be mentioned in sale deed which less than 50 Lacs (Guidance value * SBA) is that correct? As per my understanding on TDS rule, buyer has to deduct 1% TDS on amount towards paying to builder. Till date no TDS has been deducted on any disbursement.
which cost should be consider? an amount which we pays to builder or sale deed amount.
I am getting different different info which really confusing me. please provide your valuable inputs.
Thanks
Akash
TDS should be deducted on Total Consideration Value i.e. 59 Lacs not on guidance value. For TDS, total amount i.e. 59 Lacs will be considered. Also i am assuming that in your agreement with builder, break up of 59 Lacs is not available and it is mentioned as total cost.
Hi Nitin,
it’s divided in two parts.
(1) 35L mentioned construction agreement which includes construction cost of 30L plus car parking, amenities, maintenance and electricity charges of 5L.
(2) 24L mentioned in sales agreement.
builder is saying that 38L ((guidance value * SBA) + Amenities@2% + car parking) amount will be mentioned, so you do need to pay any TDS.
can you please more details on total consideration value part. is it amount which we pay to builder or which mentioned in sales agreement or an amount which will be mentioned in sale deed.
Many Thanks
Akash
You need to exclude Water, Electricity, Maintenance, Sales Tax and VAT from total value to arrive at final consideration value. As i understand these components are 5 Lac in 59 Lacs therefore consideration value is 54 Lacs. You need to deduct TDS for this transaction.
Secondly, as i mentioned TDS is deducted on total consideration value / Sale Agreement value not on Guidance value / Registration Value therefore builder’s understanding is wrong in this regard.
Thanks Nitin for useful information.
I have checked with builder. i can go for either options from below,
(1) Get the property registered on full amount (58L) and pay 1% TDS and produce challan at the time of registration.
(2) Get the property registered as per guidance value (38L) and dont pay TDS. with this, even if i pay TDS (1% on 58L) then they will have to produce challan at the time of registration and i will have to pay registration charges as per 58L.
According to builder, sale deed value is the consideration value of your property, if 38L is mentioned there, no one will bother about TDS and how much payment has been paid to builder. From my side, 100% money has been paid by cheque. Which one is the better option to avoid any IT related or other issue in the future and what is benefit for end user to go for higher registration value?
Regards
Akash
Total consideration value will remain 58 lac even if the registration is on 38 Lac. Builder is misleading you. There is no correlation between Registration and TDS deduction. TDS is sole responsibility of buyer and should be deposited within 7 days from the end of month in which TDS is deducted therefore TDS can be deposited after registration also.
The TDS challan never ask for registration amount, you only need to mention Total Consideration Value i.e. amount paid for property. In your case it will be 58 Lacs.
E.g. if you are registering your property on 18th April this month and making payment. Now you can deposit TDS on or before 7th May.
As entire money i.e. 58 Lac is paid to builder through cheque than you cannot escape Income Tax department (if you escape TDS) as it is your responsibility.
Hi Nitin,
if i pay 1% TDS on 58L, Is it mandatory to register property on 58L or i can still go ahead with 38L. let’s say if i go for 38L, Do i need to pay any extra registration charges (6%) on difference of 20L or not.
Please advise.
Thanks
Akash
As i mentioned, TDS is paid on Total Consideration value which is 58L in your case but you can register the property at 38L. You need not to pay registration charges on balance 20L.
Hi Nitin,
Till now on TDS has been deducted on payments towards builder and i am going to pay 1% TDS now.
(1) Excluding water, electricity and other amenities, total basic cost is 54 lakh and 7.5 lakhs are paid before 1st June, 2013. now applicable TDS is Rs. 46,500 is it correct?
(2) From 1st june, 2013 onwards, Amount has been paid in installments. while paying 1% TDS which payment type should be selected in Form 26QB?Installment/Lumpsum.
(3) If i select installment then do i need to pay 1% TDS separately for each installment value or i can pay in lumpsum. if i select lumpsum then what Date of Payment/Credit should i mention in Form 26 QB. what is the correct way to fill?
(4) As no TDS has been deducted from my side, As per my understanding on this, I have to only pay 1% interest of TDS amount. 1.5% penalty is not applicable.
(4) We are joint holders for this property. Do we need to submit separate Form 26QB for me and my wife.
1. Correct. Its 46.5 lakhs
2. Installment
3. As you have delayed in depoiting TDS therefore you need pay penalty also. For each installment there will be seperate challan and corresponding TDS amount along with penalty.
4. Correct
5. Seperate challan to be filed by each buyer in proportion of ownership in property
Thanks Nitin for the quick reply..
one more doubt, which is correct value to be filled “Total Value of Consideration (Property Value)” in challan. 59 lakhs or 54 lakhs or 46.5 lakhs (54-7.5)?
Total Consideration Value is 54 Lakhs but TDS is payable only on 46.5 lakhs.
Hi Nitin,
Couple of questions
1) My flat cost 47L + 5L(Maintenance cost + Water + Electricity Charges). Am I supposed to deduct TDS for this.
2) After jun 2013 guidance value is increased and I have to register my flat at cost of 54L.
Now which cost need to be considered in this case for TDS.
Thanks
Vikas
1. If Maintenance Cost + Water + Electricity Charges are mentioned separately in your agreement with builder than you need not to pay TDS on these charges as your total consideration value will be 47 Lacs.
2. Now cost/consideration value will be 54 Lacs and 1% TDS is applicable only on payment made on or after 1st June, 2013.
Hello sir,
I have sold a property worth Rs. 6500000/- and paid 1% TDS amounting to Rs. 65000/-. Since I do not have any income can I get a refund of the TDS by filing IT return. Kindly suggest.
TDS can only be adjusted against Capital Gain. If your capital gain from transaction is NIL or is lower than TDS deducted than you can claim refund while filing your IT return for that FY
sir thank you very much for your advise. Long Term Capital Gain is NIL. I could not find any column in ITR 2 to fill form 16B details. How could i get the refund. Which ITR form i need to fill to get the refund. Kindly help.
All refunds for sub-sections u/s 194 are processed under ITR-IV but still i will suggest you to wait for IT department to release ITR forms for AY 2014-15 as this tax is introduced in FY 2013-14. Hopefully IT department will release clarification reg refund u/s 194IA while relasing ITR forms, if no clarification than ITR-IV can be used.
My sister booked an under construction property in December 2013 but the deduction of TDS on the booking amount was missed. While in the next installment, 1% TDS was deducted but for the booking amount, the same got missed deducting by her and the builder also didn’t alert us. What can be done to rectify this. Thanks
You can still deposit the TDS with following penalties
(a) 1% interest for the delay of every month i.e. late deduction of tax from the date the tax was due to date the TDS is deducted
(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
In your case only point (a) is applicable as there is delay in deduction but not late payment to the Govt.
I have purchased a property for Rs.70 lacs and registered the same on 19/04/2014. I missed to deduct TDS on the purchase amount and paid the full consideration. What course of action is needed to be taken. Kindly help.
Firstly, Congratulations for new purchase. You may approach the seller & request him to refund the TDS amount to u i.e. Rs 70k as it is legal requirement. You can deposit the same with Govt Authorities on or before 7th of next month.
Dear Sir,
I have purchased a new apartment jointly in name of My dad mom & me. I made advance payment in installment through various cheques of different dates from all of our three’s account from 14 th March 2014 till 25th April 2014. The agreement is registered on 21st April 2014. Please indicate, what would be the due date to deposit the TDS for same considereing payments have been made on almost 12 different dates via three deductors. As far as i know the due date for March 14 is 30th April & that for april 14 is 7th May. Is it fine if i deposit the entire TDS on 30th april itself?
I am assuming that you deducted TDS at the time of payment. For TDS deducted on or before 31st Mar the due date for TDS deposit was 7th April. You may deposit this amount with 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
For TDS deducted in April, 2014 you may deposit the same on or before 7th May without any penalty.
Dear Sir,
Thanks for response. Meanwhile, could you provide any notification regarding due date being 7th april because as far as i know, the due date to deposit TDS for month of March is April 30 like in case of deposit of any other TDS for March.. Also, in that case, would i be required to file 36 different form 26QB ( considering 12 cheques from 3 buyers)? or 3 26QB will serve the purpose.
Please check clause 2A of Govt Notification on 1st page
http://law.incometaxindia.gov.in/DITTaxmann/Notifications/IncomeTaxAct/2010/NOTIF39_2013.pdf
You should deposit Three 26QB challans. As i mentioned, pls add penalty interest for TDS deducted in Mar’14 on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
Thank you so much sir.
One more query. The seller of the property is demanding that the said TDS be deposited only in FY 14-15 so that it would not create any issues for him on account of tax for one income being deducted in two assessement years. So is it fine if i show TDS deducted only in april for payment made in march & pay interest @ 1% so that the entire TDS will reflect in his credit only in AY 15-16?
TDS is deducted at the time of making/releasing payment and is sole responsibility of buyer. I will not suggest you to conceal or tweak facts.
Sir, i have purchased a property for Rs. 70 Lacs on 1st Jan 2014. I have deducted TDS @1% at the time of purchase, but not deposited to govt and did not file form 26QB. There will be 1.5% interest on late payment of tds for every month. I want to know is there any penalty for Late filing of 26QB or not u/s 234E or any other section (considering 26QB as TDS return i.e. Rs. 200 per day)?
Penalty/Fees u/s 234E will not be applicable in this case, as buyer need not to file TDS return for this TDS deduction (TAN is not required for TDS deduction u/s 194IA) therefore you can pay TDS with 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment. Besides this there is no other penalty for late filing.
Thansk Sir…this post is too much informative…answers to all queries are already discussed here….
Thanks for liking the post :)
Sir, what if property purchased in joint names and whole payment to seller was made by only one buyer. can we file form 26QB by only one PAN(of the person making whole payment) or we have to file form 26QB by PAN of both buyers(irrespective of buyer making payment or not).
No, you cannot file Challan 26QB on behalf of only 1 Buyer. PAN & other details of both the buyers are required while filing Challan 26QB. Payment can be done by either of the buyer.
Hi,
Thanks for the post. I have purchased flat on my and my wife’s name. She is not working. My wife does not have PAN. How do I proceed with furnishing TDS om purchse.
Thanks
PAN is compulsory for property purchase and for TDS. Before the purchase you should apply for PAN of your wife.
Thank a lot. I have to find a way around because all the formalities are almost over (without PAN) including registration and loan approval. Can I get PAN after the purchase and pay TDS later?
TDS can be deposited within 7 days from the end of month in which TDS is deducted therefore TDS can be deposited after registration also.
Amount mentioned in sale agreement is less than 50L and in registration/sale deed value is also less than 50L but more than 50L (excluding amenities) has been paid to builder, is 1% TDS applicable in this case?
TDS is applicable in your case. You can exclude only Water, Electricity, Maintenance, Sales Tax and VAT from total value to arrive at final consideration value. The total consideration value include amenities also.
Hello sir. I purchased a flat for base price 5950000. I paid 1 lakh cash in mar14. Then 13lakhs by cheque in apr14. And then 4940000 thru loan cheque of sbi in may14. The amt comes to more than bsp as it includes sales and service tax and plc and ifms and club charges. My wife is d co owner.
Now im told 2 pay tds on d BSP. Is it 5950000 on which I pay tds.
Second I paid 13000 as tds for d cheque. As only owner and generated one challan. How do I rectify this.
Third do I generate 2 challans now and pay 30000 from my wife side and 17000 from my side. Will it rectify my earlier mistake.
How do I cater for 1 lakh cash and bal money of loan cheque. Because they fall in service tax and misc charges.
Seriously help. Regards lieutenant colonel ky singh
1. As i mentioned in my other comments that Water, Electricity, Maintenance, Sales Tax, VAT & other amenity charges are excluded from total value to arrive at final consideration value. TDS is payable on Final Consideration Value which is 59.50 Lac in your case.
2. There is no option to correct if TDS is paid online. You may approach Assessing Office (AO) or TDS-CPC. If paid through bank (Physical challan) than you may approach bank to correct the same. Correction in different fields have different time frame of correction.
3. In challan there is option of Multiple Buyers and Multiple Sellers. You need not to fill 2 different challans. You may fill single challan with multiple buyers option. The wrong challan should be corrected and in future, pls include your wife’s details while making TDS payment.
4. I am not sure for what purpose the cash payment was made. Regarding loan cheque, you may arrive at break up of contribution towards BSP and other charges e.g. out of 49.40 Lac. You paid 45 Lac towards BSP and rest as other charges than deposit TDS on 45 Lac towards consideration value.
Sir if I make one challan for self and wife how and where do I fill her pan number. Please clarify.
You just need to declare that there is more than 1 Buyer. Her PAN is not required in your challan.
Sir my point is can I now compensate it by paying 17000 thru my challan and 30000 from my wifes challan so that both have equal share in the tds that amounts to 60000.
The point is you need to mention if there are multiple buyers or sellers in challan which was not mentioned. You may correct the payment anomaly through this route but still need to get the 1st challan corrected by declaring more than 1 buyer.
Dear Nitin,
Thanks a ton for sharing so much information
I still have one doubt; I have deducted 1% on the 20% amount that I paid to the seller; However, how do I withhold 1% of the remainder amount that is being funded by Bank Loan; The loan amount is being directly paid to the Seller
Will await your feedback! Thanks in advance
Please give it in writing to bank to deduct TDS before disbursement. In some cases bank may deposit the same on your behalf. If bank is not ready than you may deduct entire TDS amount from your contribution to the seller.
hi, my brother and myself are buying a property from a SINGLE owner and whole price is 70L. but we both are going for two different sale deeds..i.e 40L and 30L each. we are not doing joint registration. Since the seller is same, should we have to pay the TDS?
A single property cannot be registered separately 2 times in the name of 2 different people. As i understand, you are going for bifurcation of property into 2 parts from single owner and buying separately. In this case TDS u/s 194IA will be not be applicable.
thanks sir
Hello Mr. Nitin, Thanks for the article, being newly introduced such discussions help the community.
I have purchased a flat and paid an installment to the builder who deducts 1% and submits on my behalf. Now, I am using ITR 2 utility to file retruns and when I used the prefill option, it populated this 1% amount deducted under Schedule IT section (Advance Tax and Self Assesment Tax) and is using this amount as tax to be returns back to me. My question – I feel this is not correct. The seller should report this TDS on his returns and I should not be reporting it anywhere on my returns as a buyer. Can you please confirm my understanding?
Regards,
Sanjeev
Please check Challan no of TDS deposited by bank on your behalf. It should be Challan no Form 26QB. Prima facie it seems TDS is deposited under wrong Challan No.
I checked the Challan no it says ITNS 280, even though it doesn’t mention Form 26QB but the payment type below mentions (800) TDS on Sale of property. Should I delete the advance payment pre-populated on return form and complete returns filing.
As i anticipated, the TDS is deposited under wrong Challan. Challan No 280 is meant for payment of income tax and corporation tax which is under Non-TDS category i.e. payment of Income Tax. Please check following link
https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
The right challan no. for TDS on property sale u/s 194IA is Form 26QB.
If you delete the advance payment in return form, it will not solve the problem. 2 corrective steps
1. You can claim payment through Challan No. 280 as refund. It is rightly populated in your return and same amount must be shown as refund.
2. Pay the TDS on property sale u/s 194IA through challan no. form 26QB through above mentioned link. You have to pay penalty for late payment of TDS. TDS can be paid with 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
Hello Mr.Nitin,
My case is exactly same as of Mr Sanjeev.
Do you mean to say, I can claim this amount as refund?
Or should I just delete it from the ITR app?
Thanks for all the help.
Regards,
Praveen
As a buyer you cannot claim Refund as the TDS is deducted from the seller’s share in the property transaction. Its a flaw in Income Tax system that it is showing it as Advance Tax Paid or Self Assessment Tax. You may remove the entry and file the IT return.
Thanks a lot. I had been working with the builder to get this rectified as they have made this blunder but no luck. What’s the option? It’s just delaying my Returns filing. Should I go ahead and make the TDS payment myself s the amount is not too big and claim refund on the TDS paid by the builder under wrong form. And also, where on my ITR 2 do I report the TDS deducted?
Appreciate your help.
You need not to report TDS deducted in your ITR. Just delete the entry and file your return. Its a flaw in IT portal as it shows TDS on property as self assessment tax thus is shown as refund.
If the right challan is filed then simply delete the entry and file your return.
But the issue is that wrong form was filled. In that case, I need to submit another TDS with fine and claim a refund correct? so I should not delete that entry.
The option suggested by you seems to be best option in current scenario
Hi Nitin,
I also have a similar issue as mentioned by Sanjeev below. In my case I see the challan No as 55 while filing IT returns using ITR1. Builder shared the form 26QB and tax paid counterfoil receipt with us and these are recorded only against my name. There is a Minor Head Code : 800 mentioned in form 26QB. I am in dilemma whether I should claim this refund or not. Also myself and my husband are joint owners of this property. So should we have generated two 26QB forms ? Plz advise.
Regards,
Haritha
Prima facie, it seems your TDS is deposited correctly. You may check Form 26 AS whether TDS on sale of property is reflected in Part F of the Form 26 AS under ‘Details of Tax Deducted at Source on Sale of Immovable Property u/s 194(IA) [For Buyer of Property]. It will give you details like TDS certificate number (generated by TRACES), name of deductee, PAN of deductee, acknowledgement number, total transaction amount, transaction date, TDS deposited, date of deposit, status of booking and date of booking. If above details are correct than no need to worry.
Form 26 AS is available at following link
https://incometaxindiaefiling.gov.in/
Also you may demand TDS certificate from builder i.e. Form 16B.
TDS can only be adjusted against Capital Gain. If your capital gain from transaction is NIL or is lower than TDS deducted than you can adjust/claim refund while filing your IT return.
For 2 buyers, the two challans i.e. Form 26QB are required i.e. each buyer should deduct and deposit the TDS in the proportion of his/her share in the property.
Thanks Nitin for your prompt reply.
Yes I had a look at form 26AS and I see the TDS under Part F with the correct details in the columns you mentioned. I registered in TRACES and dowloaded a copy of Form 16B from the site with respect to this transaction. I do not have any capital gains , hence this TDS will be a total refund in my case.
We did not reduce the 1% TDS amount from what we paid to builder, hence there is a chance that later when builder realizes its not showing up as claim to his PAN he may approach us for the amount.In that case we just have to pay him is it ? or whats the better way to handle this ? Any suggestions plz ?
As you mentioned two form 26QB are required incase of two buyers , but our registration is already done and this form 26QB had been presented.Should we now try to invalidate the existing form 26QB and deposit TDS using two forms again ? How do we take this up ? Kindly advise.
As i understand you paid TDS from your pocket. TDS is paid to Government, builder cannot claim the same. Also TDS u/s 194IA is sole responsibility of buyer therefore i don’t think so that builder will be bothered about TDS.
Though you mentioned that there are more than one buyer but issue is only one buyer paid the entire TDS through 1 challan. Govt will consider it as your TDS contribution but what about co-owners TDS payment. 1st you check with builder on this part as you mentioned builder paid TDS on your behalf i.e. why instead of 2 only 1 challan is filed.
Hi Nitin,
Thanks for the great post.
I have a query though and I will share it by means of the following example
I have purchased a property of Rs 75lakhs.
1% TDS to govt, builder should get 75,00,000 – 75,000 = 74,25,000
I have made the payment of 25lakhs in total to builder. Remaining due to builder is 7425000-2500000 = 49,25,000
My question is, what should I fill up in the amount paid to builder in the form 26QB ?
1. If I fill it to be 2500000, the tax to government will be 1% = 25000
Next time I pay builder 4925000, TDS 1% = 49250
So Total tax to government = 25000 + 49250 = 74250 (which is less than expected TDS of Rs 75000)
OR,
2. Taking 25lakhs as the net paid to builder, the gross should be 2500000 / 0.99 = 25,25,252
The tax is then 1% i.e 25,252. So the net given to builder is 25,25,252 – 25,252 = 25,00,000, and the remainder to government.
So should I fill 25,25,252 in the form 26QB ?
Next time when I pay builder 49,25,000 -> I will again quote 4925000 / 0.99 = 49,74,747 and
TDS = 49747
So total TDS this way = 25252 + 49747 = 74999 (same as expected)
Please provide your input.
Thanks,
Puneet
In form 26QB, you need to mention the transaction value i.e. value @ which property is being bought by the borrower. In your case transaction value is 75 Lacs.
In this case, i will take same example. Total TDS liability is 75k for 75 lac property. Now you should deduct TDS in same proportion with each payment. Assuming you are paying to builder in 2 installments of 25 Lac and 50 Lac each therefore TDS deducted will be
1. 25k when you will pay 25 Lac (Payment to the builder = Rs 2475000)
2. 50k when you will pay 50 Lac (Payment to the builder = Rs 4950000)
Total TDS deducted: Rs 75k. In short, TDS is deducted on Gross value not on Net value.
Thanks Nitin. So that is same as the option 2 that I mentioned above.
Since I already paid 25 lacs to the builder, I need to mention that the actual payment was 25lacs/0.99 = 25,25,252 for which tax is 25,252…so the builder has got actual – tds = 25 lacs from me…
Yes, if net payment post TDS is 25 Lacs than your calculation is right. Gross amount will be 25,25,252 and TDS will be 25,252
Hi Nitin,
I have just completed the Agreement of Sale to buy an apartment (1 year old) from an NRI (he has a PAN card). After reading about the 30% TDS to be deposited on the Sale, I am worried.
The purchase price is Rs.70 Lakhs.
Please let me know the following:
a) What is the TDS amount to be deducted before making the payment to the NRI Seller.
b) Does the Bank (providing the loan) deduct the TDS? (Currently the bank has said that since its an NRI no TDS needs to be deducted)
Please provide your inputs.
Thanks,
John
It seems bank has passed wrong information to you regarding TDS
1. Under section 195 of Income Tax Act, Buyer should deduct and deposit 20% TDS in case the seller is NRI
2. It is at the discretion of the bank. TDS is sole responsibility of Buyer.
Hi Nitin,
I am buying a property from NRI. He is agreed to deduct 20% TDS. My question is, do we need to pay TDS before registration to show the challan during registration. Or can I pay 1% before the registration to completed the registration (I came to know without challan registration can not be done) and rest of the TDS can be paid after the registration.
Thanks,
Pawan
TDS can be deposited within 7 days from the end of month in which TDS is deducted therefore TDS can be deposited after registration also. Also in case of NRI Property, TDS u/s 194IA is not applicable. This section is only applicable to Resident Sellers.
TDS is payable at the time of making payment. It has no link with registration. Normally the payment is made at the time of registration therefore you can register the property and TDS can be deposited after Registration. At max you can mention the TDS deducted in your sale deed.
Hi Nitin,
Thanks for your response. I came to know that TDS challan is a compulsory document which needs to be presented in the registrar office during registration in Bangalore. Can you please confirm if it is not true and registration can be done without challan.
As i mentioned that TDS is payable at the time of making payment. It has no link with registration i.e. before or after registration. If the payment is made at the time of registration therefore you can register the property and TDS can be deposited after Registration within 7 days from the end of month in which TDS is deducted therefore TDS can be deposited after registration also.
Now if you are making payment to NRI at time of Registration than how come TDS is paid for transaction in advance which is not completed yet. Another option is you pay complete amount to NRI seller before registration, deduct TDS, deposit TDS and than go for registration. In this case, you can produce TDS challan at the time of registration.
Another hypothetical scenario, you deposit 20% TDS before registration to produce challan at time of registration. Now NRI backs out of deal after TDS is deposited by you than what will you do…Its just an hypothetical example.
Dear Nitin
Lets say that we deposited the TDS. This deposited TDS would be available in 26AS. Now during the retun filing using the ITR, this TDS would appear as advance income tax deposited by us, which would increase our tax paid amount and we would be eligible for the refund of this amount with other things having the net tax as 0. Should this still be factored during filing the return or this should be removed from the ITR.
As a buyer you cannot claim Refund as the TDS is deducted from the seller’s share in the property transaction. The refund can be claimed only by seller if his or her against the capital gain. Its a flaw in Income Tax system that it is showing it as Advance Tax Paid or Self Assessment Tax. Advance Tax Paid or Self Assessment Tax is paid to fulfill your Income tax liability whereas TDS is paid by you from seller’s contribution. It is similar to scenario that your organization deduct TDS from your salary and TDS appears in your ITR not in your organizations ITR as refund. Ideally it should not appear but if it appearing than you may remove the entry and file the IT return
Thanks a lot..Even I had the same opinion..I called up the traces helpline number but even they couldn’t get me satisfactory response. At one point they said I should also deduct it and other time said it should not even be considered.
Hi Nitin ,
I booked a under construction property jointly with my brother and father ,now either we have to evenly share TDS amount and deposit individually or any of us can deposited altogether on behalf of others also ? Since last two times I paid full TDS on behalf of my father and brother and only myself submitted Form 16b , Now if its wrong ,than how to correct as amount paid is in but I submitted only one form16b (only mine) ?? .Kindly advice
As i mentioned in my post, in case of multiple buyer each buyer has to deposit his or her respective TDS share in accordance with ownership/contribution in property purchase. Also while filing challan, it is necessary to declare that property has multiple buyers.
if TDS is paid online. You may approach Assessing Office (AO) or TDS-CPC. If paid through bank (Physical challan) than you may approach the bank to correct the same. Correction in different fields have different time frame of correction.
Hello nitin..
Thanx for the valuable information ..i wanted to know …whether the tds has to be deducted on full installment which includes service tax also…or i should deduct tds on the amount excluding service tax..
Water, Electricity, Maintenance, Service Tax, VAT & other amenity charges are excluded from total value to arrive at final consideration value. TDS is deducted on final consideration value after discounting these charges.
Nitin Ji,
i had sold a property and the buyer had deducted 1% for the sale price, as he had filed TDS. The buyer has also issued me form 16B traces to show that TDS has been filed.
Now i am eligible to claim this TDS refund when i file return. However when filing return online, it asks me TAN and PAN number of the deductor. While I have the PAN, is TAN manadatry to claim refund. The buyer was an individual and not company.
TDS on property sale u/s 194IA can be claimed as refund only against capital gain. If your capital gain is Nil or less than TDS than only you can claim refund.
TAN is not required to claim refund in this case.
Thank you Nitin Ji, my Capital gain is zero, and hence per your suggestion i will be able to claim refund. For some reason the online tax filing portal tax spanner etc, have this as a mandatory filed, without which they do not allow to proceed and file returns. Any idea on why this would be a mandatory field.
You need check the same with helpline of specific portal. I would suggest you to file your return through Govt of India portal. Select Auto fill / Pre-fill option and you will observe that amount deducted u/s 194IA as TDS will be shown as refund. If it does not show refund still you can claim the refund. The GOI income tax -filing portal is as follows
https://incometaxindiaefiling.gov.in/
Nitin Sir,
I have paid TDS at TIN website for a Purchase of property. I got the acknowledgement. Now, I want to register in TRACES. Should I register as Payer or Deductor ?
Also, I am paying in installments. Does that mean I pay TDS as many times as installments ? In that case, do I need to register in TRACES multiple times ?
You will register as Deductor.
You need to register with TRACES only once and you can pay TDS as many times as you wish through same login.
Thank you Nithin Sir. That was a very prompt reply. Appreciate your help.
– Geeta
Good Day Sir,
I have bought a flat worth 86 lacs in oct 2013. I have paid around 16 lacs in 3 instalments till april 2014 but not deducted 1% TDS on instalments and not deposited same. Now I want to deduct and deposit TDS when I will pay next installment. Should I deduct 1% TDS when I pay next installment including earlier due also which I have not paid. Kindly advise pls.
As i mentioned in my Post that TDS is payable at the time of making payment. You can still pay the TDS of previous 3 installments but with following penalty
(a) 1% interest for the delay of every month i.e. late deduction of tax from the date the tax was due to date the TDS is deducted
(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
I am purchasing property of Rs 60 lacs for which i have paid 12 lacs ( 48 lacs remaining to be paid by bank disbursement). There are two sellers involved. I am trying to make online payment but facing issues
– My query is that 1% of 60 lacs comes Rs 60000, so how can i can the entire payment . The call centre told me that i should pay 1% of 12 lacs which is Rs 12000 ( for the amount already paid) and should make another payment ( 1 % of 48 lac i-e 48000) when the remaining 48 lacs is paid… Kindly guide me. Is it possible to make entire payment of 1% of value of property ( i-e 60 lacs) eve if bank disbursement is pending.
I concur with call centre. Current TDS due is Rs 12000 as TDS should be deducted only at the time of making payment. Now you need to fill 2 challans as there are 2 sellers involved and deposit TDS in proportion of their respective share in property. If both have equal share in property then you can deduct Rs 6000 as TDS from each seller’s payment and deposit the same. You can deduct and pay entire TDS (Rs 60k) till the payment is made to the sellers.
I have paid TDS as property tax 106000 under section 26QB when I purchsed a flat.Now while filing income tax return in form ITR -1 this property tax is showingin advance tax or self assessment section. And in Taxes paid section this amount is reflecting in refund.
Please help on how to file income tax return compiling salary income with property tax is paid
Its a flaw in Income Tax system that it is showing it as Advance Tax Paid or Self Assessment Tax. You may remove the entry and file the IT return.
Dear Nitin,
Are you sure on this as i am myself stuck with this? Do you suggest us to clarify on this?
I am sure on this. You may go for 2nd opinion. Please click on following comment link for detailed justification on same
https://www.nitinbhatia.in/real-estate/how-to-deduct-tds-on-property-sale-us-194ia/#comment-1421882074
How much is the penalty for non payment? We didn’t know about this and it’s been a year since this rule came about. We have been told by the builder now. Now if we make the payment will there be a penalty amount too? Please let us know asap. Thanks
Mumbai
You can pay TDS with following penalty
(a) 1% interest for the delay of every month i.e. late deduction of tax from the date the tax was due to date the TDS is deducted
(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
I have paid TDS on property 53000 which ITR form is to be preferred to file ITR.
.
ITR form is not linked to TDS on property. You can select ITR based on your income status e.g. if you have income only from salary/pension then you may use ITR – 1 SAHAJ. Please check following link for more details
http://incometaxindia.gov.in/download_all.asp
We are buying a property as a family (3 brothers). But, while doing the TDS Form26QB, I did not do 3 separate forms. Our lawyer says we can go ahead and register the property as we have already done the 1% TDS.
But, would this create problem for me later? There is no way to cancel this single form so I can do 3 seperate forms!!
if TDS is paid online. You may approach Assessing Office (AO) or TDS-CPC. If paid through bank (Physical challan) than you may approach the bank to correct the same. Correction in different fields have different time frame of correction.
Though 1% TDS is paid but it should have been deducted for each seller in the proportion of their respective share in the property.
Thanks for the prompt reply.
My question was if there is any illegality in only one person deducting, as we are buying this as a family.
It wasn’t clear to me before I did the TDS remittance. Since govt. is getting the same ‘advance tax’ deducted from sellers, isn’t the intent of law met?
This rule makes no sense, as govt. is trying to ensure it’s LTCG is secured. But, why need buyers to separately do deduction? I mean, what if a family is selling an asset owned by 15 folks jointly making a deed to another family of 10 people?
150 seperate form filing? Baap re!! ;)
You 3 brothers are 3 different legal entity for Income Tax Department because each of you has separate legal standing in the eyes of law.
Whether we love it or hate it, rules will not change. I have simple query, in future if you receive income tax notice to pay dues as one of your brother defaulted on Income Tax. Will you pay on his behalf. Income Tax department can also justify that you all are one family so you should clear income tax dues of your brother’s behalf.
Saw this a bit late.
Thanks for your reply. I do understand the legal point of view in brothers being separate entities, and liability of one isn’t a liability of other.
However, this case is different.
Let us say my brother owes the bank some money, would the law care if I paid it instead of him? Would it still punish him?
I don’t see how any court or (IT dept) can punish anyone on this point, because govt. wasn’t deprived of its revenue and intent of law was met (which is ostensibly to get an advance on LTCG of seller).
Procedure prescribed is not only impractical, it is also arbitrary. Imagine me wanting to buy a property in my mother’s or children’s name. I won’t go and get a PAN card made in their names just so I can make a TDS!!
Besides, as I said in case of 15 sellers of a property worth 50lakh, each seller only gets about 3+lakhs and his TDS will only be 3,333. And if there is a family of 10 buying it, each person has to make a TDSes of Rs.333 for each seller?!
This couldn’t have been the intent of law when Parliament approved it.
Law, AFAIK, doesn’t only go by technicality, it also goes by intent.
Anyway, we went ahead with registration, and decided we will provide explanation to IT dept, if asked.
I do understand. All the best
Shri Nitin,
Your blogs provide very good information on the issues faced by common people. Keep up the good work.
I am an NRI selling a property. I am in the process of obtaining the Nil Deduction certification from the Assessing Officer in my Income Tax Circle. Now if I obtain this certificate, what should the buyer do? Should he still file a TDC on my name with o% and show some bank records?
In the event I do not get the Nil deduction certificate before registration, how do I get the refund once the buyer pays the TDC.
Thanks
Viswanath
If you obtain Nil Deduction Certificate from Assessing officer either under subsection (2) of Section 195 or u/s 195(3) then you will receive full amount from buyer. In this case 1% TDS u/s 194IA is also not applicable as TDS u/s 194IA is only applicable for resident individual sellers.
You can handover original Nil Deduction Certificate to the buyer for his reference and He need not to file any TDS in your name as TDS is not deducted in this case.
If you don’t get NIL deduction certificate then you need to find out whether capital gains are Short Term Capital Gain (Property sold within 3 years of purchase) or Long Term Capital Gain (Property Sold after 3 years of purchase). Tax treatment is different as STCG is taxed as per income tax slab of individual but in LTCG, you can avail indexation benefit.
For TDS refund there are 3 possible scenarios
1. If your country of residence has Double Taxation Avoidance Agreements (DTAA) with Indian government i.e. lower rate of TDS is allowed. you need to submit a tax residency certification from the country of your residence. it will certify that you are a tax paying resident in that country and that tax on this income is paid in that country, it ensure no tax leakage for either countries.
e.g. In US, the tax residency certificate is called Form 6166. You can make application to the Internal Revenue Service (IRS) in Form 8802. In UK you need to get the tax residency certificate from the HM Revenue and Customs.
2. If your total income in India is less than basic exemption limit of 2 Lac: In this case, you can apply for TDS waiver with Income Tax officer under whose jurisdiction your case will fall.
3. You can claim TDS refund if can show proof of reinvestment of capital gains in India. You can either buy another house in India or invest in capital gains bonds u/c 54EC. You should submit an affidavit stating that you will invest the capital gain amount in capital gain bonds.FOr property purchase you can produce allotment letter or payment receipts.
Thank you for the clarification.
Considering the scenario.3, as I am already investing in a property and hence avoid the capital gain, how long will it be before TDS is claimed back once it is payed by the buyer into the government.
Alternatively, I believe the NIL TDS certificate will be available after the registration is completed but before the deadline of payment of the TDS (7th of the following month as per your earlier blog). Can I request the buyer to hold the TDS portion of the total payment till I produce the NIL deduction certificate.
Thanks and Regards
TDS refund can be claimed at the time of filing IT return.
If you obtain Nil TDS certificate before property registration then buyer will not deduct TDS but if you obtain Nil TDS certificate after registration but before the deadline of TDS payment then in this case TDS has to be deposited by the buyer. Buyer cannot hold TDS payment in this case. Reason being, TDS is payable at the time of making payment. It is only for the convenience of deductor, govt allow some time to deposit the same i.e. before 7th of next month in which the TDS is deducted. In this case, buyer will deposit the TDS and based on Nil TDS certificate you can claim refund while filing IT return.
Nitin Sir, I payed TDS that I deducted from my property seller. Now, I have to log on to Traces to get the form 16B to give him. When I try to register as new user, you asked me to register as a Deductor. When I try that, I am asked for TAN, when I look up TAN for my name, i am not getting it.
What should I do ?
1. Please click on following link
https://www.tdscpc.gov.in/app/tapreg1.xhtml#sthash.dvYDmNyh.dpuf
2. Enter basic details like PAN, DOB, Name etc
3. Now between option 1 (tax deducted) and option 2 (tax paid by you), you have to fill details in option 2. TAN is required for option 1 which is not required in case of TDS on Property
4. Enter assessment year, challan serial no and amount. Please note assessment year for FY 2013-14 is AY 2014-15.
5. Enter verification code
System will validate the details & account will be created. User ID is your PAN, You can set password of your choice. An automatic email will be generated providing you an activation link. 2nd code for verification will be received as SMS on your mobile. You can activate account using these details. You can check 26AS statement and download Form 16B in case you are the buyer of immovable Properties through traces.
Please let me know if you face any issues.
Thank you so much Nitin Sir. I was successfully able to register and log in to traces as you said. Only thing is, I had to go through a lot of circus with respect to my PAN details – with our indian citizens PAN details stored by 3 different agencies and all that – so I had to do a merry-go-round there :-).
Finally got it done. Thanks a lot for your help.
May your tribe increase.
Great !!
Hi Nitin Sir, I am buying a property in Gurgaon in resale. The overall property value is Rs 75 lacs. However, my seller has paid Rs 47 lacs worth of instalments till date to the builder. Now, I will be paying him Rs 47 lacs as of now and obviously the balance as and when it comes to the builder. Do I need to deduct TDS on these Rs 47 lacs payment to my seller now?
As transaction value is more than 50 lacs therefore you should deduct TDS u/s 194IA.
dear sir.
in 26As there is detail of tds u/s 194IA .what it means? If it is tds which i have deducted and deposited?
It is TDS dedcuted and deposited by you
padmakumar
dear sir,
I am purchasing a property at Bangalore at a cost of 69.75 lakhs.
There are two sellers, in that one is an NRI.
The NRI person had given me a TAX reduction certificate from IT Dept under section 197(1), to deduct tax at 0.1%.
Help me how to go about with TDS payment, which challan to be used, where to mention the IT certificate details and how to generate form 16A in case of the NRI seller. Thanx
1. You need to apply for TAN (Tax Deduction Account No) for TDS deduction (only in case of NRI) as per section 203A of the IT Act
2. Collect PAN, Addrees and other details of NRI
3. Fill Form No 27Q. Deposit TDS deducted within 7 days from end of the month in which TDS is deducted
4. After filing TDS return, issue Certificate of Deduction of Tax in Form 16A to NRI within 15 days from due date of TDS
Hi Nitin,
I understand that in case of multiple buyers, TDS amount has to be paid in proportion to the share in property.
Five days back, I went for registration of property. So far, I have paid 25% of total consideration and Stamp duty, VAT, and Service Tax. Do I need to pay TDS only on 25% of the amount or should I include other charges like stamp duty, VAT, and service Tax.
Additionally,
Which option should I choose since sellers is a company and buyers are individuals.
1. (0020)INCOME-TAX ON COMPANIES (CORPORATION TAX)
2. (0021)INCOME-TAX (OTHER THAN COMPANIES)
thanks
Rahul
TDS is deducted only on consideration value. Stamp Duty, VAT, ST and other amenity charges should be excluded.
Select (0021)INCOME-TAX (OTHER THAN COMPANIES) as you are Non-Corporate Payer.
Thanks Nitin..
Last question: do i need to pay tds on the rest 75%?
Yes, you should deduct TDS at the time of making balance 75% payment and deposit the same with Govt treasury.
Hi Nitin
I deducted 1% TDS for the two instalments that I paid in FY 2013-14. And submitted the From 16B with the builder. However now when I am filing my annual return the tax deducted appears are refund. Please advise, I am using ITR1 to file my returns
Please delete the entry and file the return. Its a flaw in Income Tax system.
Hi,
We are buying a residential property for which we made the TDS. But, before registration, we got to know that there are two sellers. However, we have made the TDS on behalf of one seller. Is there any way to claim the TDS back and make two TDS payments all over again?
if TDS is paid online. You may approach Assessing Office (AO) or TDS-CPC. If paid through bank (Physical challan) than you may approach the bank to correct the same. Correction in different fields have different time frame of correction.
Hi,
I am purchasing a flat from joint owners(wife and husband) in which wife’s name appears first on share certificate.
Sellers are insisting to make the payment and deduct the TDS only on Husbands name which is second in share certificate.
Kindly advice, whether cheques can be given on single name and TDS also can be deposited on single name?
Weather there will be any issue with IT?
Regards,
Pradip
The payment should be made in proportion of their ownership in property and TDS should be deducted accordingly i.e. you need to fill 2 forms (1 each for husband and wife separately).
I purchased a flat last year (FY 2013-14) (AY 2014-15) and completed Form 26QB and made 1% TDS online payments according to the instalments paid. On June 8, 2014 I made another installment payment and tried to pay 1% TDS using last year’s acknowledgement number from Form 26QB and I am getting error message “ERROR -Assessment Year does not match with system details” selecting AY 2015-16(FY2014-15).
Do I have fill out another Form 26QB for AY 2015-16 (FY 2014-15) ??
Please advise.
Regards
Lalit
Yes, you need to fill another form with AY 2015-16 and FY 2014-15.
Is the acknowledgement number from FORM 26QB unique to each FY/AY to make 1% TDS e-payments. Please clarify. Do we need to complete new Form 26QB for each Financial Year to obtain new acknowledgement number ???
My apologies but i could not understand your query properly. A new form needs to be filled for each installment and there will be unique no. for each TDS payment.
Hello
In the FY2013-14, I sale a flat with price 60.5Lacs and purchased a flat of cost 93Lacs. So my capital gain is zero. During the sale my buyer had deducted TDS and I received From 16B. In my 26AS both transaction are showing. Now I want to take the return of the TDS through ITR1. However in the ITR1 form in the section of TDS2 (tax deducted at source other than salary ) it is mandatory to put TAN of the deductor. But my buyer is an individual person only have PAN.
Plz help me how to fill the ITR1 in this case.
If you are filing your return through income tax departments official portal then it will automatically show this amount as refund. If you are filing through private portal then you need to address the query to customer query as system should allow to submit without TAN.
Thank you for immediate response. I was trying to fill using income tax departments official website. I tried using e-file and also using the excel file downloaded from income tax web site. In exele file in TDS2 it is not taking without TAN number. I tried to put PAN no instead of TAN then it is rejecting. In e-file it is not showing automatically anything in TDS2. In the next section it is showing the value of tax what I have submitted during purchase of another flat. I have seen in your blog you recommend to remove it.
Plz suggest what should I do when filling the return using e-file or using excel file.
Use e-file option. Excel is locked to make any changes therefore it will not allow to proceed without TAN. In e-file, it is taking it correctly as it is not showing anything in TDS2. You may remove the corresponding refund amount and file your return. All the best.
Thank you once again for prompt answer. I found the other thing yesterday through help line. In ITR2 there is TDS3 which is made for TDS due to sale of property where TAN is not required. So I am going to fill ITR2.
Thank you for the cooperation.
Hello Nitin Sir,
I have couple of questions regarding TDS on property:
1. While considering the property value, should it be just the Base price i.e. area x rate/sq ft or should it be Base price + PLC + Other Charges (club charges, parking, development charges, power backup, electricity installation)
2. I have gone through the penalty charges mentioned in your other posts, apologies but they are still not clear to me. I have paid four installments since Dec 2013, latest being 22nd June, so will the TDS for 22 June installation be treated as late?
I will be filing the TDS for the first time, hence your kind suggestions would be appreciated.
Many thanks.
Kishore
1. Water, Electricity, Maintenance, Service Tax, VAT & other amenity charges are excluded from total value to arrive at final consideration value. TDS is deducted on final consideration value after discounting these charges.
2. The TDS for installment paid on 22nd June can be deposited before today eod i.e. 7th July without any penalty. If you deposit today, it will not be considered late.
Thanks nitin sir for the prompt response. Is there an easy way to calculate the penalty charges for say an installment done on 24th December 2013.
You can pay TDS with following penalty
(a) 1% interest for the delay of every month i.e. late deduction of tax from the date the tax was due to date the TDS is deducted
(b) 1.5% penalty for every month on account of late payment of TDS deducted to Govt. from the date TDS deducted till actual date of payment.
Thanks sir. I have a follow up question, I have paid four instalments to builder in past six months but was not aware of tds. So should I fill the form 26qb four times along with penalty or can I pay the entire amount in one go.
You can pay entire amount in single transaction along with penalty
Can you please give an example how this interest calculation is done ?
If I had made an installment payment of 10,00,000 on 21st Sep 2013 without deducting TDS – what would (a) and (b) amount to , if I pay the TDS of 10,000 online on 13th July 2014 ?
Interest penalty will be calculated as simple interest and part of the month is considered as full month e.g. if delay is of 1 Month 2 Days then interest penalty will be for 2 months.
If you need any personalized consultation, you may write to me at info@nitinbhatia.in