Tuesday, December 17, 2013

TDS on Immovable Property (Sec 194-IA)

What is TDS on Immovable Property?
As per Finance Bill 2013 Buyer of Immovable Property (Other than rural agricultural land) is required to deduct tax on the rates applicable from the sales consideration payable to RESIDENT Transferor provided the sales consideration is equal to or more than Rs.50 Lacs.
What is the applicability of Section 194IA?
Section 194IA would be applicable if any of the following conditions are satisfied:
1.       If the transaction of sale is occurred on or after 1st June 2013 & sales consideration is equal to or exceeding Rs. 50 Lacs.
2.      If the advance consideration received before 1st June 2013 is equal to or exceeding Rs. 50 Lacs but sale agreement is made after 1st June 2013.

Whether Sec 194IA would be applicable on Non-Resident Indian [NRI]?
No, sec 194IA would not be applicable on Non Resident Indians [NRI’s]. For information on purchase of property from NRI’s, read our article here.

When is Tax to be deducted?
·         Tax shall be deducted at the time of payment or at the time of giving credit to transferor, whichever is earlier.
·         If any advance payment is being made, then tax is to be deducted at the time of such payment.
·         If the payment is made in installments then tax is to be deducted on payment of each installment.

What is the Rate at which the Tax is to be deducted?
The Tax is deductible @ 1% of the consideration payable to resident transferor [if valid PAN is quoted].
If the seller does not provide valid PAN, then the tax is deductible @ 20%.

What is the Due date for deposit of Tax Deducted?
The tax deducted is required to be deposited on 7th of the following month in which the tax is deducted except for the tax deducted in the month of March. In case the tax is deducted in the month of March then due date for deposit is 30th April.

How to Deposit the Tax deducted by the buyer?
The tax deducted is to be deposited by challan cum statement on Form 26QB. You can print the challan from here.

Whether the TDS is applicable if the Property is held by Joint Owners?
In case the property is held by joint owners, the provisions of Sec 194IA will still be applicable because the threshold limit of Rs. 50 Lacs is property-wise and not transferee-wise.

Whether PAN of Seller is mandatory?
Permanent Account Number (PAN) of the seller as well as buyer should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction. If the PAN of seller is not filled or wrongly filled, then TDS would be deducted @20%.

What is the Procedure of depositing the Tax Deducted?
1.       The buyer has to fill the details of buyer and seller in Form No. 26QB.
2.       After that, the buyer has to remit the tax deducted electronically.
3.       On receipt of payment confirmation, a nine digit alpha numeric acknowledgement no. would be generated and such acknowledgement no. is to be kept by the buyer.
4.       On successful payment, a challan containing CIN and payment details would be generated. Print this as it will be required at the time of registration as Tax Payer.

What would be the implications if the Tax deducted is not deposited within due date?
In case of failure to deposit the tax deducted, interest and penalty would be levied on the purchaser.
Interest will be charged @ 1.5% per month or part of the month from the date of deduction to date of actual deposit. 

What is to be done after depositing the Tax deducted?
The buyer is required to issue Form No. 16B [TDS Certificate] to the seller of immovable property within fifteen days from the due date of deposit of tax, so that the seller would be able to take the credit of tax deducted.              

How to Download Form 16B?
Firstly the buyer is required to register himself as tax payer on TRACES [https://www.tdscpc.gov.in/]
The tutorial for registering on traces can be downloaded here.
The tutorial for downloading Form 16B can be downloaded from here.

What information is required for registration as Tax Payer on TRACES?
1)      PAN of Buyer
2)      Date of Birth/Date of Incorporation of Buyer
3)      Name of Buyer [Complete name including surname]
4)      Particulars of Tax Deducted*
(a)    TAN of Deductor
(b)   Type of Deduction
(c)    Month & Year of Deduction
(d)   TDS/TCS Amount
5)      Particulars of Challan Deposited*
(a)    Asst. Year in which Challan is deposited
(b)   Challan serial No.
(c)    Amount of Challan Deposited
6)      Complete Address of Buyer
7)      Mobile & Email id of Buyer
* The assessee may provide information for either Point 4 or 5.

What is the Information required to download Form 16B [TDS Certificate]? 
1)      User ID & Password of Tax payer
2)      TAN/PAN of Tax payer
3)      Acknowledgement No. of Buyer
4)      PAN of Seller

What is the Password to Open Form 16B?
The Password to Open Form 16B is Date of Birth/Date of Incorporation of Buyer.

- Contributed by Ms. Shiwali Shukla (Article Assistant)