Section 194-IA in Joint Property Purchase: ITAT Delhi Rules No TDS if Individual Share is Below ₹50 Lakhs

 By CA Surekha Ahuja

Joint Property Purchase: No TDS if Individual Share is Below ₹50 Lakhs

Harvindra Singh vs ACIT CPC-TDS – 186 taxmann.com 176 (Delhi ITAT)

A significant clarification has been laid down by the Delhi ITAT on one of the most litigated TDS issues in property transactions — whether the ₹50 lakh threshold under Section 194-IA applies per property or per buyer in joint purchases.

In a taxpayer-favourable ruling in Harvindra Singh vs. ACIT CPC-TDS, the Tribunal has held that the threshold must be tested with reference to each individual transferee’s share, where ownership and consideration are clearly identifiable.

This ruling has direct relevance under both:

• Income Tax Act, 1961 (Section 194-IA)
• Income Tax Act, 2025 (Section 393 – TDS on immovable property framework)

Core Legal Issue

Whether TDS under Section 194-IA is triggered:

• on aggregate property value, or
• on individual buyer’s share in joint ownership

Delhi ITAT’s Final Ruling

The Tribunal held:

The ₹50 lakh threshold under Section 194-IA must be applied buyer-wise, not property-wise, where shares are clearly defined in a joint purchase transaction.

Accordingly:

• If individual share < ₹50 lakhs, no TDS is required
• CPC cannot mechanically aggregate total consideration for default creation

Facts in Brief

Particulars	Amount
Total Property Value	₹55,00,000
Co-buyers	3
Individual Share	₹18,33,333 approx.
TDS Deducted	Nil

Despite clear ownership apportionment, CPC-TDS raised demand under Section 200A, which was deleted by ITAT.

Mathematical Position (Ownership Test)

$\text{Individual Share} = \frac{\text{Total Property Value}}{\text{Number of Buyers}}$

$\frac{₹55,00,000}{3} = ₹18,33,333$

Since:

$₹18,33,333 < ₹50,00,000$

Result:

No TDS liability arises under Section 194-IA.

Comparative Legal Position

A. Income Tax Act, 1961 – Section 194-IA

• TDS @ 1% on transfer of immovable property
• Threshold: ₹50 lakhs consideration
• Dispute: Whether threshold applies per transaction or per transferee
• ITAT ruling clarifies: Per transferee basis applies where shares are identifiable

B. Income Tax Act, 2025 – Section 393 (New Framework)

Under the new law:

• Section 393 replaces Section 194-IA framework
• Digital integration with property registries increases automation
• CPC-style validations become more data-driven and system-based

However, the legal principle remains unchanged:

Threshold applicability must still be determined on individual transferee consideration, not mere aggregate property value.

Key Comparative Insight (Old vs New Act)

Aspect	1961 Act (Section 194-IA)	2025 Act (Section 393)
Threshold test	₹50 lakhs property consideration	Substantially retained
Basis of application	Disputed (property vs buyer)	Must remain transferee-based
Compliance system	TRACES / CPC	AI + registry-linked system
Risk area	Manual aggregation errors	Automated mismatch detection
Judicial safeguard	ITAT interpretation	Still fully applicable

Key Findings of ITAT

The Tribunal emphasized:

• Threshold cannot be applied mechanically on aggregate value
• Identifiable ownership shares govern tax deduction liability
• CPC processing under Section 200A cannot override substantive law
• Identical transactions must not result in unequal tax treatment

Practical Impact of the Ruling

1. Major Relief for Joint Property Transactions

Applies to:

• husband-wife purchases
• HUF acquisitions
• family investments
• co-investor arrangements
• NRI joint property holdings

2. Protection Against CPC-TDS Demands

Helps in challenging:

• automated Section 200A intimations
• interest under Section 201(1A)
• TRACES mismatch defaults
• incorrect aggregation-based demands

3. Strong Substance Over Form Principle

The ruling reinforces:

Tax law applies on real economic ownership, not mechanical aggregation.

Compliance Takeaways (Very Important)

To safely rely on this ruling:

Ensure:

• ownership ratio is clearly stated in sale deed
• payment contribution matches share
• bank trail supports allocation

Maintain documentation:

• share computation sheet
• legal note on non-deduction
• sale deed extract
• ITAT ruling reference

Tax Audit Relevance

• Clause 34 of Form 3CD is the primary reporting clause for TDS compliance
• Auditors must document:
  • whether TDS was applicable
  • basis of non-deduction (if any)
  • share-wise computation
  • legal reliance including judicial precedents

Clause 19 has only indirect or minimal relevance in this context.

Conclusion

The ruling in Harvindra Singh vs. ACIT CPC-TDS is a landmark clarification on Section 194-IA, now strengthened in relevance under both tax regimes.

It conclusively establishes:

The ₹50 lakh threshold applies to the individual transferee’s share, not the aggregate property value in joint purchases.

This judgment not only resolves a long-standing CPC-TDS controversy but also sets a clear compliance direction for the evolving digital tax administration framework under the Income Tax Act, 2025.

TDS Due Date for April 2026 (Pay by 7 May 2026): Complete TDS Compliance Update for FY 2026–27

By CA Surekha Ahuja

April Closed. First TDS Due Date Is Here.

Tax deducted during April 2026 must be deposited by 7 May 2026 by all non-government deductors under Rule 218 of the Income-tax Rules, 2026.

This is the first TDS compliance cycle under the new Income-tax Act, 2025.

The law is simpler.

But compliance is stricter.

TDS now depends on getting five things right:

Check	Why
Section	Legal applicability
Threshold	Liability trigger
Rate	Correct deduction
Form	Correct reporting
Due date	Valid compliance

A mistake in any one can trigger default.

TDS Framework under the New Law

Section	Coverage
392	Salary
393(1)	Resident payments
393(2)	Non-resident payments
393(3)	Specified payments

The structure is simpler.

The responsibility is sharper.

Due Dates to Track

Compliance	Due Date
Regular TDS for April 2026	7 May 2026
Form 141 cases	Within 30 days from month-end

Not every TDS follows the normal monthly route.

Key TDS Rates for Business Payments

Payment	Threshold	Rate
Salary	Slab based	As applicable
Interest	₹50,000 / ₹1 lakh	10%
Contracts	₹30,000 / ₹1 lakh aggregate	1% / 2%
Commission/Brokerage	₹20,000	2%
Rent (Plant & Machinery)	₹50,000 monthly	2%
Professional fees	₹50,000	10%
Purchase of goods	₹50 lakh	0.10%
Benefits/Perquisites	₹20,000	10%
Partner payments	₹20,000	10%

These cover most routine deductions.

Important: Form 141 Is a Separate Compliance Route

Certain transactions require Form 141 (Challan-cum-Statement), where payment and reporting happen together.

Applicable for 

Transaction
Rent by Individual/HUF
Property purchase
Contractor/professional/commission by Individual/HUF
Virtual Digital Asset transfer

Form 141 is not a simple challan.

It captures:

• deductor details
• deductee details
• PAN
• transaction value
• asset details
• tax deducted

That makes it a transaction-level statutory statement.

Wrong filing can create mismatch and notices.

Correct Form Mapping

Nature	Form
Salary TDS	Form 138
Resident TDS	Form 140
Non-resident TDS	Form 144
TCS	Form 143
Special cases	Form 141

Correct deduction with wrong form is still defective compliance.

Conclusion

For April 2026:

Type	Action
Regular TDS	Deposit by 7 May 2026
Form 141 cases	File within 30 days

The new Income-tax Act, 2025 has simplified TDS law.

But compliance is now more process-driven.

The biggest risks are no longer non-deduction.

They are:

• wrong classification
• wrong form
• wrong due date

The first TDS due date of the year sets the compliance discipline for the year ahead

Section 194C vs Section 194J: The Ultimate Guidance Note on TDS Classification

By CA Surekha S Ahuja

Introduction

Classifying TDS correctly between Section 194C and Section 194J is one of the most frequent and consequential issues in TDS compliance. The difference is not just academic — it affects deductibility, expense acceptance, interest exposure, penalties, and appellate risk.

Misclassification commonly arises in payments for execution-oriented contracts, creative and digital services, IT services, maintenance agreements, and professional / advisory engagements. Assessing Officers, audit teams, and tribunals repeatedly emphasise that labels on invoices or contracts do not determine the law — substance and dominant purpose do.

This definitive guidance note consolidates law, statutory sub-section distinctions, thresholds, judicial tests, risk indicators, grey areas, compliance safeguards, and practical classification logic. It is meant for professionals, compliance teams, and clients to deduct the right TDS — sustainably and defensibly.

Statutory Framework & Section-Level Distinctions

Section 194C — Payments for Carrying Out Any Work

Section 194C applies to sums paid to a resident for carrying out any work (including supply of labour) in pursuance of a contract.

• Sub-section (1): Governs deduction by the payer from payments to a contractor.

• Sub-section (2): Extends the requirement to deduction by a contractor from payments to a sub-contractor.

• Explanation: Expands “work” to include activities like advertising, broadcasting, transport, catering, and manufacturing under supply contracts.

Section 194C is execution-oriented: the payer engages someone to accomplish a job and deliver output.

Section 194J — Fees for Professional or Technical Services

Section 194J applies to payments for:

• Professional services (sub-section (1)(a)), and

• Technical services (sub-section (1)(b)),
  along with royalty, non-compete fees, and certain director remunerations.

Key internal sub-section points:

• Explanation (a): Defines “professional services” using a restrictive list — legal, medical, engineering/architectural, accountancy, and similar notified professions. Photography, videography, or creative execution is not included.

• Explanation (b): Defines “technical services” as managerial, technical, or consultancy services, excluding simple execution contracts.

Section 194J is intellect-oriented: it applies where service delivery involves independent application of specialised knowledge, professional judgment, or advisory functions.

Thresholds, Rates & Trigger Points (FY 2025–26)

Section	Single Trigger	Aggregate Trigger	TDS Rate
194C	₹30,000	₹1,00,000/year	1% (individual/HUF) / 2% (others)
194J	₹30,000	₹30,000/year	10% (professional) / 2% (technical)

Once the relevant threshold is crossed, TDS must be deducted on the entire amount, not merely the excess.

The Core Legal Test — Dominant Nature & Substance

Courts and tribunals uniformly apply the dominant purpose test. Neither the title of a contract nor the terminology on invoices determines the applicable section. The guiding questions are:

1. Is the engagement primarily execution of work or primarily advisory/consultancy?

2. Is the responsibility output-oriented or discretion/judgment-oriented?

3. Does the service require independent application of specialised knowledge?

• If execution of work dominates, then Section 194C applies.

• If professional or technical judgment dominates, then Section 194J applies.

Skill or artistry alone does not elevate a contract to professional service.

When Section 194C Applies

Section 194C captures contractual work even if skill or technical ability is involved, provided the engagement is execution-driven.

Common classifications under Section 194C include:

• Event photography or videography

• Product catalogue shoots

• Corporate video production

• Advertising production and shoot execution

• Editing, retouching, post-production as part of the shoot agreement

• Fabrication, installation, routine maintenance contracts

• Transport, logistics, catering, housekeeping, security services

• Manpower supply and routine IT support/implementation

Judicial support:
In EMC v. ITO (ITAT Mumbai), payments to photographers and artists were held to be under Section 194C. The Tribunal emphasised that photography is not a notified profession and that skill alone does not transform execution into professional consultancy.

When Section 194J Applies

Section 194J applies in limited and clearly demonstrable situations involving:

• Advisory or professional judgment: legal, audit, valuation, certification, strategic consultancy

• Technical services: architectural design, management consulting, specialised IT architecture

• Professional experts engaged independently of execution (e.g., legal opinions, technical system designs)

• Notified film artists in cinematographic production

The dominant element must be intellectual or professional expertise, not mere delivery of an output.

Grey Areas & Overlap Situations

Real-world contracts often combine execution and advisory elements. In such cases the dominant nature must be established factually:

• Maintenance contracts: Routine servicing → Section 194C; Expert diagnostics → Section 194J

• Advertising: Shoot execution → Section 194C; Brand strategy/creative consultancy → Section 194J

• IT services: Implementation/support → Section 194C; System design/architecture → Section 194J

Artificial invoice splitting or naming conventions without contractual clarity will not persuade authorities.

Risk-Flag Checklist for Correct Classification

These indicators often trigger adverse findings and should prompt careful review before TDS deduction:

• Use of words like consultancy, advisory, professional without defined scope

• Absence of specific deliverables or timelines

• Responsibility extending beyond execution to design/strategy

• Independent discretion exercised by vendor, not client-directed execution

• Composite contracts without clear segregation of consulting vs execution elements

• Change in scope without re-review of TDS treatment

• Historical practice followed without re-classifying changed deliverables

• Deduction under a higher rate assuming it cures default

Presence of multiple risk flags generally suggests a default under Section 194J.

Common Compliance Errors

The most common mistakes are:

• Deducting under Section 194C solely because a contract exists

• Deducting under Section 194J due to “professional” terminology

• Assuming higher deduction under the wrong section neutralises default risk

Judicial precedents firmly establish that deduction under an incorrect section constitutes a default, regardless of the rate applied.

Compliance Safeguards & Best Practices

To ensure defensible TDS compliance:

• Draft contracts clearly: Define scope, deliverables, and responsibility

• Identify dominant nature: Execution vs advisory should be explicit

• Document reasoning: Maintain internal notes on section selection

• Segregate services: Separate execution from advisory components financially and contractually

• Annual review: Reassess recurring contracts for any scope changes

• Retain judicial references: Especially EMC v. ITO for creative/photography classifications

A well-reasoned and documented approach is the strongest defence in scrutiny and appellate proceedings.

Conclusion

Determining whether Section 194C or Section 194J applies is not a mechanical label exercise but a legal characterisation based on substance and dominant purpose. Courts and tribunals prioritise function over form.

• Execution-oriented work — clearly Section 194C

• Professional or technical advisory services — clearly Section 194J

Correct TDS classification today is the most effective strategy against tomorrow’s assessments, audits, and disputes. A contract-backed, function-driven, and judicially aligned approach ensures compliance certainty and long-term defensibility.

Finance Ministry Extends Deadline for TCS Rates and Credit Card Inclusion in LRS

 

The Indian finance ministry has extended the implementation date for increased Tax Collection at Source (TCS) rates and the inclusion of credit card payments in the Liberalised Remittance Scheme (LRS). The new TCS rates, which were supposed to be effective from July 1, 2023, will now come into effect from October 1, 2023. This decision provides more time for the implementation of the revised TCS rates and the inclusion of credit card payments in the LRS.

As a result of this extension, transactions made through international credit cards while abroad will not be considered LRS transactions and will not be subject to TCS, contrary to the earlier announcement. The revised TCS rates for LRS and overseas tour packages remain unchanged for amounts up to Rs. 7 lakh per individual per year, regardless of the payment mode. However, for overseas expenses on credit cards exceeding Rs. 7 lakh, a TCS rate of 20% will apply. Medical or educational expenses incurred through credit cards will be subject to a lower TCS rate of 5%. Individuals availing loans for overseas education will face a TCS rate of 0.5% above the Rs. 7 lakh threshold.

The Union Budget 2023-24 initially announced the increase in TCS rates to 20% for overseas tour packages and funds remitted under LRS, with the effective date set as July 1, 2023. However, the implementation of these rates has been delayed by three months to October 1, 2023.

It is important to note that in May, changes were made to the FEMA Current Account Transaction Rules, bringing overseas credit card expenses under the purview of the Liberalised Remittance Scheme. This scheme allows residents to remit up to USD 2.50 lakh per year abroad, with RBI approval required for transactions exceeding this limit.

New 26AS Format - FY 2020-21 / AY 2021-22

The Annual Information Statement in Form 26AS will come into effect in its new form from 01-Jun-2020 and will disclose the following details.

1. Tax Credits

(i) TDS deducted on payments made to you

(ii) TCS collected on payments made by you

2. Specified Financial Transactions (SFT) as filed in Form No. 61A.

These are high-value transactions entered into by you during the year, such as:

(i) Purchased or sold immovable property

(ii) Bought shares, debentures or bonds of a company exceeding Rs. 10 lakhs

(iii) High value cash deposits or payments in an account as reported by banks

(iv) Credit card payments of Rs. 1 lakh or more made in cash

(v) Bought units of a scheme of mutual fund exceeding Rs. 10 lakhs

(vi) Bought or sold foreign currency exceeding Rs. 10 lakhs

3. Taxes Paid for the Year

(i) Advance Tax

(ii) Self Assessment Tax

(iii) Tax paid on Regular Assessment

4. Demands Outstanding & Refunds

(i) Demands outstanding for payment to the tax department

(ii) Refunds due but not received

(iii) Refunds paid

5. Pending Tax Proceedings

(i) Scrutiny assessments pending before the Assessing Officer

(ii) Appeals pending before the Tax Tribunal

6. Completed Tax Proceedings

(i) Tax Assessments

(ii) Appeals before the CIT(A)

Reduced TDS Rates FY 2020-21 (AY 2021-22)

The following table gives the reduced TDS rates in force from 14th May, 2020 to 31st March 2021.

S. No	Section of The Income Tax Act	Nature of Payment	Existing Rate of TDS	Reduced Rate From May 14, 2020 to March 31, 2021
1	193	Interest on Securities	10%	7.5%
2	194	Dividend	10%	7.5%
3	194A	Interest other than Interest on securities	10%	7.5%
4	194C	Payment of Contractors and sub-contractors	1% (individual/HUF) 2% (others)	0.75 (individual/HUF) 1.5% (other)
5	194D	Insurance Commission	5%	3.75%
6	194DA	Payment in respect of life insurance policy	5%	3.75%
7	194EE	Payments in respect of Deposits under National Savings Scheme	10%	7.5%
8	194F	Payments on account Of re-purchase of Units By Mutual Funds or UTI	20%	15%
9	194G	Commission, prize etc., On sale of lottery tickets	5%	3.75%
10	194H	Commission or brokerage	5%	3.75%
11	194-I(a)	Rent for plant and machinery	2%	1.5%
12	194-I(b)	Rent for immovable property	10%	7.5%
13	194-IA	Payment for acquisition Of immovable property	1%	0.75%
14	194-IB	Payment of rent by individual or HUF	5%	3.75%
15	194-IC	Payment for Joint Development Agreements	10%	7.5%
16	194J	Fee for Professional or Technical Services (FTS), Royalty, etc.	2% (FTS, Certain royalties, Call Centre) 10% (others)	1.5% (FTS, Certain royalties, Call Centre) 7.5% (others)
17	194K	Payment of dividend by Mutual Funds	10%	7.5%
18	194LA	Payment of Compensation on Acquisition of immovable property	10%	7.5%
19	194LBA(1)	Payment of income by Business trust	10%	7.5%
20	194LBB(i)	Payment of income by Investment fund	10%	7.5%
21	194LBC(1)	Income by Securitisation trust	25% (Individual/HUF) 30% (Others)	18.75% (Individual/HUF) 22.5% (Others)
22	194M	Payment to commission, brokerage etc. by Individual and HUF	5%	3.75%
23	194-O	TDS on e-commerce participants	1% (w.e.f. October 1, 2020)	0.75%

 
The Tax Collection at Source (TCS) Rates for the same period are also reduced as under.
 

S. No	Section of The Income Tax Act	Nature of Payment	Existing Rate of TCS	Reduced rate From May 14, 2020 to March 31, 2021
1	206C(1)	Sale of
		(a) Tendu Leaves	5%	3.75%
		(b)Timber obtained under a Forest lease	2.5%	1.875%
		(c) Timber obtained by any Other mode	2.5%	1.875%
		(d)Any other forest produce Not being timber/tendu leave	2.5%	1.875%
		(e) scrap	1%	0.75%
		(f) Minerals, being coal or Lignite or iron ore	1%	0.75%
2	206C(1C)	Grant of license, lease, etc. of (a) Parking lot	2%	1.5%
		(b) Toll Plaza	2%	1.5%
		(c) Mining and quarrying	2%	1.5%
3	206C(1F)	Sale of motor vehicle above 10 lakhs	1%	0.75%
4	206C(1H)	Sale of any other goods	0.1% (w.e.f October 1, 2020)	0.75%

Note:

- There shall be no reduction in rates of TDS or TCS, Where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar.

- There is no reduction in TDS on payment of salaries.

TDS Notices, Defaults, Penalties, Interest and Online Correction of 26QB – TDS on sale of Immoveable Property

TRACES is the site where we can generate 26QB – TDS on sale of Immoveable Property make corrections and generate TDS Certificates for TDS deducted by the buyer of property

TDS is applicable on transfer of Immovable property under section 194IA enacted by Finance Act 2013 where the consideration of property exceeds or is equal to 50 lacs. TDS Provisions for Property Sale/ Purchase above 50 Lacs are as under:

1)     WEF 1st June, 2013 Tax @ 1% should be deducted by the buyer of the property at the time of making payment of sale consideration.

2)     For furnishing of Information of such transaction a 26QB form is to be filed online containing PAN of seller as well as buyer & Address, Transaction value and date of agreement for such transaction. In case of more than 2 buyers or sellers the Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share.

3)     Any sum so deducted under section 194 IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made either through Net Banking or through Authorized Bank Branches.

4)     TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited in Government Account.

5)     Challan and Form 26QB will be filled in by all the buyers for respective sellers for their respective share.

6)     If the person liable to deduct tax does not file 26QB and deposits the Tax Deducted in time will be treated as Assessee in default and shall be liable to pay Interest under section 201 of Income Tax Act,1961 before furnishing the Form 26QB

(a)   In case of TDS Deducted but Not paid in Time @1.5% for every month or part of a month on the amount of such TDS from the date on which such TDS was deducted to the date on which such TDS is actually paid.

(b)   In Case TDS is not deducted @1% for every month or part of a month on the amount of such tax from the date on which such TDS was deductible to the date on which such TDS is deducted.

7)     No filing or late filing of statement of TDS / TDS returns in Form 26QB the Assessee in Default shall be liable to pay late fees under section 234E @ Rs 200 per day till the failure to file TDS statement continues with challan within a period of seven days from the end of the month in which the deduction is made.

8)     The late filing fees shall be deposited before filing the TDS return in Form 26Q but the total fee cannot exceed the amount of TDS deductible for which statement was required to be filed filing fee.

9)     No filing or late filing of statement of TDS / TDS returns in Form 26QB shall invite penalty under section 271H minimum Rs 10,000/- to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement.

10) As Per section 271H, penalty will be levied if the deductor/collector files an incorrect TDS return minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000/-. In Case TDS return is filed without payment of Penalty under section 271H it may be levied on deductor by the assessing officer.

11) TRACES is sending two types of notices:

 i) Demand of interest payment in case TDS is paid but interest is payable, and

ii) Demand of TDS and interest payment in case TDS is deducted or not deducted but not paid to the credit of the Central Government and TDS return in Form 26QB not filed.

Online Correction of 26QB

The CPC TDS released Online Correction facility for TDS statements filed in form 26QB, for TDS on transfer of Immovable Property where consideration exceeds Rs. 50 Lacs. The TRACES has given now Online Correction facility for closure of the following TDS Defaults due to incorrect data entry in the 26QB statement.

Steps for online correction in 26QB

·         Register at Traces.

·         Register your DSC.

·         Make Correction in the following Fields : PAN of Buyer Details, PAN of Seller Details, Amount Paid/Credited, Date of Payment / Credit, Date of Tax Deduction, Financial Year & Details of Property.

·         No DSC required for Corrections in the fields of email address, Mobile Number and Address of the Property.

·         In case a person does not have DSC then Assessing Officers’ Approval is required except for amendment in E Mail ID, Mobile and Address of the property.

Some important points related to correction of form 26QB

1) Bank Branches cannot do 26QB challan correction.

2) Assessing officers are not authorized for 26QB challan correction.

3) Correction only in select challan fields:

·         Buyer PAN

·         Seller PAN

·         Assessment Year

·         Major Head i.e.0020- Income tax on companies(Corporation Tax) and 0021- Income Tax(other then companies).

4) Challan fields that cannot be corrected: Correction is not possible for following relevant fields:

·         Total Value of Consideration (Property Value)

·         Minor head i.e. Type of Payment – 800 (TDS on Sale of Property)

·         Address

·         Property Details

·         Payment Details

·         TDS or Tax Deposit Details including penalty i.e. interest and Fee.

5) The Process of 26QB Challan Correction: For 26QB Challan Correction, a buyer has to submit the written application to the PAN Assessing Officer as per the jurisdiction of the buyer’s PAN. To know your PAN Assessing Office, please click on the following link : https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourJurisdictionLink.html

6) NOC from seller: A buyer need NOC from the seller on an affidavit in original. This original NOC should be attached to the application for 26QB Challan Correction.

7) Correction Status: If your correction is approved by IT department then it will be reflected in the Form 26AS of the seller. A buyer may request the seller to check his/her Form 26AS for corrections.

TDS on Sale of Property, Delays & defaults in 26QB and

payment of TDS

The 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.

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. OR

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.

Tax is to be deducted at Source at the time of payment or at the time of giving credit to transferor, whichever is earlier. So at the time of sale of property the tax can be deducted in installments or lump sum as per the date of agreement by the 7th of the subsequent month in which agreement is entered into for payment in installments or in lump sum but as per the date of payment. 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.

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%.

The tax deducted is to be deposited by challan cum statement on Form 26QB. 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.

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%.

Procedure of depositing the Tax Deducted:

The buyer has to fill the details of buyer and seller in Form No. 26QB. After that, the buyer has to remit the tax deducted electronically. 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. 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.

There are two options to make payment:

a) Online payment through net Banking.

b) E-Payment at a subsequent date.

In case a) option is selected then as soon as click for first option there is window to select the name of the bank from where the payment is to be made and then account details and other details a for E-payment are required. After successful payment the receipt is generated which is further required at the time of generating Form 16B i.e TDS Certificate.

In case b) option is selected then Acknowledgement slip for TDS on sale of immovable

property is generated having PAN of Buyer, PAN of Seller, 9 digit alpha numeric Acknowledgement number, Amount of TDS as well as last date of payment. Then second step in this option is to make payment which can be done by bankers on behalf of the Buyer of the property or otherwise e-payment can be made by Clicking on the given link:

https://onlineservices.tin.egov-nsdl.com/etaxnew/PopServletOffline

After clicking the above web page there are the following information is to be entered:

·         PAN of Buyer.

·         PAN of Seller.

·         Ack Number of Pre-generated 9 digit Alpha Numeric Acknowledgement Number.

·         Assessment Year which is subsequent to Fin. year in which property is purchased i.e Assessment Year is 16-17 for Financial Year 15-16.

Generally payment of TDS on Purchase of property is a huge amount so Income Tax

Department has given tutorials for the same.

There are E-Tutorials for TDS on Sale of Property:

E-Tutorial for making the on line payment or for subsequent payment please follow the given links respectively:

TDS on Property - e-tax payment immediately (through net banking)

TDS on Property - e-tax payment on subsequent date (through bank branches)

https://www.tin-nsdl.com/download/TDS/eTutorial_TDS%20on%20property_etax-subsequently.pdf

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. TDS CPC has raised the demands against delays and defaults in filing 26QB. TDS CPC has sent U/S 200A and raised demands under Section 156 for defaults and Section 234E for delays @ Rs.200/- per day.

Payment of Demand raised on delays and defaults:

Now TDS CPC has given the facility to make payment of demand raised against TDS on Sale of Property has been enabled.

To Pay Such Demand raised please click on

https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

Contributed by Megha Bansal