TDS on sales of property

From 1 June 2013, when a TDS is applicable on sale of immovable property wherein the sale consideration of the property exceeds or equal to Rs. 50 lakhs, TDS has to be deducted when he pays the seller. TDS @ 1% should be deducted by the purchaser of the property at the time of payment of sale consideration.

Points need to Remember by Purchaser:

1. TDS has to be deducted @ 1% from the sale consideration.
2. Collect the PAN of the Seller and verify the same with the Original PAN card. TDS is to be paid on the entire sale consideration amount. For example, if you have bought a house at Rs 55,00,000 you have to pay TDS on Rs 55,00,000 and not on Rs 5,00,000 (i.e. Rs 55 lakh – Rs 50 lakh). This is applicable even there is more than one buyer or seller.
3. PAN of the seller, as well as Purchaser, should be mandatorily furnished in the online form (challan 26QB) for furnishing information regarding the sale transaction.
4. Do not make any error in quoting the PAN or other details in the online form as there is no online mechanism for rectification of errors. For the purpose of rectification, you need to contact the Income Tax Department.

Points Need to be remembered by Seller:

1. Provide seller’s PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
2. Verify deposit of tax by the Purchaser in your Form 26AS

Frequently asked Questions

Q1. I am a buyer Do I need to deduct TDS for sale consideration of under-construction property?

As per Income Tax Rules, if any payment is done towards the purchase of immovable property worth ? 50 lakh or more, whether built-up or under construction, you are required to withhold tax at the rate of 1% on the sale consideration payable to a resident transferor.

Q2. Who is liable to deduct TDS on sale of a property?

According to rules in respect of tax deducted at source, the buyer of the property will have to deduct the TDS and deposit the same in Government treasury.

Q3. I am a buyer do I need TAN to report TDS on sale of the property?

Buyer or Purchaser of the property is not required to procure with Tax Deduction Account Number (TAN). The buyer requires quoting his or her PAN and seller’s PAN.

Q4. What is the due date for payment of TDS on sale of the property?

As per the CBDT notification no. 30/2016 dated 29 April 2016, the due date of payment of TDS on transfer of immovable property has been extended to 30 days (from existing 7 days) from the end of the month in which the amount deducted.

Example: If a taxpayer makes payment of sale consideration in the month of December, then the corresponding TDS should be deposited on or before (30 days) i.e. January 31st.

Q5. What if I do not have PAN of the seller, Is it mandatory?

PAN of the seller is mandatory. It would be acquired from the Seller before effecting the transaction.

Q6. How can I use this facility to pay TDS o sale of the property?

The Buyer of the property (deductor of tax) has to furnish information regarding the transaction online on the TIN website in challan 26QB. After completing the details in the form:

• Deductor, either make the payment online (through e-tax payment option) immediately;
• Or make the payment subsequently through e-tax payment option (net-banking account) or by visiting any Bank branches. However, such bank branches will make e-payment without initialization of any challan. The bank will get the challan details from the online form filled by TIN website.

Suman Bisht

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