TAX DEDUCTED AT SOURCE(TDS)
on Immovable Property (Other than agriculture land) From A.Y. 2014-15 U/s 194IA
is payable at the rate of 1% if the value/transaction
Introduction:-This is a new tax, applicable from1st, June, 2013, deducted
at source on the sale of any immovable property (other than agriculture
land).
However this section
applicable only when sale consideration of the immovable property more than 50
Lacs.
This provision
introduced by The Finance Minister to improve the reporting of such
transactions and prevents the circulation of black money in Real Estate
Market.
Rate of TDS
TDS on transactions of
immovable property is to be deducted at 1%. If the seller has not
disclosed his PAN No., then the rate of TDS would be 20%.
Who will liable to deduct & pay tax(TDS)
TAX DEDUCTED AT SOURCE
is required to be deducted by the purchaser at the time of payment of Sale
Consideration. Such TDS would be deducted from the consideration being
paid to seller and have to be paid separately to the Govt. by the
purchaser.
TDS deducted by the
buyer at the time of making the payment to the seller has to be deposited with
in a period of 7 days from the end of the month in which deduction
has been made. Form
26QB has been prescribed for making such payment.
TAN No. is not mandatory
According the provision
of Section- 203A, any person deducting TDS shall also apply for a TAN No. U/s
203A. This TAN No. is mandatory required to be quoted at the time of deducting
any TDS, at the time of filling return and at the time deposit of TDS with the Govt.
Without holding TAN No. any person not able to deducts TDS.
However Section 194IA
(3) remove such hardship. Which state that a person deducting TDS
on property is not mandatory required to quote TAN No.
TDS on amount paid in Installment
According to Sec-194IA
TDS is to be deducted at the time of payment. The date of transfer is not
relevant. It is not required to be deducted at the time of transfer but is
required to be deducted at the time of payment.
So even if advance
payment is being made TDS would be required to be deducted. In case the payment
is being made in installments to the seller, then TDS would be deducted at the
time of paying each installment.
More than one Buyer or Seller
In case where more
than one buyer or seller and individual purchase price of each buyer is less
than 50 lacs, but the aggregate value of transaction exceed Rs 50 Lacs, then
Sec-194 IA would be applicable and TDS on such property required to be deducted
and deposit with the Govt. before Due date.
TDS in case when property is Finance through Bank
Provision will also apply
even when property is financed through a bank loan. Buyer will have to ensure
that he himself or bank deducts tax before disbursing the loan to the seller.
IMPORTANT POINTS TO REMEMBER
1) TDS may be required
to be deducted even in the case where the capital gains exempt U/s 54.
2) In this
provision, provision of Sec-203A will not apply.
3) TDS on
Immovable property deducted only if transaction is over 50 Lacs or the
Consideration is above Rs50 Lacs.
4) TDS on Agriculture
land is exempt. Which is defined Us- 2(14) (iii) of the Finance Act.
5) The TDS
Certificate shall be issued in Form 16B within 15 days from the due date of
deposit.
6) Provision will
also apply in case when part of the total payment made before 1st June,
2013.
7) If
any advance payment made to the seller, in this case also TDS will deduct whole
amount.
8) The provision
will also apply even in case where buyer bought an Under Construction Property prior
to the provision coming into effect but he has to make the balance payment
after 1st June, 2013.
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