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Section 194IA: TDS on Property Selling and Other Details

Section 194IA: TDS on Property Selling and Other Details

Section 194IA is all about the TDS deduction at the time of buying a property. All the details that revolve around that zone have been zipped here.

Given below is all that you need to know about the TDS on Selling Property and Section 194IA

What is Section 194-IA?

Section 194-IA was introduced on June 1, 2013. According to Section 194-IA, if a buyer buys an immovable property like a house, building, a section in a building, or land (other than agricultural land), of more than Rs.50 lakhs, he/she also has to pay TDS (Deduct Tax at Source).

TDS on Property Sale: Budget 2022

As per the announcement made by the Finance Minister of India, Nirmala Sitaraman in the Budget 2022, homebuyers have to pay 1% TDS (Deduct Tax at Source) on either the actual price of the property or on the stamp duty values; whichever is higher, will be considered. This rule will be implemented with effect from April 1, 2022.

Key things to remember about TDS

Given below are some points that can help the buyer as well as the seller with matters related to TDS.

  1. Homebuyers have to pay TDS (Deduct Tax at Source) to the government on the purchase of properties over Rs 50 lakhs.
  2. It is the responsibility of the buyer and not the seller to pay the TDS on the property.
  3. In case the rules are not followed properly, the buyer will be considered guilty. It is the responsibility of the buyer to fill out form 26QB and credit the TDS.
  4. In case multiple buyers and sellers are involved in the transaction, multiple forms have to be filled.

Properties that are covered

Rules of Section 194-IA are applicable on the purchase of residential properties, commercial properties, and lands. Rules of Section 194-IA do not apply to the purchase of agricultural land.

Details required for payment of the TDS

To efficiently follow the payment procedure of the TDS (Deduct Tax at Source), you need the following details to be filled in Form 26QB:

  1. PAN No. of the Buyer
  2. Address of the Buyer
  3. PAN No. of the Seller
  4. Residential Status of the Seller
  5. Address of the Seller
  6. Address of the property transferred
  7. Date of Payment
  8. Amount Paid
  9. Date of Agreement
  10. Total Transaction Value

How to pay TDS?

TDS (Deduct Tax at Source) can be online as well as using the offline method.

  • Offline Method

Visit your branch bank and ask for a Tax Payment Challan Form. Provide all details in the Challan Form and submit it to the Bank. Bank will update those details on the Income Tax website, and once TDS has been deposited, the buyer can download the TDS certificate from the Income Tax website. It is the duty of the buyer to provide a TDS certificate to the seller within 15 days.

  • Online Method

Visit https://www.incometaxindia.gov.in/Pages/tds-sale-of-immovable-property.aspx and follow all the steps to deposit TDS (Deduct Tax at Source) online.

The due date for depositing the TDS to the government

After deducting TDS (Deduct Tax at Source), the buyer needs to deposit it by the 7th of the following month. In other words, the TDS deducted in the month of January must be paid to the government by February 7.

TDS: Points for the buyer to remember

Given below are some points that can help the buyer with matters related to TDS.

  1. PAN is necessary to pay TDS (Deduct Tax at Source)
  2. Fill the details in the online form with great care as the errors cannot be rectified online.
  3. In case of errors, contact the Income Tax Department through the website and toll-free numbers.

TDS: Points for the seller to remember

Below are some points that can help sellers with matters related to TDS.

  1. A seller needs to provide his/her correct PAN to the buyer.
  2. Verify if the TDS has been deducted or not through the TDS certificate.

Frequently Asked Questions (FAQs)

  • What if I don’t have sellers' PAN to deduct TDS on the sale of the property?

PAN of the seller is necessary. There's no way you can deduct TDS without the seller's TDS.

  • I am a buyer of the property; do I require obtaining TAN to deduct TDS on the sale of the property?

No. TAN (Tax Deduction Account Number) is not required to deduct TDS. Buyers and Sellers PAN is all that is necessary to deduct TDS on the sale of the property.

  • Who is responsible for deducting TDS?

The buyer of the property is responsible to deduct TDS on the sale of the property.

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