Income Tax - TDS on Purchase of Immovable Property
"TRANSACTIONS in immovable properties are usually undervalued and underreported. One-half of the transactions do not carry the PAN of the parties concerned. With a view to improve the reporting of such transactions and the taxation of capital gains, I propose to apply TDS at the rate of one percent on the value of the transfer of immovable property where the consideration exceeds Rs. 50 lakhs. However, agricultural land will be exempt", said the Finance Minister in his 2013 Budget Speech. Consequently, Finance Act 2013 inserted a new Section 194-IA in the Income Tax Act with effect from 1.6.2013.
Now the CBDT has amended the Income Tax Rules to prescribe the procedure for paying the TDS to the Government.
1. The TDS deducted has to be paid to the Government by the 7th of the following month and shall be accompanied by a challan-cum-statement in Form No.26QB.
2. Payment has to be made electronically into the Reserve Bank of India or the State Bank of India or any authorised bank.
3. The deductor shall furnish the certificate of deduction of tax at source in Form No.16B to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No.26QB.
How to pay electronically and generate the challan and TDS Certificate? The Director General of Income-tax (Systems) WILL specify the procedure, formats and standards. Anyway you have time till 7th July to make the first payment under this new regime.
Now, when you bargain for a property worth more than Rs. 50 lakhs (in white), please inform the seller about the TDS liability. And don't forget to pay that deducted amount to the Government by the 7th of the next month. One of our Netizens had suggested that the collection of TDS should have been entrusted to the Registrar of immovable properties instead of burdening individual buyers with this burden.
Please also see TDS on purchase of immovable properties - A procedural nightmare?
CBDT Notification No. 39/2013, Dated : May 31, 2013