Section 194 IA deals with TDS on immovable property under Incometax.In order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time Government has introduce Section 194-IA.
Some important provisions or points related to section 194IA is as under:
- TDS to be deducted @ 1% of the total sale consideration. However, TDS needs to be deducted @ 20%, if the deductee does not furnish PAN.
- No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than Rs. 50,00,000/-.
- Online Payment of TDS through challan cum statement on Form 26QB through NSDL Website:- Tax so deducted should be deposited to the Government Account through any of the authorized bank branches using the e-Tax payment option available at NSDL. TDS so deducted shall be paid within 30 days from the end of the month in which TDS was deducted.
- TDS certificate must be issued to the deductee in Form 16B within 15 days from the due date of deposit of TDS.
- The deductee shall be entitled to avail credit for the entire amount of TDS deducted during the financial year in its Return of Income.
- TDS u/s 194-IA shall be deducted even if the transaction takes place before 1st June, 2013 and payment is made after 1st June, 2013.
- However, if credit to the account of the transferor has been given before 1st June, 2013 then provisions of section 194-IA will not apply, even if payment has been made after 1st June, 2013. (Payment or credit whichever is earlier)
- Threshold limit of Rs. 50 Lacs will be applicable to each & every property separately. Property can be either of residential or official purpose.
- In case any installment becomes due before 1st June, 2013 but paid after 1st June, 2013 and the transferee has not credited the same to the account of the transferor before 1st June, 2013, then provisions of section 194-IA shall apply and TDS will be deducted on the amount paid after 1stJune, 2013.
- In case of installment system of payment, TDS is required to be deducted on all such installments individually which fall due after 1stJune, 2013 but only on principal portion and not on the interest or penalty portion.
- The threshold limit of Rs. 50 Lacs is with reference to each property. If a property transaction involves more than one buyer and share of each buyer in the property is less than Rs. 50 Lacs but the value of the property in aggregate is more than Rs. 50 lacs then provisions of section 194-IA will be applicable. In such case, TDS will be deducted and deposited by each buyer in respect of their respective share in the property.
- Similarly, in case of a property transaction involving more than one seller, TDS will be deducted in respect of amount paid to each seller and their respective PAN will be quoted while making payment through Form 26QB.
- TDS provisions of section 194-IA shall apply only if the transferor is resident in India.
Procedure of filing Form 26QB:
- Firstly one has to go to the site of Tin.nsdl in following link: https://onlineservices.tin.egov-sdl.com/etaxnew/tdsnontds.jsp
- Once this link is opened click on Form 26QB (Payment of TDS on sale of property).
- Select (0021) in case of non corporate payer and 0020 in case of corporate payer.
- On filling in the various details called for in that form, click on ‘Proceed’ at the bottom of the page, this will then take you to the next page, which will give you the option to select your bank.
- Once you select the bank, then login using the normal online process for your bank. Once the payment is made the bank will let you print challan 280 with a tick on (800), which is payment of TDS on sale of property.
- Take a printout of the challan and keep the same for your records and for the builder/seller if required. This is the first phase of the process.
- There is also alternative mode payment if one does not have online banking registration.
- One can fill in the form as above & while proceed there is option of “Subsequent payment through bank”
- Choose that & it allows you to generate online receipt for Form 26QB with Ack no.
- The same can be valid for 10 days from the date of generation online.
- The same is to be carried at the authorized bank (list is given on the TIN.nsdl site) with cheque.
- Bank will do online payment for you & generate Challan.