Tax

How much TDS is deducted on sale of Property

LegalKart Editor
LegalKart Editor 03 min read 337 Views
Last Updated: Feb 08, 2024
TDS on sale of Property

The India real estate market size reached US$ 256.8 Billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 780.6 Billion by 2028, exhibiting a growth rate (CAGR) of 9.2% during 2023-2028. Imagine if the number of transactions involving the acquisition and selling of real estate rose extremely quickly. Additionally, the budget for 2022 focused heavily on capital investments. It indicates that the government is also investing in the growth of the infrastructure. Since buying and selling real estate is a highly typical transaction, sellers and buyers often wonder what the tax implications will be. Several transactions, including the sale of real estate, are subject to tax deducted at source. Regardless of whether the Seller will experience capital gains, this TDS must always be subtracted. If the seller believes that more TDS has been deducted than necessary, he may request a refund while completing his income tax return. 

 

AMOUNT

As stated in Section 194-IA of the income tax code, TDS on the sale of the property is applicable. A buyer is required to withhold and deposit 1% of the transaction cost as TDS on the sale of property under Section 194-IA of the Income-Tax Act if the property's worth exceeds Rs 50 lakhs. In the event that there is a discrepancy between the stamp duty value and the actual sale value of the property, Section 194-IA does not indicate which amount should be taken into account for calculating the TDS on the property sale. No tax is to be deducted under section 194-IA if the consideration paid for the transfer of immovable property and the stamp duty value of such property are less than Rs 50 lakhs. Regardless of whether the property under discussion is a building, a vacant plot of land, or another sort of property, this TDS must be withheld from all types of property transactions. Regardless of whether a property is residential, commercial, or industrial, TDS must be withheld. Except for agricultural land, TDS must be deducted from all forms of real estate transactions. TDS on the Sale of Property by NRI would be levied even if the Transaction Value was less than Rs. 50 lakhs. TDS on the Sale of Property by NRI would be 20% + Surcharge + Cess.

 

GENERAL POINTS: 

  • It is important to note that property cannot be registered below government-set circular rates, which are used to determine how much stamp duty will be charged on the sale. The property's market value may be greater or less than the amount subject to stamp duty. According to the notification made on February 1, 2022, the buyer will be required to determine TDS on a property transaction based on a higher valuation in such a situation.

  • According to the Income Tax Act, all TDS deductions must be deposited with the government on or before the designated TDS deposit due date. Also required is the application for a TAN No. under Section 203A from anyone who deducts TDS. When deducting any TDS, as well as when submitting returns and depositing TDS with the government, this TAN No. must be provided. 

  • The addition of this new section 194IA for the deduction of TDS on Property would have put the buyer of the property through unneeded difficulty because he would have been required to apply for a TAN No. before buying any property. The government has added a new sub-section (3) to Section 194IA that stipulates that a person deducting TDS on Property must not necessarily have a TAN No. to alleviate any such burden.

  • According to Notification No. 30/2016 from April 29, 2016, the TDS that the buyer deducted while paying the seller must be deposited within 30 days of the end of the month in which the deduction was made. For instance, if TDS was deducted in April, it must be deposited with the government by May 30. The other months are all the same as well.

  • Form 26QB, which must be presented at the time of payment, must contain all information pertaining to the transaction and TDS on the Property. Details in this form can only be provided online through the following link and cannot be provided manually.

  • The buyer of the property must also give the seller of the property Form 16B in relation to the TDS deducted and deposited with the government after submitting the TDS. After 15 days from the end of the month in which the payment has been made, Form 16B may be downloaded from the website of the Centralized Processing Cell of TDS (CPC-TDS), which is located at www.tdscpc.gov.in. 

 

POINTS THE PROPERTY BUYER SHOULD KEEP IN MIND INCLUDE: 

  • Depending on the date of payment or credit to the seller, deduct tax at a rate of 1% per cent from the selling consideration. 

  • Obtain the seller's Permanent Account Number (PAN) and cross-check it against the original PAN card. 

  • PAN of both the seller and the buyer must be provided in the online form in order to provide information about the sale transaction. 

  • There is no online option for correcting inaccuracies, so be careful while quoting the PAN or other details in the online Form. You must contact the Income Tax Department for the purpose of correction.

 

REMINDERS FOR THE PROPERTY SELLER INCLUDE THE FOLLOWING: 

  • Give your PAN to the buyer so they can give your TDS information to the income tax department. 

  • Verify the Purchaser’s taxes deducted in your Form 26AS Annual Tax Statement. 

Ask a Lawyer

Hello
Welcome to LegalKart
Please tell us what legal issue you are facing?
00:00
LegalKart LegalKart

Need Help? I won't keep you waiting

LegalKart

3

LegalKart
3

Ask A Lawyer

Ask now and get answer within two hours from expert lawyers.

LegalKart