How To Deduct TDS on Property Sale u/s 194IA?

TDS on property sale is a very good method of controlling the developments in the real estate sector. Last few years, there has been a huge number of changes in this sector. Most importantly, all the records have been started to be computerized. PAN number is a must for all transactions and Supreme Court holds the authority to ban the transactions, if the same is not done. It has been seen, that in spite of these efforts, many transactions either do not contain PAN details or remain undervalued or under-reported. To solve this problem, the government introduced section 194IA in the 2013-14 Union Budget.

No TAN Number required to deduct TDS while purchasing Property

Under the above section, it has become mandatory to deduct TDS on property sale above Rs 50 lac. From effect June 01, 2013 1% of the total transaction is deducted except agricultural lands. This is also known as Withholding Tax. Here, a problem arose. To deduct TDS and deposit it with the government, one needs to obtain TAN as a buyer. This is necessary for deduction and depositing TDS with Govt. Treasury. Later the subsection was introduced, stating that TAN is not required at any stage.

Key Issues to Consider regarding TDS to be deducted while Purchasing Property

• The responsibility of deducting the TDS on property sale lies solely with the buyer. This is valid even if the property is financed by a home loan or if the property is purchased from a builder. The bank can also deduct the TDS on behalf of the buyer and deposit it but it is not mandatory for them.
• The TDS on property sale should be deposited with government by the buyer within 7 days from the end of the month in which the TDS deduction takes place.
• It is necessary to state both the buyer’s and the seller’s PAN while depositing TDS on a property sale.
• Non-deduction or non-deposition of TDS will lead to heavy penalty.
• TDS should be deducted at the time of payment to the seller and if it is done in installments then for each installment, the TDS should be deducted.
• The TDS on property sale can be deposited with the government by filling the form 26QB challan.
• All details pertaining to property transaction should be furnished in form of 26QB.
• One can use https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp for depositing the TDS online.
• After the TDS is deposited for property sale, the government will issue a TDS certificate to the seller. This is also available online after 10-14 days from the date of deposition.