TDS ON IMMOVABLE PROPERTY
TDS ON IMMOVABLE PROPERTY
(Sec 194IA as amended by Finance Act 2022)
Conditions to be fulfilled:
- Seller MUST be a Resident of India.
- Buyer may be Resident or Non-Resident.
- Consideration or Stamp Duty Value of such Property is Rs. 50,00,000/- or more.
Note:- It is important to note that for the purpose of TDS calculation, Consideration paid for the acquisition of immovable property under the same or different agreement such as Club membership fee, Car Parking fee, etc. which are incidental to the transfer of immovable property shall also be considered.
Important Note:- No TDS is required to deduct if the Consideration amount of immovable property as well as the Stamp duty Value of such property is less than Rs. 50,00,000/-.
Analysis of Provision :
If any person (Resident or Non-Resident) purchases any immovable property (Except Specified Agricultural Land which is not a capital asset) then such buyer is required to deduct TDS @ 1% of the total consideration price or the stamp duty value of such property, whichever is higher and remit the balance amount i.e 99% of the Consideration price to the Seller/Transferor. In order to remove practical difficulties let us understand this provision with some examples.
- When Both Buyer and Seller are Residents.
Mr. Rakesh resident of Mumbai sold his house property to Mr. Vikram of Noida for a consideration price of Rs. 70,00,000/-. Here Seller/Transferor of the immovable property is Resident Indian, accordingly, Buyer has to deduct 1% of Rs. 70,00,000/- i.e. Rs. 70,000 and pay the remaining amount i.e. Rs. 69,40,000 to the seller in this case. - When Buyer is Non-Resident but Seller is Resident.
Mr. Shekher is a resident of Delhi and sold his house property to Mr. Aakash of New York for a consideration price of Rs. 70,00,000/-. Here Seller/Transferor of immovable property is Resident Indian, accordingly, Buyer has to deduct 1% of Rs. 70,00,000/- i.e. Rs. 70,000/- and pay the remaining amount i.e. Rs. 69,40,000/- to the seller in this case. The status Seller must be a resident to fall under this provision. - When Buyer is Resident but Seller is Non-Resident. Mr. Abhishek resident of Canada sold his Flat situated in Mumbai to Mr. Kiran of Chandigarh for a consideration price of Rs. 70,00,000. Here Seller/Transferor of immovable property is Non-Resident Indian, accordingly, Provision of Sec 194-IA is not applicable in this case. The status Seller must be a resident to fall under this
provision. However, Provision of Sec 195 is still applicable here for the purpose of TDS and here TDS rate is 20% plus a surcharge. - When more than 2 sellers in a transaction
Mr. Akshay and Mr. Anshul residents of Delhi sold their house property to Mr. Nishant of Jaipur for a consideration price of Rs. 70,00,000. Both sellers has an equal share in the property, accordingly, both sellers are eligible to receive Rs. 35,00,000 each which comes to less than Rs. 50,00,000 if we take both sellers individually. Still, in this case, Buyer has to deduct 1% TDS of the amount paid to each seller i.e. Rs. 35,000 (1% of Rs. 35,00,000) because aggregate consideration exceeds Rs. 50,00,000. - If Stamp duty Value exceeds the consideration paid by the buyer.
Mr. Ramesh resident of Delhi sold his house property to Mr. Kaushal of Merrut for a consideration price of Rs. 45,00,000. However, the stamp duty value of the said property is 52,00,000. Here buyer is required to deduct TDS @ 1% u/s 194-IA on the Stamp Duty Value amount i.e. Rs 52,000 (1% of 52,00,000) in this case because the stamp value of the property exceeds Rs. 50,00,000.
How to deposit TDS in this case? In case TDS is deducted u/s 194 IA, then the buyer has to file Form 26QB in order to pass credit of TDS to Seller.
Buyer has to provide the following details
PAN details of buyer and seller.
Residential address of the seller and buyer as well as the address of the property
purchased by the buyer.
Details of consideration paid for the property.
Date of agreement and payment Plz. note that If more than one seller, the buyer should file separate Form 26QB for each seller and provide separate consideration paid to each seller in every Form 26QB in order to pass the correct TDS to each seller.
After filling in the relevant details buyer has to make a payment after which a challan is generated.
The buyer is also required to issue Form 16-B i.e. TDS certificate to the seller, which can be downloaded from the Traces portal by using the credentials of the buyer.
Due Date to File 26QB TDS-Cum-Challan Statement
Every person responsible for the deduction of tax under section 194-IA shall furnish a challan-cum-statement in Form No. 26QB electronically within 30 days from
the end of the month in which the deduction is made.
