TDS on Purchase of Immovable Property
Introduction
When a buyer purchases an immovable property (other than rural agricultural land) from a resident seller, tax must be deducted under Section 194-IA at 1% of the sale consideration or the stamp duty value, whichever is higher. TDS applies only if the property value is Rs. 50 lakh or more.
Key Provisions
- Deductor:Any buyer responsible for paying the sale consideration.
- Deductee:The seller must be a resident of India. If the seller is a non-resident, TDS is applicable under Section 195.
- Threshold:TDS applies if the sale consideration or stamp duty value is Rs. 50 lakh or more.
- Consideration Basis:
o The threshold applies to the total property value, not individual payments by multiple buyers or sellers.
o If multiple buyers purchase a property jointly, TDS must be deducted based on the total value and apportioned accordingly.
- Rate of TDS:
o 1% of the higher of sale consideration or stamp duty value.
o If PAN is not provided, a higher rate under Section 206AA applies.
Time of Deduction
TDS must be deducted at the time of payment or credit of consideration, whichever is earlier.
Exemption from TDS
- No TDS on payment to Govt., RBI, Mutual Fund or any exempt Corporation.
- No TDS on payment to ‘Air India Limited’ by ‘Air India Holding Limited’ under a plan approved by the Central Government. [Notification No. 106/2021, dated 10-09-2021]
Compliance Requirements
- TAN Not Required:Buyers can use their PAN instead of obtaining a TAN.
- Deposit of TDS:
o The deducted tax must be deposited using Form 26QB within 30 days from the end of the month in which TDS was deducted.
- TDS Statement Filing:Form 26QB must be submitted electronically.
- TDS Certificate:Form 16B must be issued within 15 days from the due date of the TDS return.
Penalties for Non-Compliance
- Failure to Deduct/Deposit TDS:Liable for interest under Section 201 and penalty under Section 271C.
- Late Filing of TDS Statements:Fee of Rs. 200 per day under Section 234E, plus penalties under Sections 271H and 272A.
- Failure to Issue TDS Certificates:Subject to penalties under Section 272A.