TDS on Immovable Property

Clipped from: https://taxguru.in/income-tax/tds-immovable-property.html

TDS on Immovable Property – Sec 194IA

Conditions:

• Seller MUST be Resident.
• Buyer may be Resident or Non-Resident.
• Consideration of Property is Rs. 50,00,000 or more.

Note :- For the purpose of TDS calculation, Consideration paid for acquisition of immovable property under same or different agreement such as Club membership fee, Car Parking fee etc. which are incidental to transfer of immovable property shall also be considered.

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 Consideration Price and remit balance amount i.e 99% of Consideration price to the Seller/Transferor. In order to remove practical difficulties let us understand this provision with some examples.

1. When Both Buyer and Seller are Residents.

Mr. Sunil resident of Delhi sold his house property to Mr. Kamal of Noida for a consideration price of Rs. 60,00,000. Here Seller/Transferor of immovable property is Resident Indian, accordingly Buyer has to deduct 1% of Rs. 60,00,000 i.e. Rs. 60,000 and pay remaining amount i.e. Rs. 59,40,000 to seller in this case.

2. When Buyer is Non-Resident but Seller is Resident.

Mr. Vikram resident of Delhi sold his house property to Mr. Singh of New York for a consideration price of Rs. 60,00,000. Here Seller/Transferor of immovable property is Resident Indian, accordingly Buyer has to deduct 1% of Rs. 60,00,000 i.e. Rs. 60,000 and pay remaining amount i.e. Rs. 59,40,000 to seller in this case. Status of Seller must be resident to fall under this provision.

3. When Buyer is Resident but Seller is Non-Resident.

Mr. Abhay resident of Canada sold his Flat situated in Mumbai to Mr. Kailash of Chandigarh for a consideration price of Rs. 60,00,000. Here Seller/Transferor of immovable property is Non-Resident Indian, accordingly Provision of Sec 194-IA is not applicable in this case. Status of Seller must be resident to fall under this provision. However Provision of Sec 195 is still applicable here for the purpose of TDS.

4. When more than 2 seller in a transaction

Mr. Sameer and Mr. Amir resident of Delhi sold there house property to Mr. Suresh of Jaipur for a consideration price of Rs. 60,00,000. Both the seller has equal share in property, accordingly both seller are eligible to receive Rs. 30,00,000 each which comes less than Rs. 50,00,000 if we take both the seller individually. Still in this case Buyer has to deduct 1% TDS of amount paid to each seller i.e. Rs. 30,000 (1% of Rs. 30,00,000) because aggregate consideration exceeds Rs. 50,00,000.

5. If Stamp duty Value exceeds the consideration paid by buyer.

Mr. Sanjay resident of Delhi sold his house property to Mr. Kishore of Merrut for a consideration price of Rs. 45,00,000. However, the stamp duty value of said property is 55,00,000. Here buyer is not required to deduct TDS u/s 194-IA because total consideration does not exceeds Rs. 50,00,000.

How to deposit TDS in this case.

In case if 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 following details

• PAN details of buyer and seller.
• Residential address of seller and buyer as well as address of property purchased by buyer.
• Details of consideration paid for property.
• For more than one seller, 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 correct TDS to each seller.

After filling the relevant details buyer has to make payment after which challan is generated.

Buyer is also required to issue Form 16-B i.e. TDS certificate to the seller, which can be download from Traces portal by using credentials of buyer.

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(The author is practicing chartered accountant and can be reached out at ca.atif95@gmail.com, Mobile- 9811270863)