If you are buying a property whose value is more than Rs.50 lakh, then the buyer has to deduct TDS on the property and can pay TDS on sale of property online. Let us see how you can pay it online.
According to Section 194IA, if you are buying an immovable property (other than agricultural land) and value is equal to more than Rs.50 lakh, then the buyer must deduct the TDS and pay it to Government. In this post, we concentrate on how we can pay TDS on sale of property online option.
Meaning of Agricultural land for Income Tax purpose?
As I said above, agricultural land will not be considered for deduction of TDS under Section 194IA. Hence, first, let us understand the meaning of agricultural land as per IT act.
Any area which is outside the jurisdiction of municipality or cantonment board having a population of 10,000 or more and also which does not fall within the distance (to be measured aerially) given below-
# If the population of municipality/cantonment board is more than 10,000 but less than 1 lakh-2 Kms from local limits of municipality/cantonment board.
# If the population of municipality/cantonment board is more than 1 lakh but less than 10 lakh-6 kilometers from the local limits of municipality/cantonment board.
# If the population of municipality/cantonment board is more than 10 lakh-8 kilometers from the local limits of municipality/cantonment board.
Features of IT Section 194IA
Before proceeding further, let us understand the conditions and features of Section 194IA.
- Property for this purpose means any immovable property but other than agricultural land.
- The buyer has to deduct TDS on the sale of property. Hence, it is the responsibility of buyer but not the seller to deduct the TDS.
- TDS rate for this purpose is 1%. However, if the seller does not have PAN, then the TDS rate is 20%.
- TDS will be applicable when the sale of the property is more or equal to Rs.50 lakh.
- TAN is not required to deduct TDS in the case of Section 194IA.
- Deducting TDS is the responsibility of the buyer. He has to deduct TDS at the time of payment or at the time of giving credit to the transferor, whichever is earlier.
- Hence, if the buyer is paying the lump sum, then the whole TDS should be deducted at the time of payment. However, if you applied for the home loan, then some banks assist you to deduct TDS before releasing the amount or installment to the buyer. As the buyer is the responsible person to deduct TDS, it is advisable to inform the bank for deducting TDS.
- If you are paying in installments, then TDS should be deducting during each such installments.
- TDS on property sale is deducted on total consideration irrespective of the number of buyers or sellers and their respective contribution in the property. If the property value is more than Rs.50 lakhs than irrespective of the number of buyer or sellers, TDS will be deducted by Buyers.
- TDS should be on the entire amount but not on the only exceeding amount of Rs.50 lakh. For example, if the sale value is Rs.60 lakh, then the TDS is on whole Rs.60 lakh not on Rs.10 lakh only (Rs.60 lakh-Rs.50 lakh).
- TDS has to be deposited along with Form 26QB within 7 days from the end of the month in which TDS was deducted.
- After depositing TDS, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.
- Hence, buyer need Form 26QB and seller need Form 16B.
What are the information required to pay TDS on sale of property online?
# Buyer- Name , PAN number and Complete Address of the buyer. Buyer is called Transferee. If there are multiple buyers then details of all such buyers.
# Seller- Name , PAN number and Complete Address of the seller. Seller is called Transferor. If there are multiple sellers then details of all such sellers.
# Property– Address of the property.
# Transaction details- Date of Agreement, Total Value of Consideration,Payment Type (In Lump Sum or installment) or payment mode.
What if the buyer is NRI?
What is the buyer is NRI and seller is residentSS? Indian? Whether the TDS need to be still deducted by NRI buyer? The answer is yes. Because in this case seller is resident Indian. TDS on property applies to resident Indian seller not to the buyer. Hence, the buyer has to deduct TDS.
What if the seller is NRI?
If the seller is an NRI, then Section 194IA will not be applicable. In such cases, Sec. 195 will come into the picture. Buyer has to deduct 20.66% TDS on the sale price of the property if the capital gain is long-term. In the case of short-term capital gain, TDS will be 33.99% irrespective of income tax slab of NRI. Buyer will deposit TDS with Income Tax Department. TDS is applicable even if the value of the property is less than Rs.50 lakhs.
How to pay TDS on sale of property online?
Here, I will explain you about how you can pay TDS on sale of property online. However, you can pay the TDS offline by visiting the authorized banks. The list of authorized banks is available at NSDL Website.
Below are the steps to pay TDS on sale of property online.
# Visit NSDL Home Page.
# Then Click on the option “TDS on sale of property’ and under TDS on sale of property, Click on the option ‘Online form for furnishing TDS on property’.
# Select Form for Payment of TDS on sale of Property and click on the option “TDS on sale of property”.
# Fill the details as shown below.
# Next step is to provide complete details of buyer and seller. Also, provide the property details. The screen looks like below.
# Next is to submit the total amount buyer paying to the seller and also the TDS amount deducted on that.
# Next step is to chose the payment option, bank, date of the payment and click on proceed.
# Once you click on the tab of proceed, you will be redirected to the confirmation page where all details you entered already will be displayed once again. Verify the details for any correction. Then click on the tab of CONFIRM.
# On confirmation a 9 digit unique acknowledgement number will be generated. This you have to save for future usage.
# Next click on tab called “Submit to Bank”. On clicking on Submit to the Bank, deductor will have to login to the internet banking site with the user ID/ password provided by the bank for internet banking purpose. Then enter bank details at bank site. Once the payment is successful, then counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.
What is Form 26QB?
Form 26QB is a challan used if the sale consideration of the property exceeds or is equal to Rs 50 lakh, then TDS at 1% should be deducted by the buyer of the property at the time of making payment of sale consideration.
What is Form 16B?
Form 16B is the TDS certificate to be issued by the buyer to the seller as a proof of the taxes deducted on the sale of immovable property and deposited into the Government Account.
How to download Form 26QB (for the buyer) and Form 16B (for the seller)?
Once you do the payment procedure as above, then the next step is to take the proof of TDS for buyer and seller. For the buyer it is Form26QB and for the seller, it is Form 16B. You can download Form 16B after two days of paying the TDS.
You have to login to Traces site. In this Traces portal, go to the “Download” tab click on “Application for Request of Form 16B”. For the Form 26QB, click on Application for Request of Form 26QB. For finishing this process, fill the 9-digit acknowledgment number and the details in Part F of Form 26AS. This will generate an application request number and give you an application. After a few hours, the request will be processed. Click on the “Downloads” tab and select “Requested Downloads” from the drop-down menu.
What is the penalty if the buyer of property not deduct/deposit the TDS?
As I said above, it is the responsibility of the buyer to deduct TDS and deposit with IT Department. Hence, if there is a failure to do so, then there are two types of penalties.
1) If the buyer failed deduct TDS-Penalty of 1% per month (or part thereof) from the date on which tax was deductible to the tax is actually deducted.
Let us take an example for the same. Mr.X purchased a property worth Rs.60 lakh on 20th August, 2016. He failed to deduct TDS. Finally, deducted the TDS on 10th October, 2016. The TDS at 1% on this transaction is Rs.60,000. Here, the delay is for 3 months August (part of a month is considered as full one month), September and October (part of a month is considered as a full one month). Therefore, penalty @ 1% per month on Rs.60,000 for 3 months will be calculated as below.
Rs.60,000 x (3 x 1%)=Rs.1,800.
2) If the buyer failed to deposit TDS amount with Government-Penalty of 1.5% per month (or part of thereof) from the date on which tax was collectible to the date of actual deposit.
Let us take an example for the same. Mr.X purchased a property worth Rs.60 lakh on 20th August, 2016. He deducted the TDS. But failed to deposit the same in Government before 7th September, 2016. Finally, deposited the TDS on 10th October, 2016. The TDS at 1% on this transaction is Rs.60,000. Here, the delay is for 3 months August (part of a month is considered as full one month), September and October (part of a month is considered as a full one month). Therefore, penalty @ 1.5% per month on Rs.60,000 for 3 months will be calculated as below.
Rs.60,000 x (3 x 1.5%)=Rs.2,700.
Late Fee Penalty for Applicable
Along with above penalty of interests, the late fee of Rs.200 per day will be levied subject to the maximum of the amount of tax is to be levied for late filing of TDS .
Let us tax the same above example, if Rs.60,000 TDS was deducted TDS on 20th August, 2016. But failed to deposit the same in Government. Finally, deposited the TDS on 10th October, 2016. But the same is to be deposited on or before 7th September, 2016. Then the penalty is calculated as below.
The number of days from 20th August, 2016 to 10th October, 2016=51 days.
Late fee=51 x Rs.200=Rs.10,200 or Rs.60,000 (TDS amount) whichever is lower. Hence, the late penalty will be Rs.10,200.
Hope this much information is enough for understanding the process on how to pay TDS on sale of property online.