From June this year, any individual who purchases an immovable property, other than agricultural land, will have to deduct 1% tax at source of the amount paid to the seller, provided the amount is more than Rs 50 lakh.
The government inserted a new Section, 194-IA, in the Finance Act, 2013, to introduce the tax deduction at source (TDS) on real estate transactions. The onus of deducting the tax is on the buyer of the property at the time of crediting the amount to the seller. Also, Form 26QB has been introduced for compliance of this Section where the buyer has to give details like full name, address and his and the ownerís Permanent Account Number (PAN), mention the address of the property purchased, the value of the property, date of agreement or booking and the amount paid either in installments or in lump sum.
However, the buyer of the property is not required to obtain the Tax Deduction Account Number (TAN).
As per the norms, the buyer can make the payment of the TDS online or through cheque or demand draft within seven days from the end of the month in which the deduction is made. The buyer will issue the TDS certificate, which is Form 16B, to the seller within 15 days from the due date of payment of taxes. The buyer can generate the the certificate from the income tax portal, www. tdscpc.gov.in
ďIn order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time, it is proposed to insert a new Section 194-IA to provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a residential transferor, shall deduct tax, at the rate of 1% of such sum,Ē the Finance Act says.
Immovable property includes assets such as a house, commercial property and land purchased for commercial or residential purposes. While the rate of TDS on transactions of immovable property is 1%, in case the seller has not disclosed his