Contact us

TDS On Property Purchase- what it means and how important it is?

Date Icon 24 May 2018
Default Image

Chidambaram, the former Union Finance Minister introduced TDS on property purchase in the budget 2013-14 on all immovable property of market value over 50 Lakhs under section 194 IA of the income tax act. Effective from 1 June 2013 onwards, the purpose of TDS on property purchase was to improve those number of transactions which are largely undervalued or unreported. On an estimate, almost half of the transactions are made without even any PAN card number provided by the concerned parties. The buyer, in this case, has to deduct TDS on property from the estimated property price and should be deposited along with the Income tax. Form 26QB is the concerned form that has to be furnished along with other details.

Who Has To Pay and What’s The Amount To Be Paid?

TDS @1% has to be deducted at any purchased immovable property. However agricultural property doesn’t fall into this category. If the property’s market value or the amount paid to the seller is less than 50 Lakhs, then also there’s no need to deduct TDS in such cases. I case the PAN is not quoted in such property deal, then the TDS must be deducted at the rate of 20%.

The TDS sum should be released within 7 days from the month end at which the deduction has been made. Below is the list of banks who’re authorized to remit this electronically:

  1. Allahabad Bank
  2. Andhra Bank
  3. Axis Bank
  4. Bank of Baroda
  5. The Bank of India
  6. Bank of Maharashtra
  7. Canara Bank
  8. Central Bank of India
  9. Corporation Bank
  10. Dena Bank
  11. HDFC Bank
  12. ICICI Bank
  13. IDBI Bank
  14. Indian Bank
  15. Indian Overseas Bank
  16. Jammu & Kashmir Bank
  17. Oriental Bank of Commerce
  18. Punjab and Sind Bank
  19. Punjab National Bank
  20. State Bank of India
  21. Syndicate Bank
  22. UCO Bank
  23. Union Bank of India
  24. United Bank of India
  25. Vijaya Bank

The TDS form 26QB along with TDS sum can be paid online on the official websites of the above-mentioned banks.

It doesn’t matter whether the property is residential, commercial or industrial apart from the agricultural land which has been relaxed from TDS deduction. TDS sum is deducted from the total TDS payment made to the seller excluding GST.

The Complete Procedure to Pay TDS on Property Purchase

The relevant form 26QB can be filled online with an online payment getaway or you can consider paying it offline along with the printed form in any of the banks mentioned above.

Here’s the list of documents that has to be furnished along with your 26QB form.

  1. Pan No. Of Both The Parties (i.e Seller And Buyer)
  2. Residential Address Of The Seller And Buyer
  3. Address Of The Selling Property
  4. Total Transaction Value
  5. Amount Paid
  6. Date On Which The Agreement Has Been Made

The option of TDS online payment or offline TDS payment will be given on the website itself. After furnishing all the details if you’re choosing the offline mode, you have to take a print of the 26QB form which should then be deposited in the bank along with the TDS payment.

Frequently Asked Questions On TDS On Property Purchase

Ques.1 Is it is mandatory to pay for Tax Deduction Account Number (TAN) if you’re applying for TDS?

No, it is not mandatory in case of TDS. Buyer and seller both are exempted from paying TAN which is otherwise mandatory in wherever a person deducts tax.

Ques.2 What if there are more than 1 buyer or seller?

In case of more than 1 buyer or seller the individual purchase price is less than 50 Lakhs but based on the aggregate value of the deal which if goes equal or above 50 Lakhs, TDS has to be paid.

In case of more than one buyer or seller, TDS on property purchase form 26QB has to be submitted separately by each seller and buyer combination.

For example, in case of 1 buyer and 2 sellers- 2 forms have to be submitted.

Ques.3 What is the penalty in non-depositing TDS on property purchase?

In case of not furnishing form 26QB or payment of TDS, a penalty of 1 Lakh can be levied by the income tax officer. Also, there is a provision of paying interest at the rate of 1.5% per month.

Points That You Must Keep In Mind for TDS on Property Purchase

  • In case both buyer and seller have not paid income tax in the purchase year, a notice from Income tax office will be issued. However, this payment is not mandatory.
  • If buyer or seller failed to furnish their PAN number, the TDS on property purchase will be issued at the rate of 20% of the transaction value.
  • The main objective of this rule is to identify those properties and transactions that mostly goes undervalued or for properties which are not registered.

So, this is the TDS on property purchase how important it is.

Join the Newsletter