Buying house property of Rs. 50 lakhs or more? Don't forget to deduct TDS on payment!

Cases where these provisions don't apply:

• In case of purchase of any rural agricultural land
• Where the sale consideration of the property is less than Rs 50 Lakh
• Where the purchase is made by a non-resident person.

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Mark a note of these points as well:

1. If the seller doesn't have PAN, then TDS will have to be deducted @ 20% instead of 1%;
2. If the price of the property is more than Rs. 50 lakhs, TDS is to be deducted on the whole amount, not only on the amount in excess of Rs. 50 Lakhs. (For e.g., if the total price of the property is 60 lakhs, TDS to be deducted = 1% of 60 lakhs, i.e., 60,000)
3. If payment is made in different installments, TDS @ 1% is to be deducted on each installment. (For e.g., if the total price of the property is Rs. 60 lakhs, but it is payable in 6 installments of 10 lakhs each, TDS to be deducted = 1% of 10 lakhs, i.e., 10,000 on each payment of installment);
4. TDS is to be deposited to the Government within 7 days from the end of the month in which TDS is deducted;
5. Payment can be made online through the TIN-NSDL website;
6. Return is to be filed in Return-cum-challan form 26QB wherein details of both seller and buyer, details of the property, total consideration, amount of TDS deducted & deposited, amount and date of payment, etc. details are to be mentioned
7. Form 16-B is to be downloaded within 15 days after submitting 26QB, and it is to be provided to the seller for his records.

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Consequences in case TDS is not deducted or deposited on time:

If you don't deduct TDS at the time of payment/ credit, whichever is earlier, or don't deposit TDS within 7 days from the end of the month in which TDS is deducted, then you have to pay interest on the amount of TDS.

In case of non-deduction of TDS, interest @ 1% of TDS amount is to be paid from the date on which TDS should have been deducted to the date on which TDS has been deducted;

In case of non-timely deposition of TDS, interest @ 1.5% of TDS amount is to be paid from the date of deduction of TDS to the date on which TDS has been deposited.

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Failure to file/Late filing of Form 26QB:

If the buyer fails to file Form 26QB or, in the case of late filing of Form 26QB, the buyer will have to pay a fee of Rs 200 for each day till such failure continues, subject to a maximum of TDS amount.

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Tax Credit to Seller

The seller will be eligible to claim a tax credit for the TDS deducted by the buyer at the time of filing of his Income Tax Return. This amount will also be reflected in 26AS of the seller as well as the buyer.

So before buying a house property, ensure that you are well versed with the relevant tax provisions. Write to us in case of any query/ feedback, and we'll ensure that you duly comply with all provisions so that you can enjoy your dream house without any worry!

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