One of the major sources of collection of Direct Taxes in India is by way of Tax Deduction & Tax Collection at Source (TDS & TCS). It has become a key revenue collection method for the Central Board of Direct Taxes (CBDT). A person (deductor) who is liable to make payment of specified nature to any other person (deductee) has to deduct tax at source and remit it into the account of the Central Government. Almost more than 40% of direct tax collection is contributed by TDS and hence more reliance is placed by authorities across the world on collection through TDS by tapping and covering more and more areas under the net of TDS.
We are fully automated to take care of your TDS/TCS Compliances.
TDSÂ Compliances
Following are some of the compliances that we help companies with:
❯ Obtain Tax Deduction and Collection Account Number and quote the same in all the documents pertaining to TDS.
❯ Deduct the tax at source at the applicable rate.
❯ Pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard)
❯ File the periodic TDS statements, i.e., TDS return (by the due date specified in this regard)
❯ Issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard)
TDS On Buying Of Properties
In order to check the rampant use of black money in immovable property transactions, the government of India has introduced a law, wherein, the purchaser of a property has to deduct tax at source, while paying the seller for his property.
Properties that are covered:
Section 194IA of Income Tax Act, requires a buyer to deduct tax at the rate of 1% of the sale consideration, if the value of the transaction is Rs 50 lakhs or more. This section covers residential property, commercial property, as well as land. However, transactions pertaining to the purchase of agricultural land, are not covered under this provision.
When to deduct the TDS and how to pay it:
The purchaser of the property has to deduct the TDS, either at the time of executing the conveyance deed, or at the time of payment of advance in case any advance is being paid before the execution of the conveyance deed. The buyer has to deposit the TDS amount to the credit of the central government, within 30 days from end of the month in which the tax is so deducted. For payment of the TDS and furnishing other particulars, you have to fill in Form-cum-challan No 26QB. If a property has more than one buyer and/or seller, you need to fill in separate Form 26QB for each set of buyer and seller. The details of all buyers and sellers, have to be submitted in each Form 26QB.
Details required for payment of the TDS:
It is the buyer who has to comply with the requirement of deducting TDS and paying the amount to the central government.
Generally, every person who is responsible for deducting TDS has to obtain a TAN (tax deduction account number). However, in case of TDS on immovable property, the buyer does not have to obtain the TAN. You need to provide details like name, address, PAN, mobile number and email id of the seller as well as buyer, in Form 26QB. You also need to provide the complete address of the property, along with the date of agreement, total value of consideration, date of payment, etc.
The buyer should ensure that the PAN of the seller is correct. Otherwise, the seller will not be able to get the credit for tax deducted by the buyer, as the credit shall flow on the basis of PAN card details furnished in Form 26QB.
The TDS can be paid online or deposited offline, by tendering the physical challan to an authorised bank. The bank will then update the details on the income tax department’s website. Once the TDS has been deposited, the buyer has to download the TDS certificate in Form No 16B, from the website of the Income Tax Department and furnish it to the seller within 15 days.
Lower deduction or nil deduction of TDS:
Some TDS provisions provide for the payee to either approach the income tax officer for issue of a certificate, so that the payer shall deduct tax at a lower rate or nil rate, or in some cases the payee can just furnish a declaration for nil TDS. However, there is no such provision for TDS on immovable property. The buyer has to mandatorily deduct tax at source, where the consideration exceeds Rs 50 lakhs, in respect of each set of buyer and seller.
FAQs
How to pay TDS on property?
The purchaser of the property has to deduct the TDS.
How to pay TDS on sale of property?
It is the buyer who has to comply with the requirement of deducting TDS and paying the amount to the central government.
How to pay TDS on purchase of property?
For payment of the TDS and furnishing other particulars, you have to fill in Form-cum-challan No 26QB.
How to deduct TDS on purchase of property?
Section 194IA of Income Tax Act, requires a buyer to deduct tax. This section covers residential property, commercial property, as well as land.
