Frequent question: Is TDS applicable for immovable property?

As per the Finance Act of 2013, TDS is applicable on the transfer of immovable property, wherein the consideration of the property exceeds or is equal to Rs 50 Lakhs.

How is TDS on immovable property calculated?

TDS is required to be deducted @ 1% on the amount payable to the seller of property. If the PAN number of the seller is not available then the TDS is required to be deducted @ 20%. No tax is required to be deducted where the total amount of consideration (selling price of property) is less than Rs. 50 lakhs.

What is TDS immovable property?

Any person purchasing immovable property (other than rural agricultural land) of Rs. 50 lac or more is required to deduct tax @1% from the payment made to seller. This new rule (Section 194IA of the Income Tax Act) was introduced by Finance Act, 2013.

What is TDS rate on property?

The TDS rate for property purchase is 1%. Surcharge and secondary and higher education cess (SHEC) need not be added. If the property seller does not have PAN or if PAN is not quoted, then TDS must be deducted at the rate of 20%.

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Who pay TDS while buying property?

Buyers have to deduct and pay TDS to the government on property valued over Rs 50 lakhs. The responsibility to deduct and submit the TDS lies on the buyers and not on the seller.

Is TDS mandatory for property sale?

TDS has to be deducted by the buyer on the entire amount that is paid or credited to the seller when the amount exceeds Rs 50 lakh. For example, if a property is bought for Rs 70 lakh then TDS has to be deducted on the entire amount–that is Rs 70 lakh, not on just the Rs 20 lakh that exceeds the Rs 50 lakh threshold.

What happens if TDS is not deducted on purchase of property?

The penalty of not paying TDS on immovable property can be up to Rs. 1 lakh under Section 271H. To avoid penalty, you can pay the TDS, interest amount and late payment fee as soon as you receive a tax notice.

How do I show immovable property in ITR?

If you have purchased a property then it is not required for you to declare it in the ITR. If your annual income crosses Rs. 50 lakhs after tax deduction then you will have to declare your assets and liabilities in the ITR which must be including the property you purchased.

Is agricultural land immovable property?

3.2 Immovable Property: Immovable property means any land (other than agricultural land) or any building or part of building.

Can seller pay TDS on property on behalf of buyer?

The responsibility to deduct TDS on Property Sale rests solely with the Buyer even if it is financed by Home Loan or property is purchased from the builder. In some cases, Bank can deduct TDS on property from disbursement and help in depositing TDS on buyers behalf but they are not obliged to do so.

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Is TDS on property reduced?

Here are the required details as mentioned under Section 194-IA of the Income Tax Act: The buyer will deduct TDS at the rate of 1% of the total sale value. If property valuation is less than 50 lakhs, then there is no deduction in TDS payment on the sale of the property. The buyer can pay in instalments too.

What is the difference between 194i and 194ib?

Q1: What is the difference between section 194-I and 194-IB? Answer: Section 194-I is applicable only if tenant being Individual or HUF who is liable for Tax Audit in previous year and Section 194-IB is applicable only if tenant being Individual or HUF who is not liable for Tax Audit in previous year.

How is TDS calculated?

The employer deducts TDS on salary at the employee’s ‘average rate’ of income tax. It will be computed as follows: Average Income tax rate = Income tax payable (calculated through slab rates) divided by employee’s estimated income for the financial year.

Can TDS be paid by seller?

TDS needs to be paid on the amount paid/payable to the seller. The buyer can make the payment using the e-tax payment option. The tax payment can be made on the net banking portal or by visiting authorised bank branches. Once the payment is made, an acknowledgement number is generated.

How can I claim TDS amount?

You can claim your TDS refund by following the steps mentioned below:

  1. Step 1: File your income tax returns in the case where your employer has deducted extra amount over your actual tax liability under the head of TDS.
  2. Step 2: Fill in the required fields with the name of your bank, your bank account number, and IFSC.
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Who is liable to deduct TDS?

When should TDS be deducted and by whom? Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited.