Procedural Requirements for TDS on Real Estate Transactions

Finance Act 2013 introduced a concept of TDS on Real Estate transactions under Sec 194IA. Under this section, any person who purchases any immovable property (except agricultural land) for a consideration (Rs 50 lakh or more), shall be required to deduct tax at source (TDS) @ 1% of the amount paid to resident seller.

The Buyer of the property is required to deduct tax, at the time of credit of consideration to the account of seller or at the time of payment by any mode (cash cheque, demand draft etc.). A simple one pager form (Form 26QB) has been introduced for compliance of this section. BUYER OF THE PROPERTY IS NOT REQUIRED TO OBTAIN TAIN NO.

Buyer is required to furnish information in Form 26QB which includes:

- Full Name, Address and PAN of buyer and seller

- Address of the property

- Value of property

- Date of agreement / booking

- Amount paid / credited, payment in instalments or lump sum

- TDS etc.

Subsequently, buyer can make the payment online or offline, within 7 days from the end of the month in which TDS is deducted. TDS certificate (Form 16B) will be issued by the buyer to the seller within 15 days from the due date of payment of taxes. This can be generated from www.tdspc.gov.in

Notes:
- Immovable property includes land (except agricultural land), building or part of building

- Buyer includes foreign buyers

- Seller refers to resident sellers only. Non resident sellers covered under Sec 195

- Transactions between developers and individual assessee's are included

- Property held as stock in trade is also included

- Consideration received under compulsory acquisition of property (Sec 194LA) is excluded.

- Consideration limit of Rs 50 lakhs or more applies to all places - no distinction between rural/urban areas.

- In case of non deduction or short deduction, 1% interest per month 

- In case of non payment of taxes, 1.5% interest per month

 Download Form 26QB