One more new complication by Government which will affect property buyer and seller

TDS on transfer of Immovable properties under section 194 IA of Income Tax Act, 1961

I hope all of you may be aware that Section 194-IA was inserted by the Finance Act, 2013 to provide for deduction of tax at source@1% on consideration for transfer of immovable property, other than agricultural land. However, no tax is to be deducted if the consideration for transfer of immovable property is less than Rs.50 lakhs.

Consideration for this purpose shall be taken as the total value of the property including land, construction and other charges but excluding refundable maintenance deposits.

Now for buyers of flats in Pune, the provision requires that the deduction of tax must be made by the transferee (customers) and each payment made by customer after 1st June 2013 will attract this provision. If some payments are made against the sales made prior to 1st June 2013, then only the receipts made after above date will attract TDS and not the earlier payments. However, irrespective of whether the payment is in respect of current purchases or the past purchase, if there is a payment made after 1st June 2013, TDS provision will apply.

TDS for the payment made during the month should be remitted to govt. account on or before 7th of subsequent month. If there is delay or default in remittance or deduction, the interest and penal provision as prescribed in the Income Tax Act will apply.

Challans have been prescribed by the tax department to be used by the customers for tax remittance; the copy of the same is attached here with. This is appearing as challan for ‘TDS on sale of property’ in the e payment portal of online tax payment service facility of nsdl. Customers have to use the following link for direct on line transfer of TDS payments by using the said challans.