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Buying property? TDS deduction is compulsory

As you may be aware, if you are buying an immovable property, you have to deduct TDS from the amount payable to the seller and deposit it with the Government.

This is a mandatory requirement as per the Income Tax Act.

Well, the mention of Income Tax need not scare you. The process is extremely simple and straightforward. It can be completed within a matter of minutes.

For your quick reference, I am listing below the key provisions with regard to TDS on Property.

1. Property purchased shall include land, any building or part of a building.

2. Purchase of agricultural land is, however, excluded from these provisions of TDS on property purchase.

3. Properties of value less than Rs.50 lakhs are also excluded from these TDS provisions.

4. TDS is to be deducted @1% of the amount payable to the property seller. (This is assuming that the property seller has furnished his valid PAN no. to you).

5. In the absence of the seller's valid PAN No., TDS is to be deducted @20%

Buying a property? Don't forget to deduct TDS from the amount payable.

6. TDS on purchase of the property must be deducted at the time of payment of the sale consideration to the seller.

7. Normally, persons deducting TDS are supposed to have a Tax Deduction and Collection Account Number (TDCAN). However, this provision of TDCAN is not applicable in this particular case of TDS deduction on immovable property.

8. You have to pay the tax deducted to the Government with 7 days from the end of the month in which you deduct the specified percentage.

9. You have to attach challan-cum-statement in Form 26QB while remitting the money to the Government. The details to be provided herein are basically PAN Nos. of buyer and seller, Addresses of buyer and seller, Property Address, Sale consideration and TDS amount.

10. The tax deducted has to be remitted electronically. Alternatively, you may visit the authorized bank branches.

11. You have to also furnish the certificate of tax deduction at source to the seller in Form 16B. The same has to be generated and downloaded from the specified website.

12.  The certificate to the seller must be given within 15 days from the due date of depositing the tax with the Government. 

To know the steps for filling Form 26QB and downloading Form 16B you can go to the following link: http://incometaxindia.gov.in/pages/tds-sale-of-immovable-property.aspx

For giving effect to this TDS on property, you have to visit the website Tax Information Network of Income Tax Department i.e. https://www.tin-nsdl.com/

This, in a nutshell, is all about Tax Deduction at Source or TDS at the time of purchase of immovable property.

Note: A land shall not be considered as Agricultural Land if it is situated 
a) within a municipality or cantonment board which has a population of 10,000 or more
b) within 2 kms of distance from a municipality or cantonment board with population more than 10,000 but less than 1 lakh
c) within 6 kms of distance if the population is more than 1 lakh but less than 10 lakh
d) within 8 kms of distance if the population is more than 10 lakh

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