Many buyers believe that only buyers pay taxes when buying a property. But it’s not the case, a seller also has certain tax liabilities. The Government of India is continually making changes in the taxation rules. Every citizen is bound to comply with the constantly changing taxation rules. According to one taxation rule, when you buy a property in India you need to pay TDS.
Now the question that arises is- What is TDS on the purchase of the property?
As a property buyer, you might have related queries such as Who pays the TDS?
To whom and where the TDS has to be paid? How much TDS has to be paid?
AND so on…
Let’s get started…
TDS stands for tax deduction at source. The concept behind this taxation rule is to collect the tax at the source. When the property transaction amount value exceeds or is equal to 50 lacs, 1% or 0.75% of TDS is to be levied on the sale of the property.
TDS to be deducted on all the sales of properties. Irrespective of whether it’s residential or commercial or industrial properties, except agricultural land.
When a person buys property from the developer. The amount he/she pays for the property will be income for the developer. This means the liability to deduct the TDS(tax deduction at the source) lies with the buyer. Hence, the person needs to deduct the TDS from the agreed amount of payment for the sale of the property.
As the buyer, the responsibility of TDS lies with you. It is your duty by law to deposit the TDS on behalf of the developer to the Government treasury. By law, you cannot refuse to pay it. In case the buyer does not pay the TDS on time. They would be liable to pay the penalty.
To start the procedure for depositing the TDS.
Fill Form 26QB mentioning all the required details. To fill the form 26QB you need to go on the website URL- www.tin-nsdl.com
Services> TDS on sale of property> Online form for furnishing TDS on property (Form 26QB).
You need to furnish the following details such as-
- PAN No. of the Buyer
- Address of the Buyer
- PAN No. of the Seller
- Residential Status of the Seller
- Address of the Seller
- Address of the property transferred
- Date of Payment
- Amount Paid
- Date of Agreement
- Total Transaction Value
Once all the details are filled in, You need to submit the form. After you submit the form, you are given a choice to make the payment online or offline. You can choose your preferred mode of payment.
What is of note here is that- the TDS deduction is to be made on the total amount excluding GST. TDS is not an additional tax. It is part of the agreed amount that you pay for the sale of the property.
In some cases, the builder or developer will ask for a separate check for the TDS amount. And their representative will do all the TDS formalities from their end. To avoid any inconvenience due to error while paying the TDS on your part.
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