Simplifying TDS Payment Process For Your New Property Purchase

Have you purchased a new property? If yes, then have you deducted the TDS? Recent media reports have suggested that majority of the new home buyers are ignorant about TDS deductions.

I agree it is comparatively a new law in the Income Tax Act (Section 194IA) as it got implemented in July 2013 only but it makes it mandatory for all buyers who are purchasing any immovable property other than agricultural land worth 50 lakhs or more to deduct TDS at the rate of 1 percent. This 1 percent withdrawing tax is calculated on the total property price excluding the service tax component if shown separately in the sale deed. These tax deductions require the PAN card entry of the seller; otherwise tax rate could go up to 20 percent. And yes, responsibility of deducting TDS lies on the buyer and not seller.

Does it sound scary?

To ease your life, here are easy to follow steps to pay the TDS online. Before filing do make sure that you have your as well as the seller’s PAN card details handy.

Photo Credit: Flickr

Steps to pay TDS

1) Tax under this stream could be deposited by filling a challan cum statement form 26QB online (It is a general form that requires you to furnish the details regarding TDS on the property). You can find it on the website TIN-NSDL. To fill 26QB you can follow as per the sample below.

Source: tin-nsdl.com

2) Before hitting the proceed tab, do cross-check your details again as there is no provision on the website to edit it later. On confirmation a nine digit acknowledgement number would be generated. Do save this number carefully as it would later help you in downloading Form16 B.

3) In the screenshot you can see that at the end there are two kinds of payment options i.e. either through a challan which could be submitted at the desired bank or via e-payment. You can select accordingly. After successful payment a challan number would be generated. You need to save it too as it would be helpful for Traces registration, as explained below.

Downloading Form 16B through Traces

1) After you have made the payment successfully and received an acknowledgement number, you need to wait for 3-4 days to download Form16B through the Traces website ( CPS-TDS).

2) To access the Form you need to register yourself first as a new user by furnishing all the necessary details. If everything goes well and your account gets made you would be allowed to download the form as shown in the below sample picture.

3) It’s done! Now you can relax and have a cup of coffee.

strong>What would happen if you won’t pay TDS on time?

In case you fail to comply with the regulation, interest and penalty would be imposed on you. Interest is charged at the rate of 1% per month or calculated as part of month for tax deducted but not paid by you from the date of deduction to actual payment done.

Frequently Asked Questions (FAQ’s) surrounding TDS

Q – I have purchased the property before June 2013, is TDS applicable?

A – This deduction is for the property transactions made on or after 1st June 2013. In addition to this if your sale deed was made before 1st June 2013 but consideration was made after 1 June, TDS is not applicable. Moreover, it is relevant on everyone including senior citizens and minors. But if you are transferring the property as a gift, then it is not pertinent.

Q – If there are two buyers than how is the TDS calculated?

A – It is still 1% but each owner pays 1% on his own share. So, let’s say if it is 50 -50 sharing then each will pay 1% of half the property value.

Q – Do as a buyer I need to obtain TAN?

A – No, to make the process simple, the government has decided that the purchaser need not get the TAN. You can use your PAN number instead while paying TDS.

Q – I have purchased a home but have not deducted TDS. Can I do it now?

 A – As it is a relatively new rule, so you can deduct it now and pay the remaining in upcoming installments. If a bank is involved, then do make sure that you have informed them to make the deductions appropriately.

I hope you would be very much clear by now on the aspect of TDS deductions. If you still have any query, you can post them in the comment box below. We would definitely try to resolve them.