Buying Property? Deduct TDS – above Rs. 50 Lakhs!

A new section has been introduced in Indian Income Tax Act with effect from June 1st 2013 regarding the deduction of Income Tax at source with respect to purchase of immovable property.

The new section deals with situations that involve

1. The purchase of immovable property 
2. Sale value is more than Rs. 50 lakhs
3. Money is being received by a Resident Individual in India
4. The property being referred to is a non agricultural land

 The following provisions shall apply in such situations

1. The Buyer is responsible to deduct Income Tax from the sale value at the rate of 1% at source. Ie only 99% of sale value to be given to Seller.
2. The deducted sum has to be paid by the Buyer to Income tax department along with ‘Challan cum statement’ no Form 26 QB
3. The TDS has to be be deposited to the Central Government electronically through RBI/SBI/any authorized bank
4. To be done within 7 days from the end of the month when the TDS is done
5. The Buyer who deposited the TDS has to provide the Form No 16B from the web portal specified by the Director General of Income-tax (System) to the Seller within 15 days from the due date for deposit of TDS
6. In case PAN is not provided by the Seller the Buyer is required to deduct 20% at source

Applicable Provisions and Sources of Update:

• Income Tax Act 1961 with all its amendments
• Key Sections – Income Tax Act – Sections 194-IA,206AA
• Income Tax department circular 39 dated May 31, 2013
• THE FINANCE BILL, 2013