Never make this mistake in a property deal
The property buyer will have to deposit one percent of the total price in the Income Tax Department. For this Form-26QB has to be filled. This amount can be deposited online through the website.
Recently, Amit made a deal of a flat for Rs 49 lakh. According to the circle rate, the value of this property was 65 lakh rupees. Rules say , if the value of the property is 50 lakhs or more according to the circle rate, then TDS will have to be given at the rate of one percent. Even if the deal was done for less than 50 lakh rupees. TDS is deducted on the Stamp Duty Value (SDV) or the amount of the deal, whichever is higher. But considering that the cost of the house is less than Rs.50 lakh, Amit did not deduct the amount of TDS from the seller and deposit it. Now he has received a notice from the Income Tax. And now he will have to deposit this amount along with the fine while he has already paid the full amount to the seller.
What are the rules?
Until about a year ago, TDS was deducted only on deals above Rs 50 lakh. But since Budget 2022, the rules have changed. Now the person buying the property will have to deduct 1% TDS while making payment to the seller. If the seller does not have PAN, then TDS at the rate of 20 percent will be applicable. Advocate Sachin Sisodia, an expert in property matters, says that the change in TDS norms on the sale of immovable property will help the government in curbing tax evasion. Now people will not be able to rig the deal to save TDS. And transparency will come in the property market.
If the seller is NRI
If the seller of the property is a Non-Resident Indian ie NRI, then the rate of TDS will be higher. If the property is sold after two years, then it will come under long term capital gain tax. There will be 20 percent tax on this. Additionally, surcharge and cess will also be applicable. If sold before two years, this income will be added to the annual income of the seller, on which tax will have to be paid as per the slab. CA Ankit Gupta says that the seller will not get any benefit of indexation in this. If you have bought property from NRI, then deposit TDS in time. If the NRI goes back after getting the registry done, then it will be difficult to reach him.
How to deposit TDS?
The property buyer will have to deposit one percent of the total price in the Income Tax Department. For this Form-26QB has to be filled. This amount can be deposited online through the website https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp. This money can also be deposited in the bank through Form-26QB. If there is any problem, then you can deposit it with the help of CA. After this Form-16 will have to be provided to the seller. It can be downloaded from the website www.tdscpc.gov.in.
When will the penalty be imposed?
The amount of TDS will have to be deposited within 30 days after the end of the month of payment. For example, if payment is made on 10th May, then this amount has to be deposited by 30th June. If the buyer has not deducted TDS, penalty at the rate of 1% per month will be levied. If TDS is deducted but not deposited then 1.5% penalty will be applicable. In this case, the Income Tax Department can also impose a fine of one lakh rupees. If Form 26QB is not filled for depositing TDS, then a penalty of Rs 200 per day will have to be paid.
To avoid these hassles, never make a mistake like Amit did in the property deal. While making the property deal, clearly talk to the seller about depositing TDS. Get this work done in time. Be more cautious if you have bought property from NRI.