I thought the information was very useful for people who buy and sell properties. It is almost government is chasing citizens in every transaction. I wish everybody look into this new provision in the IT law. -Thanks.
NEW DELHI: Now, you will now have to deduct tax when you make the payment to the seller if the cost of the immovable property exceeds Rs 50 lakh. The Central Board of Direct Taxes has notified the new provision of tax deducted at source, or TDS, on immovable property.
The Finance Act 2013 had provided that purchaser of an immovable property (other than agricultural land) worth over Rs 50 lakh is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor.
The rate at which tax is to be cut is 1%, but it would go up to as high as 20% if the seller does not disclose his permanent account number. The provision will apply even when the property has been financed through a bank loan.
Buyer will have to ensure either he himself or the bank deducts tax before disbursing the loan to the seller. The provision will apply in cases where buyer bought an underconstruction property prior to the provision coming into effect but has to make the balance payment after June One.
The tax deducted is to be paid electronically on the Income-tax Department’s website by filling a form online. If a person does not have the facility to pay tax online, he can take the printout of the duly filled form and make payment on any authorised branch. The income tax authorities have done away with the mandatory requirement of Tax deduction and account number for buyers. The buyer will be able to generate the TDS certificate from I-T department’s website and provide it to the seller. The seller would also be able to see the TDS credit in 26AS statement.
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