TDS On Purchase of Property: How to Calculate and File

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Introduction

TDS On Purchase of Property: The taxes you pay on your income and the taxes you pay when you buy things are different. All these taxes are used to improve the country’s infrastructure. A particular type of tax known as Tax Deducted at Source (TDS) holds significant importance. Now let us know about TDS in this article.

TDS On Purchase of Property: How to Calculate and File

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TDS On Purchase of Property helps collect taxes smoothly. However, TDS is applicable for various transactions. One of them was a real estate purchase. If you want to buy a property, it is very important to know the details about TDS on the purchase of that property.

TDS on real estate transactions is typically deducted at a rate of 1% of the property value for transactions exceeding a certain threshold. Failure to comply with TDS regulations can result in penalties and legal consequences. So, it is crucial to understand these obligations when buying property.

What is Tax Deducted at Source (TDS)?

TDS means tax deducted at source on the tax paid. It is a method of collecting income tax from the source of income, i.e., the person who makes the payment to the recipient. TDS is deducted at a specified rate by the payer. Deposited with the government on behalf of the payee.

This helps ensure a steady flow of revenue for the government and prevents tax evasion. It also helps in distributing the tax collection responsibility between the payer and the payee. Making it a more efficient and transparent process. The payer can claim credit for tax deducted at source from their income tax liability.

TDS was implemented by the Income Tax Act of 1961. 1962 came into force. Since then, the income tax rules have been in force. Sections 190 to 206C of the Act deal with various aspects of TDS, such as rates, thresholds, obligations, certificates, returns, etc.

TDS On Purchase of Property: Rates

TDS is applicable on tax related to purchase of immovable property in India. The stamp duty value of sale of property is Rs. 50,00,000 Lakhs or above is applicable only. Property buyer has to deduct 1% of the sale as TDS. This TDS has to be deposited with the government on the purchase of property within 30 days from the end of the exempted month.

Sections 190 to 206C, Rules 30 to 37 of the TDS Act apply to TDS. These rules include TDS, which is applicable to various types of payments. These include salaries, interest, dividends, rent, commissions, and fees, among others. It is important for businesses to understand these rules in order to comply with TDS regulations and avoid penalties.

Exemption from TDS On Purchase of Property

As per Indian law, there are certain exemptions on TDS payments for property purchases. These exemptions are available for properties below a certain value threshold. Usually around Rs. If you buy more than 50 lakhs, it will be taxed. First time home buyers are also entitled to certain tax benefits on their TDS payments.

  • As per section 194-IA the value of stamp duty on transfer of immovable property expenses is Rs. 50,00,000 less then no exemptions.
  • TDS is not applicable to the transfer of any immovable property from an NRI to another NRI by way of inheritance or gift.
  • TDS is not applicable if the residential house in question is purchased from the state central government, or any authority constituted by them.
  • TDS is not applicable on transfer of agricultural land

How to File TDS On Purchase of Property?

Rs. 50,00,000 over and above stamp duty, this exemption applies to the purchaser. You have to file Form 26QB online within 30 days from the end of the tax-deductible month. By this this TDS amount will be credited to the Govt. To file Form 26QB, you need to follow the following steps.

  • Visit the TIN-NSDL official website and select ‘Click e-Payment and Pay Tax Online‘ under the ‘Services’ category.
  • Scroll down to the ‘TDS on Property (Form 26QB)’ option and click ‘Proceed’.
  • Fill out the form with the required details, like property details, PAN details, tax deposit details, address details, and contact details.
  • After selecting your preferred mode of payment, click ‘Proceed’ to pay the TDS amount.
  • After successful TDS payment, you will receive a Challan with a Challan Identification Number (CIN) and Form 16B certificate.
  • You have to provide this certificate to the seller as proof of this TDS deduction.

How to Calculate TDS On Purchase of Property?

To understand how to calculate TDS, let us see an example.

Mr. Raju from Mr. Kishor Suppose a flat is purchased on 15th August 2022 for Rs. 80,00,000. Mr. Raju Rs. 20,00,000 as advance on August 1, 2022, and the remaining Rs. 60,00,000 was paid on registration on 15th. August 2022. In this case, Mr. Raju paid Rs. 80,00,000 at 1%, i.e. Rs. 80,000 to deduct TDS and credit the same to Govt.

He will pay an advance on 1st August 2022 of Rs. 20,000 and while paying the balance on 15 August 2022 Rs. 60,000 should be deducted. He paid Rs. 20,000 by 30 September 2022 and 60,000 by 31 October 2022 using Form 26QB online. Form 16B should be issued to Mr. Kishor within 15 days from the due date of deposit of tax by him.

Conclusion

“TDS On Purchase of Property” rules are applicable on purchase of property when purchased with higher investment. The value of the property is Rs. 50,00,000 or more TDS is applicable on purchase of property. Buyers must deduct 1%. Deposit to be made within 30 days of withdrawal. You can pay TDS by filing Form 26QB online within 30 days of deduction. If you need this type of property information visit OpenPlot.

Also read: Tax on Rental Income: Understanding the Exemptions

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