Under Section 194IA, every buyer transferring to a seller any sum by way of consideration for transfer of any immovable property (other than agricultural land) must deduct 1% of such consideration at the time of payment, irrespective of the mode of payment, but no TDS Return (Tax Deducted at Source) on Sale of Property will be deducted where the total amount of consideration payable for the transfer of an immovable property is less than 50 lakh rupees. Tax Deduction and Collection Account Number (TAN) for TDS on Sale of Property need not be obtained and is not required. This tax was introduced and made payable from 1st June 2013.
The buyer does not include a person paying to a resident any amount, being in the nature of compensation or the enhanced compensation payment or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (not including agricultural land).
Immovable property means any land (not including agricultural land) or any building or part of a building.
Agricultural land means agricultural land in India, not being a land situated in any area:
(a) which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or the same known by any other name) or a cantonment board and which has a minimum population of 10,000; or
(b) in any area, measured aerially at a:
| Distance from the local limits of any municipality or cantonment board | Having a Population of |
| 2 km | more than 10 thousand but not exceeding 1 lakh |
| 6 km | more than one lakh but not exceeding 10 lakhs |
| 8 km | population of more than 10 lakhs |
On transfer of immovable property by a non-resident, the tax is required to be deducted at source by the transferee. However, there is no such requirement immovable property is transferred by a resident except in the case of compulsory acquisition of certain immovable properties.
How to Practically file TDS on Sale of Property?
The tax deducted on sale of property must be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and has to be deposited accompanied by a challan-cum-statement in Form No. 26QB after generating and downloading the same from http://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000009618.pdf, the amount of tax so deducted must be deposited to the credit of the Central Government by remitting it electronically (by way of internet banking facility or debit card) into the Reserve Bank of India or the State Bank of India or any authorised bank. Every person responsible for deduction of tax on the sale of property must furnish the certificate of deduction of tax at source in Form No.16B (after generating and downloading the same from http://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000009617.pdf) to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No. 26QB.
Refund, if any, of TDS Return on Sale of Property, has to be claimed in Form 26B at http://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000009144.pdf.