Pay TDS on Property More Than Rs. 50 lakh from June1, 2013

From June 1 , 2013, you will now have to deduct tax when you make the payment to the seller if the cost of the immovable property more than Rs. 50 lakh.

The Central Board of Direct Taxes (CBDT) has notified the new provision of tax deducted at source (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 per cent 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 / her permanent account number (PAN). The provision will apply even when the property has been financed through a bank loan.

Buyer will have to ensure either he /she himself / her self 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 1, 2013.

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/she can take the printout of the duly filled form & make payment on any authorised branch.

The income tax authorities have done away with the mandatory requirement of Tax deduction & account number for buyers.

The property buyer will be able to generate the TDS certificate from Income Tax department's website & provide it to the seller. The seller would also be able to see the TDS credit in 26 AS statement.

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