Property Sellers Without PAN Number Face 20 Per cent Income Tax..

Those selling immovable property without disclosing their permanent account number (PAN) are in for a tough time with the central government mandating a 20 per cent tax deduction at source (TDS) in such transactions.

The new rules that came into effect from Saturday (June 1, 2013) require buyers of immovable property, other than agricultural land, to pay TDS of 1 per cent of the deal size for transactions in excess of Rs. 50 lakh.

The proposal, which was announced in the Union Budget, was notified on recently, income tax (I - T ) department officials said. The move is part of the government's drive to clamp down on black money in the system, with real estate transactions seen as a major source of generation of black money.

While the rules would result in a check on the "white" component of the transaction, as often sellers insist that a large part of the consideration be paid in cash to skirt the capital gains tax. In many cases, where the seller has undisclosed income, cash comes into play and the share can be as high as 50 per cent. The deal size is also underreported to avoid stamp duty.

The I-T department is hoping that through the latest measure, at least some part of the cash economy would come under check, although it already has information of property transactions above Rs. 30 lakh.

The rules notified on Friday (May 31, 2013) require all buyers to deposit the 1 per cent TDS electronically on the I - T department's website by filling a form online . Those without access to the online system can fill up the form & make the payment at an authorized bank branch.

The central government may have missed the deadline to notify the commodities transaction tax but has not given up on the levy, at least for now. The 0.01 per cent levy on non-farm commodity transactions, such as gold and silver traded on commodity exchanges, was to kick in on June 1, 2013. But heavy lobbying has delayed the notification.

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