Friday 14 June 2013

TDS on immovable property (194-IA)

TDS on immovable property (194-IA)


From the June 1st, 2013 all the buyer of property 50 lakh or more than will get ready to pay TDS @1%.However the rural agriculture land and compulsory land acquisition deals are out of its scope. As well those who are planning to buy property less than 50 lakh are also out of the purview of this section.

Provision Related to Tax Deduction and Taxability

 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.  This amendment is effective from 1st June, 2013

CBDT has notified the new provision of TDS on immovable property………………..
The provision will apply even when the property has been financed through bank loan. Buyer has to ensure that he himself or the bank must deduct tax before disbursing the loan.
These provisions will also apply in cases where buyer bought an under construction property prior to 1st June 2013 but has to make balance payment after June 1st 2013.
The tax deducted is to be paid electronically on the website of income tax department by filling a form online but if a person does not have online banking facility he can take the printout and submit physically  to the authorized bank branches of any of the nationalized bank.  

Points must  be known  


Income tax department has done away the entire mandatory requirements of tax deduction and Tan account number. In other words the tax authorities made hassle free tax deposition by individual on tax on property. The buyer will be able to generate the TDS certificate from I-T department’s website and provide to seller. The seller would also able to see the TDS credit in 26AS.    



TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART-II, SECTION 3, SUB-SECTION (ii)] GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION NO. 39/2013
New Delhi, the 31st May, 2013
S.O.1404(E) - In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (Fifth Amendment) Rules, 2013.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962, (hereinafter referred to as the said rules) in rule 30,–
(a) after sub-rule (2), the following sub-rule shall be inserted, namely:-
“(2A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2), any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No.26QB.”;
(b) after sub-rule (6), the following sub-rule shall be inserted, namely:-
“(6A) Where tax deducted is to be deposited accompanied by a challan-cum-statement in Form No.26QB, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it electronically within the time specified in sub-rule (2A) into the Reserve Bank of India or the State Bank of India or any authorized bank.”;
(c) after sub-rule (7), the following sub-rules shall be inserted, namely:-
“(7A) The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purposes of remitting the amount electronically to the Reserve Bank of India or the State Bank of India or any authorized bank and shall be responsible for the day-to-day administration in relation to the remitting of the amount electronically in the manner so specified.”;
3. In rule 31 of the said rules,–
(a) after sub-rule (3), the following sub-rule shall be inserted, namely:-
“(3A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3), every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No.16B to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No.26QB under rule 31A after generating and downloading the same from the web portal specified by the Director General of Income-tax (System) or the person authorized by him.”;
(b) after sub-rule (6), the following sub-rule shall be inserted, namely:-
“(6A) The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purposes of generation and download of certificates and shall be responsible for the day-to-day administration in relation to the generation and download of certificates from the web portal specified by him or the person authorized by him.”;
4. In rule 31A of the said rules, after sub-rule (4), the following sub-rule shall be inserted, namely:-
“(4A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3) or sub rule (4), every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorized by the Director General of Income-tax (System) a challan-cum-statement in Form No.26QB electronically in accordance with the procedures, formats and standards specified under sub-rule (5) within seven days from the end of the month in which the deduction is made.”;
5. In Appendix-II of the said rules,-
(a) after Form No.16AA, the following Form shall be inserted, namely:-
         Form No 16B 
                  Notes:
          1. Salary includes wages, annuity, pension, gratuity [other than exempted under section 10 (10)], fees, commission, bonus, repayment of amount deposited under the Additional Emoluments (Compulsory Deposit) Act, 1974, perquisites, profits in lieu of or in addition to any salary or wages including payments made at or in connection with termination of employment, advance of salary, any payment received in respect of any period of leave not availed [other than exempted under section 10 (10AA)], any annual accretion to the balance of the account in a recognized provident fund chargeable to tax in accordance with rule 6 of Part A of the Fourth Schedule of the Income tax Act, 1961, any sums deemed to be income received by the employee in accordance with sub-rule (4) of rule 11 of Part A of the Fourth Schedule of the Income tax Act, 1961, any contribution made by the Central Government to the account of the employee under a pension scheme referred to in section 80CCD or any other sums chargeable to income tax under the head 'Salaries'.
           2. Where an employer deducts from the emoluments paid to an employee or pays on his behalf any contributions of that employee to any approved superannuation fund, all such deductions or payments should be included in the statement.”;

(b) for Form No.24Q, the following Form shall be substituted, namely :—
     Form No 24Q
(c) after Form No.26QAA, the following Form shall be inserted, namely:—
      Form No 26QB
[F.No.133/23/2013-SO(TPL)(Pt.)]
RAJESH KUMAR BHOOT
DIRECTOR (TPL-III)
Note: - The principal rules were published in the Gazette of India vide notification number S.O. 969(E), dated the 26th March, 1962 and last amended vide notification number S.O. 1393(E), dated the 30th May, 2013.

Summary

Every person buying property of 50 lakh or more than would required to deduct tax @1% and deposit with income tax department within 7 days of deduction. In case seller does not provided the PAN number the rate of tax will be 20% maximum.

Out of Scope area


           a)            Property transaction below 50 lakh
b)     Agriculture land in rural/village area
c)     Compulsory acquisition of land
d)     No need to obtain TAN



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