Procedure to pay TDS on purchase of property above Rs. 50 lakhs

Posted Jul 10, 2013



As Makaan.com informed you, the Central Board of Direct Taxes had notified the new provision of Tax Deducted at Source [“TDS”] on immovable property. The amendment is effective from June 1, 2013. With developers, builders, residential societies and associations starting up with the process, this article aims to provide you with procedure that is to be followed to pay the TDS.



The Amendment: Under the Finance Act 2013, the purchaser of an immovable property (any land or apartment or flat or building other than agricultural land) costing Rs. 50 lakhs or more is required to pay a withholding tax. The rate at which the tax is to be deducted is 1% of the amount paid. The new provision has been introduced by adding Section 194IA. The major objective behind the introduction of the new section is to track real estate transactions that are not being registered.

Procedure to follow the Amendment: E-Payment facilitates payment of TDS online. To avail this facility the buyer is required to have a net-banking account. Please follow the following steps to pay tax online:-

  • As the responsibility of deducting TDS on immovable property lies with the buyer, he/she will have to deposit the payment by filling up Form 26QB or “TDS on sale of property” form available at NSDL-TIN website.
  • The form has to be filled with PAN and complete address of the buyer and the seller; address of the subject immovable property; date of sale agreement and the value of the property that is for consideration.
  • Next, the buyer will also have to obtain a “challan” for the payment.
  • The TDS amount is to be electronically remitted into State Bank of India or any other authorized bank. The list of authorized banks can be referred to here. The payment can be made immediately or on a subsequent date.
  • On receipt of payment confirmation, a nine digit alpha numeric acknowledgment number would be generated, confirming the remittance of TDS & receipt thereof.
  • On successful payment, a “challan” will be generated containing CIN, payment details and bank.
  • Once a buyer makes a payment, he/she can download Form 16B from website of Centralized Processing Cell of TDS (CPC-TDS).
  • The buyer will be responsible to give the certificate of TDS in Form 16B to the seller within 15 days from the due date of submission of the “challan”. The seller will be thus enabled to claim credit for such TDS against tax liability.
  • It may kindly be noted that TDS liability u/s 194-IA lies exclusively on the buyer and the seller holds no liability or responsibility for the non-compliance of the same.

Finally please note that in case the buyer paid/remitted any payment on or after June 1, 2013 without deducting the TDS, he/she must separately deposit due TDS by filling up challan-cum-statement Form 26QB immediately and furnish the relevant certificate in Form 16B to the seller.

The Finance Minister has proposed that in order to have a reporting mechanism of transactions in the real estate sector and to collect tax at the earliest point of time, TDS should be applicable. This will widen the tax base and check tax avoidance measures. With the above steps, you can easily make the payment from the comfort of your home/office.

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