While buying immovable property payment has to be received via banking channels in India including mobile banking, ATM, etc. and is subject to various taxes, duties or levies in India. The payment can also be made out of funds held in NRE or FCNR or NRO accounts of the NRIs or OCIs. Payments cannot be made through travelers’ cheques and foreign currency notes.
As a buyer has to pay various taxes while purchasing a property, tax liabilities also arise for the seller. Apart from the capital gains tax, the seller is also liable to pay TDS or tax deducted at the source at the time of the sale.
Any person being a buyer is responsible for paying a resident seller any sum by way of consideration for transfer of any immovable property (not agricultural land), shall deduct an amount equal to one percent of such sum as income tax at the time of crediting the amount to the account of the seller or at the time of payment of such sum in cash or by the issue of cheque or draft or by any other mode, whichever is earlier. No deduction shall be made where consideration for the transfer of immovable property is less than 50 lakh rupees.
Any some paid as a considerable amount for transfer of immovable property is covered under section 194-IA of the Income Tax Act, as the sum for the transfer of the immovable property is not less than 50 lakh rupees.
The tax shall be deducted at the time of credit of the sum of consideration for the transfer of property to the account of the seller or the time of paying it in cash or cheque or draft or any other mode.
Any sum deducted shall be paid to the credit of the Central Government within thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement. The sum deducted must be deposited to the credit of the Central Government by remitting it electronically to the Reserve Bank of India or the State Bank of India or any other authorized bank.
Every person responsible for deduction of tax shall furnish to the Director-General of Income Tax or any other person authorized by him a challan-cum-statement form, electronically within 30 days from the end of the month in which the deduction is made.
The seller from whose income the tax has been deducted at source would be entitled to get a credit of the amount so deducted based on Form26AS or a TDS certificate issued by the buyer.
While paying for the property the buyer must remember the following:
Deduct tax @1% or 0.75% from the purchasing amount
Collect the PAN number of the seller and verify the same with the original PAN Card
PAN of both the parties must be furnished in an online form for furnishing information regarding the sale transaction
No error must be made while filling the online form
While receiving the property the seller must remember the following:
Provide the PAN to the buyer for furnishing information regarding TDS to the Income Tax Department
Verify deposit taxes deducted by the buyer
