TDS Rules for Property Buyers: If you are going to buy a property, then read the information given here carefully, otherwise you may have to suffer huge losses in the future.
Why property buyers should check seller’s PAN status properly: If you are going to buy a flat, shop or any such property whose price is Rs 50 lakh or more, then the information given here can save you from huge losses in future. Is. Actually, according to the income tax rules, if you are going to buy a property worth Rs 50 lakh or more, then at the time of payment, it is your responsibility to deduct 1 percent of the sale price as TDS and deposit it with the government. If you have ever bought or sold property before, you may be aware of this rule. But there is another condition associated with this rule, about which many people are not aware. Due to this, many times property buyers may have to suffer huge losses. But the information given here can save you from such possible losses.
What is the rule for TDS deduction at the time of payment?
According to Section 194 IA of the Income Tax Act, a buyer of property worth Rs 50 lakh or more has to deduct and deposit 1 percent of the value of the property as TDS. But the special thing is that the rule of 1 percent deduction is applicable only when the PAN number of the property seller is valid and active. That is, the PAN number of the property seller which is being used for deducting and depositing TDS must be valid and active at the time of payment. If the seller’s PAN is not valid at that time due to it not being linked to Aadhaar or for any other reason, then 1 percent TDS deduction will not be enough. According to the rules, if the buyer does not provide the seller’s PAN details or the seller’s PAN is not found valid at the time of payment, then the TDS deduction will directly increase from 1 percent to 20 percent. It is the responsibility of the buyer paying for the property to deduct this TDS and deposit it within 30 days. Form 26QB has to be used to deposit TDS. After this, it is the responsibility of the buyer to obtain Form 16B and provide it to the seller.
Activating PAN later is not enough
Even if you talk to the property seller and get his PAN status validated and activated after receiving the notice from the Income Tax Department, this will not give you any relief. The reason for this is whether the TDS liability will be 1 percent or 20 percent. This is decided by the PAN status of the property seller at the time of payment. That is, if the seller’s PAN is inactive or invalid at the time of payment and later becomes ‘valid’, the TDS liability will still remain at 20 percent. Under Income Tax rules, if the buyer is responsible for deducting TDS and making the payment while purchasing the property, then it is also his responsibility to check the PAN status of the seller.
What could be the result of deducting less TDS?
If you made a payment for a property worth Rs 50 lakh or more by deducting 1% TDS and later found out that the PAN number of the property seller given by you was not valid and active at the time of payment, then the Income Tax Department will charge you the remaining amount. Can give notice to pay 19 percent TDS. In the notice from the Income Tax Department, you may be asked to pay 19 percent TDS as well as interest and penalty at the rate of 1 percent per month on the outstanding amount. The amount of fine can be equal to the amount of outstanding tax. Since the seller of the property did not provide you with a valid PAN number, you can ask him to pay an additional 19% TDS and the penalty applicable thereon. But the Income Tax Department will issue the notice only to you. The best way to avoid this problem is that before making payment for the property, you not only get the PAN details of the seller, but also check whether the PAN number is valid at that time or not.
TDS Rules for Property Buyers: If you are going to buy a property, then read the information given here carefully, otherwise you may have to suffer huge losses in the future.
Why property buyers should check seller’s PAN status properly: If you are going to buy a flat, shop or any such property whose price is Rs 50 lakh or more, then the information given here can save you from huge losses in future. Is. Actually, according to the income tax rules, if you are going to buy a property worth Rs 50 lakh or more, then at the time of payment, it is your responsibility to deduct 1 percent of the sale price as TDS and deposit it with the government. If you have ever bought or sold property before, you may be aware of this rule. But there is another condition associated with this rule, about which many people are not aware. Due to this, many times property buyers may have to suffer huge losses. But the information given here can save you from such possible losses.
What is the rule for TDS deduction at the time of payment?
According to Section 194 IA of the Income Tax Act, a buyer of property worth Rs 50 lakh or more has to deduct and deposit 1 percent of the value of the property as TDS. But the special thing is that the rule of 1 percent deduction is applicable only when the PAN number of the property seller is valid and active. That is, the PAN number of the property seller which is being used for deducting and depositing TDS must be valid and active at the time of payment. If the seller’s PAN is not valid at that time due to it not being linked to Aadhaar or for any other reason, then 1 percent TDS deduction will not be enough. According to the rules, if the buyer does not provide the seller’s PAN details or the seller’s PAN is not found valid at the time of payment, then the TDS deduction will directly increase from 1 percent to 20 percent. It is the responsibility of the buyer paying for the property to deduct this TDS and deposit it within 30 days. Form 26QB has to be used to deposit TDS. After this, it is the responsibility of the buyer to obtain Form 16B and provide it to the seller.
Activating PAN later is not enough
Even if you talk to the property seller and get his PAN status validated and activated after receiving the notice from the Income Tax Department, this will not give you any relief. The reason for this is whether the TDS liability will be 1 percent or 20 percent. This is decided by the PAN status of the property seller at the time of payment. That is, if the seller’s PAN is inactive or invalid at the time of payment and later becomes ‘valid’, the TDS liability will still remain at 20 percent. Under Income Tax rules, if the buyer is responsible for deducting TDS and making the payment while purchasing the property, then it is also his responsibility to check the PAN status of the seller.
What could be the result of deducting less TDS?
If you made a payment for a property worth Rs 50 lakh or more by deducting 1% TDS and later found out that the PAN number of the property seller given by you was not valid and active at the time of payment, then the Income Tax Department will charge you the remaining amount. Can give notice to pay 19 percent TDS. In the notice from the Income Tax Department, you may be asked to pay 19 percent TDS as well as interest and penalty at the rate of 1 percent per month on the outstanding amount. The amount of fine can be equal to the amount of outstanding tax. Since the seller of the property did not provide you with a valid PAN number, you can ask him to pay an additional 19% TDS and the penalty applicable thereon. But the Income Tax Department will issue the notice only to you. The best way to avoid this problem is that before making payment for the property, you not only get the PAN details of the seller, but also check whether the PAN number is valid at that time or not.
