Reselling A Property? While Paying The Seller, Deduct TDS
Describe TDS.
Reselling A Property
- Reselling A Property. Tax Deducted at Source is referre to as TDS.
- It is a tax that is paid together with any payment to the vendor, as the name indicates. It is a direct tax, as opposed to income tax, payed at the point of the transaction.
- To pay the TDS to the Income Tax Department on behalf of the seller or company receiving payment, the buyer or entity paying the seller is responsible for deducting the TDS from that sum.
- TDS Rates according to Different Income TDS is based on a portion of the entire amount paid. The TDS rates change for various sources of income in accordance with various parts of the Income Tax Act. Among them are:
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| Type of Income | TDS Rate |
| Interest received on bank term deposits | 10% |
| Professional Services | 10% |
| Sale of immovable property (other than agricultural land) | 1% |
| Dividend income | 10% |
| Insurance commission / Brokerage | 5% |
| Income from winning lotteries, games, and prizes, etc. from sellers | 30% |
How much TDS is imposed on the sale of real estate?
- TDS is imposed on the sale of immovable property other than agricultural land in accordance with Section 194-IA of the Income Tax Act. Apartments, pieces of land, single homes, and commercial properties are all examples of immovable property.
- Only if the consideration value of the sale of a property exceeds Rs. 50 lacs is TDS applicable (Rupees Fifty Lacs). No TDS is due if the property is sold for less than Rs. 50 lacs.
- The sale price of the property, as well as any additional payments for things like parking spaces, clubhouse dues, electricity and water metre connections, etc., are all included in the sale consideration.
- TDS is owed at the rate of 1% of the entire purchase price of the property. The rate of TDS on the sale of property has been lowered to 0.75% of the entire selling consideration if the property is sold between May 14 and March 31, 2021, in light of the economic downturn brought on by the Coronavirus outbreak.
- However, it should be noted that TDS is applied on the full amount, not only the difference amount, if the sale price of the property exceeds Rs. 50 lacs.
- Think about a property that is being sold for Rs. 60 lacs, for instance. Therefore, the TDS would apply to the full Rs. 60 lacs and not only the Rs. 10 lacs difference (60 lacs – 50 lacs).
Below is an illustration of TDS amount applicable on sale of a property:
| Sale amount | TDS applicable between 14th May 2020 and 31stMarch 2021 (0.75%) | TDS applicable 1stApril 2021 onwards (1%) |
| Rs. 45,00,000 | 0 | 0 |
| Rs. 50,00,000 | 0 | 0 |
| Rs. 50,01,000 | Rs. 37,508 | Rs. 50,010 |
| Rs. 55,00,000 | Rs. 41,250 | Rs. 55,000 |
Receiving sufficient information from the vendor is crucial for the buyer. 20% of the selling price is subject to tds if the seller’s tax file is not furnish.
How to pay the TDS amount?
- Payment of TDS involves two major steps:
- Paying TDS through Form 26QB
- Generating a TDS Certificate (Form 16B) through TRACES
Reselling A Property: Paying TDS through Form 26QB
Step 1: Visit the website of Tax Information Network (TIN)
Link: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
Search for option TDS on Property (Form 26QB).
Before clicking on Proceed, be ready with the following details as the further steps are time-bound for 30 minutes:
- PAN details of the seller and the buyer
- Contact details of the seller and buyer
- Details of the property being bought
- The amount of TDS being deducte
Step 2: Fill in the details as asked for in each tab. Click on Next after filling all the details.
Step 3: Make Payment of the TDS amount
Reselling A Property: This payment can be done online as well as offline.
- Online payment method to pay TDS
- For Online payment: Select the option e-tax payment immediately. Select the mode of payment from Net banking or Debit Card.
- Click on Proceed and make the payment.
- For this, you need to select the bank from which online payment is being made. If your bank is not in the list, you need to proceed with offline payment.
- After completing your online payment, select Print Challan 280. Download or print this acknowledgment.
- In the event that online banking is not accessible, you must make the payment in person at the authorised banks’ nearest branch.
- Choose the e-tax payment on following date option. Select Proceed.
- Then select Print Form 26QB.
- This serves as a confirmation of the transaction. Take a copy of this to the bank branch and print it. Get the payment counterfoil by paying the money in cash or by demand draught at the bank branch. The payment receipt would be on this counterfoil.
- Within 10 (ten) days of creating the Form 26QB, payment must be made in person at the bank branch.
Generating TDS Certificate (Form 16B) through TRACES
- Step 1: Register on TRACES website.
- Link: https://www.tdscpc.gov.in/app/tapreg1.xhtml
- Registration can be done after three days of depositing the Challan with the bank
- Enter PAN details of the buyer. Click on Proceed
- Further, Register as New User by entering details either in Option 1, 2, 3, or 4.
- Click on Next.
- After entering details and creating the password, you would receive OTP to validate. Enter that OTP received.
- You would then receive 2 more OTPs- one on the email ID and one on the mobile number registered. Enter both the OTPs, and verify your account.
- Step 2: Login to your TRACES Account and Download Form 16B
- Once registration is done, Login to your TRACES account and check whether the TDS payment made is reflected in Form 26AS. This usually takes up to seven working days from the date of payment.
Reselling A Property: TDS on Property Rent
- TDS is also charge on rented property. The TDS is deducted under the following section:-
- Section 194IB: Section 194IB of the Income Tax Act is associate with the TDS on the property rent. This Section is primarily set for the people who are earning from leasing or renting a property.
- The rent that is receivable on a property is subject to a TDS on the property as this is an additional income earn by individuals like businessmen or salaried people.
- In conclusion, make sure to deduct TDS at the time of selling a property. Now, you can pay the TDS online as well offline. However, to make the payment online your bank should be on the list, if not then you will have to do the payment offline.
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