TDS on sale of immovable property- How to file and other important details
By Pratik Balasaria

If you buying or selling a property at Kolkata worth more than Rs 50 lakh, you need to be aware of the transaction details and also the information you need to furnish for payment of tds on sale of immovable property. Our comprehensive guide will help to simplify the process of how to claim tds on sale of property. Let’s dive in—

TDS deduction on sale of property

tds on sale of immovable property

Rate of tds on sale of property is deducted at 1% if the property is valued more than Rs 50 lakh. As per the finance bill of June 13, 2013, TDS on sale of immovable property is applicable for all properties, except on the sale of agricultural land.

The TDS deduction is eligible only if the seller is an Indian resident. Different rules apply for tds on sale of property by nri and the rate of TDS is usually higher. A few points to remember in such a case are—

  • If the seller is an NRI, TDS is 20% + Surcharge + Cess.
  • TDS is levied for NRIs even if the immovable property is less than Rs 50 lakh. 

How to claim TDS on sale of immovable property with Government?

It is the buyer of the immovable property who deducts the tds rate on sale of property from the purchase price and is also responsible to pay tds on sale of property with the income tax department. The buyer needs to fill in form 26QB to furnish all the necessary details. Furthermore, the buyer also needs to furnish the following information and keep the documents ready for payment of tds on sale of property—

  • Buyer’s PAN no. 
  • Buyer’s address 
  • Seller’s PAN no. 
  • The seller’s residential status 
  • Seller’s address 
  • Address of the property transferred
  • Date of Payment
  • Amount Paid
  • Date of Agreement
  • Total Transaction Value

After you have acquired all the necessary details, the buyer can choose the choice of preference for payment of tds on sale of property—online or through net banking. As such, form 26QB is automatically generated that takes the buyer to the e-payment gateway.

Alternatively, the buyer can also deposit the TDS offline through authorized banks. In such a case, the buyer needs to take a print out of form 26QB and fill it in manually to submit the tds deduction on sale of property. 

How to file tds on sale of immovable property? A step by step guide

In order to file the tds on sale of immovable property, the buyer needs to fill form 26QB. So, let’s understand the steps to fill the form—

  1. Search TIN NSDL on the browser​ ( www.tin-nsdl.com ).​

  2. Click on ‘Online form for furnishing TDS on property (Form 26QB)’ under ‘TDS on sale of property. 

  3. Select TDS on ‘Sale of Property’ as challan.

  4. Fill the complete form as necessary.

    (You should have the following information handy while filling the form 26QB):
    1. Seller’s & buyer’s PAN 
    2. Communication details of the seller & buyer
    3. Property details
    4. Amount paid/credited & tax deposit details

  5.  Select ‘Submit’ to proceed. ​A confirmation screen will appear on which you will see two options—‘Print Form 26QB’ and ‘Submit to the bank.’ 

    A unique acknowledgment number will also be sent, save the number for future use. ​​First, click on “Print Form 26QB” and then click on “Submit to the bank” to pay tds on sale of property online. 

  6. On successful payment, a challan is generated containing CIN, payment details and the bank’s name through which the payment has been made.

    The challan counterfoil should be kept as proof for payment of tds on sale of property.

TRACES portal ( www.tdscpc.gov.in) to download Form 16B.

Steps to download Form 16B:

  1. As a taxpayer, you need to register & login on TRACES portal with your PAN. ( www.tdscpc.gov.in
  2. Under ‘Downloads’ menu, select ‘Form 16B (For Buyer)’.
  3. Fill in the details regarding property transactions for which Form 16B is applicable. Enter the assessment year, acknowledgment number, seller’s PAN and click on ‘Proceed’.
  4. Click on ‘Submit Request’ to proceed.
  5. A success message will appear on submission of download request. Note down the request number to search for the download request.
  6. Click on ‘Requested Downloads’ to download the requested files.
  7. Search for the request reference to the request number. Select the request row and click on ‘HTTP download’ button. ​​​​​

Important points to remember for tds on sale of immovable property

  • 1% tds rate on sale of property is deducted on all property transactions above Rs 50 lakh, irrespective of whether it is a flat at Kolkata, a bungalow in Kolkata, or just a vacant plot. It does not matter if it is a residential property or a commercial or an industrial one. TDS on sale of immovable property is deducted for all types of property transactions except agricultural land.
  • TDS rate on sale of property is also applicable irrespective of whether there are capital gains or capital loss on the property. Even if you as a seller claim any capital gains exemptions, you need to pay tds on sale of property. 
  • The TDS is deducted on the total amount paid to the seller—this excludes GST. Let’s consider an example: 
  1. Transaction value for property Rs 80,00,000
  2. GST on property (if property is under construction) Rs 9,60,000
  3. Total payable amount Rs 89,60,000

As such, TDS is deducted on the transaction value of Rs 80 lakh and not on the GST levied on the sale of property. As such, tds rate on sale of property to be deducted would be 1% of Rs 80 lakh i.e. 80,000. 

Remember, the amount may vary, depending on the computation of GST on sale of property, and if the developer claims Input Tax Credit of GST. 

  • As mentioned earlier, TDS is deducted irrespective of the seller’s capital gains. However, the seller can claim a refund by filing for an income tax return, if she thinks that she has been charged with excess TDS. However, neither the buyer, nor the seller can apply for a lower amount of TDS, the tds rate on sale of property is levied at 1% of the total transaction value.  

All you need to know about TDS on sale of immovable property

Buying a house in Kolkata is an exciting experience, but the paperwork is usually overwhelming. We hope our guide has helped you with all the necessary information required for tds on sale of immovable property. Have a happy moving day!

FAQs 

Can NRIs lower TDS on property sale?

NRI sellers can apply for a lower or No TDS Deduction Certificate by filing in Form 13 online from the Income Tax Department in case their actual tax rate is lower than 22.88%

How do I calculate capital gains on sale of property?

To calculate short-term capital gains, use the formula: capital gain = final sale price – (the cost of acquisition + house improvement cost + transfer cost). 
To calculate short-term capital gains, use the formula: capital gain capital gain = final sale price – (transfer cost + indexed acquisition cost + indexed house improvement cost).

What if the buyer is an NRI and the seller is a Resident?

If the buyer is an NRI and the seller is a resident, TDS is applicable at the rate of 1% w.r.t. section 194-IA—‘Any person responsible for paying to a resident seller’. The buyer will however need PAN to deposit TDS.

How will transactions of joint parties (more than one buyer/seller) be filed in Form 26QB?

Each buyer needs to fill online statement cum challan Form/ Form 26QB for unique buyer-seller combination for respective share. For instance, if there is one buyer and two sellers, two forms have to be filled in and for two buyers and two seller, four forms have to be filled in for respective property shares.

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