Buyers, NRIs And Renters: Know All About TDS

With all the property transactions, home buyers and tenants must know about tax deducted at source (TDS) in India. Here is everything about TDS on property purchase and property renting.

Property Purpose

An Indian real estate property buyer needs to deduct TDS amount is one per cent the amount at the time of the buyout, as per the Section 194-IA of the Income Tax (I-T) Act. Note that TDS will not be deducted if the property transaction is lower than INR 50 lakh. TDS will be deducted if the transaction exceeds INR 50 lakh on the entirety of the amount.

Know the Process

Fill the 26QB form to credit the TDS. For multiple buyers/sellers or even joint owners, each party must file separate forms.
Payment mode: Submit the amount After deducting the TDS to the government within 30 days from the end of the month when TDS was deducted. The payment can be made online or offline through authorised banks. If you have availed home loan, you can ask the lender to help with TDS deduction and credit.
Certificate issue: Buyer needs to download the TDS certificate in Form 16B from the IT Department website and requires to issue it within 15 days to the seller.
Penalty on delay: In case of failure to deduct and credit TDS from the buyer, the seller would do it. If both fail, the buyer will be considered as a defaulter and has to pay INR 200 per day penalty which could be up to INR 1 lakh. The buyers can be sentenced to jail for the term of up to seven years.

TDS For NRIs

If the seller is an NRI, the TDS amount is 20 per cent of the transaction value. For deal amount below INR 50 lakh, TDS deduction has to 20.80 per cent. While the amount above INR 50 lakh, TDS deduction will be 22.88 per cent. For the value worth over INR 1 crore, TDS deduction will be 23.92 per cent.

For short-term capital gains (property being sold within two years of purchase), the TDS deduction would be 30 per cent. For NRI seller, the buyer has to fill Form 27Q and needs to issue Form 16A to the seller after crediting the amount.

TDS on Rent

Individuals as well as Hindu Undivided Families (HUFs) paying rent of INR 50,000 per month and if their accounts are not audited, then five per cent of the annual rent has to be deducted as TDS as per the Section 194-IB of the I-T Act, 1961. The renter needs to fill Form 26QC to pay TDS and must issue Form 16C to the landlord.

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