Tds On Property Sale: Claim Schemes & Late Deposit Penalties

The government will introduce TDS (Tax Deducted at Source) to ensure correct taxation on property sales starting 1 April 2022. This article describes the change!

The government has decided to implement TDS, which stands for “Tax Deducted at Source,” on the sale of property beginning on April 1, 2022, to guarantee that the correct taxes are collected. This article will provide all the information you require regarding the adjustment.

TDS on Sale of Property — Source: Linaimages / shutterstock

TDS – Sale of Property (2022)

The government has proposed introducing a new tax regime for property sale from 2022. Under the new scheme, TDS will be deducted at the time of sale of property at the rate of 1%.

However, this deduction will not be applicable if the property is sold within 5 years from the date of purchase. In such cases, the TDS shall be deducted at 0.5%.

The government has also proposed to exempt long-term capital gains (LTCG) from the sale of property from income tax. However, this exemption will only be available if the property is sold after 10 years from the date of purchase.

If you plan to sell your property in 2022, it is important to understand these changes to plan your taxes accordingly.

TDS – Property sale (immovable)

TDS on immovable property sale:

When an individual sells a property classified as immovable, such as a house or land, they are required to pay taxes on the sale. This tax is called TDS, or tax deducted at source. TDS is calculated based on the value of the property sold. The seller is responsible for paying the TDS to the government.

TDS on movable property sale:

When an individual sells a property classified as movable, such as a car or furniture, they are not required to pay taxes on the sale. This is because TDS does not apply to movable properties.

TDS – Sale of Property by NRI

If NRI sells property in India, you must pay taxes on the sale. This tax is called TDS, or tax deducted at source. The buyer typically deducts TDS at the time of purchase. However, if the buyer does not deduct TDS, the seller is responsible for paying it.

The TDS rate on the sale of property by NRIs is 2%. If you sell a property for Rs. 1 lakh, you will need to pay Rs. 2,000 as TDS.

TDS must be paid within 30 days of the sale of the property. If you do not pay TDS on time, you may be subject to interest and penalties.

You can claim a refund of TDS if you file your income tax return on time. You must complete Form 26AS and submit it with your tax return. If you do not have Form 26AS, you can get it from your employer or from the Income Tax Department.

Normal TDS rate

TDS is deducted at 1% on the sale of the property if the property is sold for more than Rs.50 lakhs. However, if the PAN number of the seller is furnished to the buyer, TDS is not deducted. The TDS deduction is made at the time of payment or credit, whichever is earlier.

Lower TDS rates

If you sell a property, you may be subject to TDS (tax deducted at source). The TDS rate on the sale of the property is lower than the regular income tax rate, so it is essential to understand how it works.

The buyer deducts TDS at the time of purchase. The amount of TDS that is deducted depends on the value of the property and the applicable TDS rate.

The current TDS rates for the sale of property are:

1% for properties worth up to Rs. 50 lakhs
2% for properties worth more than Rs. 50 lakhs but less than Rs. 1 crore
3% for properties worth more than Rs. 1 crore

The number of TDS deducted can be claimed as a tax credit against your income tax liability. This means you will only have to pay income tax on the net amount (after deducting the TDS).

Check if TDS applies to your transaction if you are selling a property. It is essential to factor in the TDS when calculating your taxes so that you don’t end up paying more tax than necessary.

TDS amount changes

The Finance Act, 2017, has amended the provisions of section 194-IA of the Income-tax Act, 1961 (‘the Act’) with effect from June 1, 2017.

As per the amended provisions, TDS shall be deducted on sale of immovable property at the rate of 0.5% if such property is valued at fifty lakh rupees or more but less than one crore rupees.

The existing provisions of section 194-IA provide for deduction of TDS at the rate of 1% on transfer of immovable property other than agricultural land, if the consideration for such transfer is fifty lakh rupees or more.

The amendment will help to reduce the compliance burden on small taxpayers as they will now be required to deduct TDS only on sale of property valued at one crore rupees or more.

Time for Deduction

The deduction for TDS on the sale of the property is available only when the seller receives the sale consideration. The time of deduction of TDS will be at the time of credit or payment, whichever is earlier.

The due date for payment of TDS shall be the date on which the payment is made to the seller. In case, the consideration for sale is not received by the seller, no deduction for TDS shall be made.

It should be noted that, if the property is sold within a year from its purchase, then TDS will not be deducted on the sale consideration.

TDS on joint property sales

1. If the property is jointly owned, the TDS will be deducted based on each owner’s proportionate share. For example, if two people own a property equally, the TDS will be deducted from each person’s share of the sale proceeds.

2. The TDS will be deducted from the sale proceeds after deducting any expenses incurred concerning the sale of the property. These expenses may include agent’s commissions, legal fees, and stamp duty.

3. The TDS will be deducted at the time of payment of the sale proceeds to the seller. The buyer is responsible for ensuring that the TDS is deducted and paid to the government.

4. The seller can claim a refund of the TDS if he/she files a tax return for the year in which the property was sold.

TDS on Joint Sellers

When two or more people jointly sell a property, each seller is liable to pay tax on their share of the sale proceeds. However, if the total sale price is more than Rs 50 lakhs, the buyer is responsible for deducting TDS at 1%. The deductor must then deposit the TDS with the government.

Claim TDS on Sale of Property

If you have sold a property, you may be eligible to claim a TDS refund.
To claim a TDS refund, you must submit a form to the buyer’s agent or solicitor.
Your name, address, contact information, and asking price for the property must all be included on the form.
Once the form is submitted, the buyer’s agent or solicitor will withhold the TDS amount from the sale price and pay it to the ATO on your behalf.
You will then need to lodge a tax return to claim the TDS refund from the ATO.

If you have sold a property, you may be eligible to claim a TDS refund. To claim a TDS refund, you must submit a form to the buyer’s agent or solicitor. The form will need to include your name, address, contact details, and the property’s sale price.

Once the form is submitted, the buyer’s agent or solicitor will withhold the TDS amount from the sale price and pay it to the ATO on your behalf. You will then need to lodge a tax return to claim the TDS refund from the ATO.

Pay TDS on Sale of Property Online

If you are selling a property, you will need to pay TDS on the sale. TDS stands for tax deducted at source. This means that the buyer will deduct a certain amount of tax from the sale price and pay it to the government. The TDS rate on the sale of a property is 1%.

You can pay TDS on the sale of property online through the e-filing portal of the Income Tax Department.
You must log in to the portal using your PAN number and password.
Once you are logged in, you will be able to view your TDS statement. This statement will show the amount of tax deducted from the sale price.
You can then make the payment online using a credit or debit card.

TDS deposit or non-deduction penalty

If you fail to deduct or deposit TDS on the sale of property, you will be liable to pay a penalty of 1% of the amount due, per month. This penalty will be imposed from the date on which the amount was due until it is actually paid. In addition, you will also have to pay interest at the rate of 1.5% per month on the amount due.

TDS on EMIs

TDS is deducted on the instalment amounts of the property.
TDS is not deducted on the full value of the property.
TDS is deducted on a pro-rata basis, based on the number of instalments paid.
If the property is sold before all instalments are paid, TDS will be deducted on the remaining instalments.
The rate of TDS is 1% for properties valued up to Rs 50 lakh and 2% for properties valued above Rs 50 lakh.

Conclusion – Manage TDS on properties

TDS on property is levied by the government on selling any property. The rate of TDS is 1% for properties valued at Rs. 50 lakh or more.

The following are the key points to keep in mind regarding TDS on property:

As part of the final payment to the seller, the buyer is obligated to withhold TDS.
The buyer is responsible for ensuring that the TDS is deposited with the government.
The seller must provide the buyer with a valid TDS certificate, which will be required by the buyer when filing their income tax return.
If the buyer does not deduct TDS from the purchase price, they may be liable to pay the penalty.

Thus, both buyers and sellers need to be aware of TDS on property. With proper planning and understanding, buyers and sellers can avoid any penalties or complications associated with TDS on property.

FAQs

Q1. How does TDS affect purchasers of property?

TDS on the sale of property is a tax that is levied on the buyer by the government. This tax is imposed on the sale of any property that is worth more than Rs 50 lakh. The TDS rate is currently set at 1%.

This tax applies to both residential and commercial properties. The buyer must pay the TDS at the time of purchase.
The TDS on the property sale is used to levy taxes on capital gains. Capital gains are profits earned from selling assets such as property, stocks, or bonds.
The TDS on the sale of property is also used to prevent money laundering. Money laundering is illegally converting cash into other assets such as property.

Q2. What’s the property’s TDS rate?

The TDS rate on the sale of the property is 1% for transactions up to Rs. 45 Lakhs and 2% for transactions above Rs. 45 Lakhs. This tax is levied on the total value of the property sold, including any stamp duty and registration charges.

The buyer must deduct the TDS when paying the purchase price to the seller. The TDS certificate must be issued by the buyer to the seller within 15 days from the date of payment.

Q3. Does an NRI receive the property selling balance after TDS?

TDS is deducted from the total sale consideration of the property, not the balance amount. Hence, the NRI gets the balance after TDS is deducted from the total sale consideration of the property.

Q4: Do purchasers need a TAN?

No, a TAN number is not mandatory for buyers. However, sellers must have a TAN number in order to sell their property.

Q5. Are late TDS payments penalised?

Yes, there is a penalty for the late payment of TDS. The penalty is 1% of the total amount of tax due per month. This means that if you owe Rs 10,000 in TDS, you will be charged a penalty of Rs 100 per month if you do not pay on time.