Buying a new house above Rs 50 lakh? Get ready for some additional tax filing and paperwork. Anyone buying an immovable property (other than agricultural land) exceeding Rs 50 lakh in value will now have to deduct 1% TDS (tax deducted at source) before making a payment to the seller.
The provision, which was introduced in the Union Budget 2013-14, has become effective from 1 June 2013.
The tax deduction will be 20% if sellers do not disclose their Permanent Account Numbers (PANs). This will also apply to purchases financed by banks and housing finance companies. You will be liable to deduct the tax even for property purchases made earlier if any payment is made on or after 1 June.
The mandated TDS has to be deposited electronically by buyers on the income-tax department's website (www.tin-nsdl.com, which has a link for online payment of taxes) using the appropriate form (26QB). The TDS can also be deposited through tax payment facilities after submitting the form online.
For property TDS, one does not require a tax deduction account number (TAN), which is mandatory for other TDS. The property buyer will be able to generate the TDS certificate through the tax department website and provide it to the seller. The tax deposited will be reflected in the seller's TDS credit statement (Form 26AS) provided by the income-tax department.
