Plan to buy a house in the future? Better know the TDS process

In this year’s budget, Finance Minister has introduced a 1 percent tax on purchase of an immovable property (other than rural agriculture land) worth Rs 50 lakh or more, to be deducted at source by the buyer.The tax will be effective 1 June. Here is a step by step guide to the confusing process:

Important thing to know:

Before we begin with the step by step process, here a few things you need to know. “First thing to know is that unlike what many believe, the deductor of TDS (the buyer of the property) does not require a TAN aka Tax Deduction and collection account number,” saysAnil Rego, a chartered accountant. So, anyone who says, you to need a TAN clearly doesn’t know the right process. Sudhir Kaushik, CEO, Taxspanner.com, says, “Tax is to be deducted a) @ 1% if seller’s PAN number is available. b) @ 20% if seller does not have PAN number.” And finally, TDS is not applicable if the sales consideration is less than Rs 50 lakh, even if the stamp duty value takes the total figure to above Rs 50 lakh.

What the buyer of the property needs to do:

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1. After the price of the property is agreed upon, the buyer needs to deduct 1 percent TDS from the payment made to the seller.

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2. Then the buyer needs to visit the www.tin-nsdl.com website and fill in the form no 26 QB. This form is a challan cum statement of tax deduction where you will need to provide PAN number of both the buyer as well as the seller. Other personal details as well as the property details need to be mentioned on the form. Ensure you have all these details handy before you start filling the online form. Also ensure that you have not made any error, especially while providing the PANs of both the parties.

3. While filling the 26 QB form online, ensure that you make the payment of TDS amount as well. You have to do so electronically, which means you will need to do it via net banking. You could do so on your own, or visit a bank branch and make the e-payment. And, if you are unable to make the TDS payment the same time while you fill the 26 QB form online, you can do so later on, but only via the electronic route that too within seven days of filling the form.

4. And finally, once the TDS is paid by you, you will need to download the TDS certificate from www.tdscps.gov.in website. We suggest make a few photocopies of the same.

What the seller of the property needs to do:

1. First is to ensure that you provide your PAN number to the buyer. Reason being, if you fail to do so, the TDS which the buyer will cut won’t be @1 percent, but @20 percent.

2. Don’t simply assume that the buyer will actually do the needful as far as paying the TDS goes. You need to verify the same by checking your form 26 AS Annual Tax Statement, which is your a consolidate tax statement.

Remember that paying TDS on immovable property has just started, this story is just to give you an idea of the process. If you find handling your own tax issues a bit daunting, we suggest you get professional advice.