Tds for flat sale
Shweta Deshpande
(Querist) 26 August 2013
This query is : Resolved
Hi,
we are buying a property in Bangalore from another person who is an NRI.
1. How much TDS we need to deduct while buying this property? law says 1% of sale value. Any special law for this case as seller is an NRI?
2. Is it necessary for buyer to have TAN number to deduct the TDS? or PAN is enough for the transaction?
Thanks,
Shweta
malipeddi jaggarao
(Expert) 27 August 2013
See this article:
Page 1 of 3
Purchase of immovable Property from Non Resident Indian - provisions
under Chapter XVII of the Income Tax Act 1961 with regard to Tax
Deduction at Source.
The broad guidelines are given below:
Section 195
Any person responsible for paying to a Non-Resident, not being a company or to a
foreign company, of any interest or any other sum chargeable under the provisions
of this Act (not being income chargeable under the head salaries) shall at the time of
credit of such income to the account of the payee or at the time of payment thereof in
cash or by the issue of a cheque or draft or by any other mode, whichever is earlier,
deduct income-tax thereon at the rates in force:
Selling of immovable property by a Non Resident Indian is taxable under the income tax
under Chapter XII-A of the Income Tax Act, more specifically under section 115E of the
Income Tax Act 1961. The rate of tax prescribed and in force is twenty per cent.
Tax should be deducted by the payer at the rate in force or any lesser rate as certified
by the Assessing Officer in a Certificate issued by him.
The application for the deduction at lesser rate of tax can be made either by the payer
or the recipient in the prescribed forms to the Assessing Officer with the necessary
documents.
If the Non Resident Indian does not have Permanent Account Number, the rate of
tax will be 20%, irrespective of any certificate issued by the Assessing Officer.
The purchaser should have his Permanent Account Number (PAN) before he enters
into any such transactions.
The purchaser before deducting income tax from such payment, should apply for and
get a Tax deduction Account Number (TAN) as per section 203A of the Income Tax Act
1961.
The purchaser should collect the Permanent Account Number (PAN) of the said Non
resident Indian before deducting the tax.
The purchaser should deposit, (by using challan for payment of TDS), the income tax so
deducted, with the government (through banks authorized to collect direct taxes) within
seven days from the end of the month in which such tax is deducted.
The purchase should file the TDS returns electronically, within the due dates as
applicable (as provided below) giving the details of the Non Resident India, his address,
PAN etc. Page 2 of 3
Due dates for filing quarterly TDS Returns (To be submitted in the Form No.27Q.)
For the quarter ending June 30 July 15
For the quarter ending September 30 October 15
For the quarter ending December 31 January 15
For the quarter ending March 31 May 15
The purchaser at the time of preparation of quarterly statement of TDS shall –
 Quote his TAN
 Quote his PAN
 Quote PAN of the Non Resident Indian etc,.
The purchaser after filing the TDS returns electronically, shall issue the
Certificate of Deduction of Tax in Form 16A to the said Non resident Indian,
within 15 days from the due date of furnishing quarterly TDS returns.
If the purchaser fails to deduct or fails to pay the amount deducted will be treated
as Assessee in Default as per section 201 of the Income Tax Act, 1961 and will
be liable for payment of interest, penalties and prosecution.
Penalties for default
For not obtaining the Tax Deduction Account Number a penalty of Rs.10,000/-
can be levied under section 272 BB (1) of the Income Tax Act 1961.
For non quoting of the TAN, a penalty of Rs.10,000/- can be levied under section
272 BB (1A) of the Income Tax Act 1961.
For non quoting of the PAN, a penalty of Rs.10,000/- can be levied under section
272 B(2) of the Income Tax Act 1961.
Failure to deduct whole or any part of the tax as required to be deducted, a
penalty equal to the tax sought to be deducted and not so deducted can be
levied under section 271 C of the Income Tax Act 1961.
Failure to file the quarterly TDS returns a penalty of Rs.100/- per day for every
day during which the failure continues can be levied under section 272A(2).
Failure to issue the Certificate of Deduction of Tax at Source, a penalty of
Rs.100/- per day for every day during which the failure continues can be levied
under section 272A(2).
If the assessing officer is satisfied that the purchaser had not paid the tax
deducted at source without any reasonable cause, a penalty to the maximum of
the amount equal to the tax deducted at source can be levied under section 221
of the Income Tax Act 1961. Page 3 of 3
Mandatory interest payable under section 201(1A) of the Income Tax Act
1961.
If the tax is not deducted the assessee in default is liable to pay interest @ 1%
p.m from the month in which the tax is sought to be deducted till the month in
which such tax is deducted.
If the tax deducted is not paid within the due dates, the assessee in default is
liable to pay interest @ 1.50% p.m from the month in which the tax is deducted
till the month in which such tax deducted is paid..
If the tax deducted at source and the interest, penalty etc are not paid the
same can be recovered by the Government from the purchaser by
attaching the moveable, immoveable property, attaching the salary & other
receivables etc under Section. 222 and 226 of the Income tax Act 1961.
Prosecution:
Failure to pay the tax deducted to the government as per the law can attract
punishment of rigorous imprisonment of not less than three months but which
may extend upto seven years and also a fine which may be decided by the Court
as per section 276B of the Income Tax Act 1961.
R.K Nanda
(Expert) 27 August 2013
nothing to add.
Rajendra K Goyal
(Expert) 27 August 2013
Well advised by the expert, nothing to add.
Raj Kumar Makkad
(Expert) 27 August 2013
TDS is 1% in Karnatka in such matters and TAN is must for the TDS.
