From June 1st, 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than ₹ 50 lakhs, he has to deduct TDS when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.

To find out what qualifies as agricultural land, click here.

Here are the requirements of this section:

• The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.
• No TDS is deducted if sale consideration is less than ₹ 50 lakhs. If installments are being paid, TDS has to be deducted on each installment.
• Tax is to be paid on the entire sale amount. For example, if you have bought a house at ₹ 55 lakh, you have to pay tax on ₹ 55 lakh and not on ₹ 5 lakh (i.e. ₹ 55 lakh – ₹ 50lakh). This is applicable even when there is more than 1 buyer or seller.
• If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.
• If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
• This TDS has to be deposited along with Form 26QB within 7 days from the end of the month on which TDS was deducted.
• After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller. This is available around 10-15 days after depositing the TDS.
• Thus for paying TDS, the seller is required to obtain Form 16B and the buyer is required to obtain Form 26QB.

  (Credit: cleartax.in)

  Want to know the steps to pay TDS and to obtain Form 16B (for the seller) or Form 26QB (for the buyer)?

  For more details, visit the following links: cleartax.in or tin-nsdl.com