Starting from 1st October 2024, significant changes are being introduced in the rules on TDS on the purchase of immovable property under Section 194-IA. These changes are particularly relevant for buyers involved in transactions where the property value is Rs. 50 lacs or more.
What was the earlier provision?
Previously, TDS under Section 194-IA was not applicable if a buyer paid less than Rs. 50 lacs for the purchase of immovable property. This threshold was designed to exempt smaller property transactions from the burden of TDS, simplifying the process for both buyers and sellers in such cases.
What is Change?
Under the new rules effective from 1st October 2024, the threshold for TDS applicability has been modified. Now, even if the value of the such property is Rs. 50 lacs or more and the value is divided into more than one buyer and/or seller, TDS would now be applicable irrespective of the payment being made.
In simpler terms:
- If the total value of the property is Rs. 50 lacs or more, TDS will apply irrespective of whether there are several buyers or sellers, or both.
- The modification ensures that TDS is deducted on such property, even if the share of each buyer or seller falls below the Rs. 50 lacs threshold.
Impact on Property Transactions
This change aims to close a loophole that allowed certain high-value property transactions to escape TDS due to the division of payment among multiple parties. Here is how the new rule impacts different scenarios:
- Multiple Buyers: If a property worth Rs. 60 lacs is being purchased by two buyers, with each contributing Rs. 30 lacs, TDS will now be applicable even though neither buyer individually pays Rs. 50 lacs.
- Multiple Sellers: Similarly, if a property worth Rs. 55 lacs is being sold by two sellers, with each receiving Rs. 27.5 lacs, TDS will still be applicable under the new rule.
What to do when, I’ve already made payment of 2 Instalment and there after before 3 payment is made, due some reasons and extra work the value is now increased for more 20 lakhs.
What will be the tds implication from the 3 instalment?
You need to deduct tax (TDS) each time you are paying the installment to the ‘seller’. We are assuming you have taken care of this while making these payments for the two installments. For the 3rd installment, again based the payment you are making, deduct the tax. TDS amount is determined by the installment amount and not the total cost of the property. When the last installment is paid, the TDS on the property cost is automatically taken care of.
It is always advisable to consult tax professionals.
How to pay tds amount in which form applicable? Is it tds procedure in TDSMAN software? please Guide.
If the buyer of the property has a TAN, in that case he can complete the TDS formality in a regular way and can surely use TDSMAN to file the Return. However, if buyer does not have a TAN, in that case Form 26QB is to be used which can be directly filled up and paid on the Income Tax website. After it successfully filed, the buyer will need to download Form 16B – TDS Certificate (available after around 15 days) and issue it to the seller.