TDS on Real estate Industry

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Concept of TDS for Real estate Industry:

Vide Finance Act 2013; concept of TDS on Real estate transactions was introduced in India. As per Newly inserted section 194IA, Any person, who purchases any immovable property (other than agricultural land) for a consideration, shall require to deduct tax at source @1% of the amount paid to resident seller; provided the consideration is INR 50 lakh or more.

Immovable property for this section means any land (other than agricultural land) or any building or part of a building. Further, this section puts burden on every buyers including non residents who are purchasing the property from the resident sellers. Further, property transaction between the real estate developers and individual assessees is also comes under the purview of this section i.e. the section will also apply on stock in trade. The section does not apply to for consideration received under the compulsory acquisition of the property as mentioned in section 194LA. Further this section does not apply in case the seller is the non- resident, as the same is covered by section 195 of the Income Tax Act.

TDS on real estate transaction (section 194LAA) was earlier proposed by Finance bill 2012, which was subsequently withdrawn for the reasons best known to the finance ministry. In comparison to earlier proposal, the scope of the newly inserted section has been diluted to a certain extent. The thrash hold exemption of INR 20 lakh for property situated in other than urban areas has not been incorporated in section 194IA; rather an exemption of INR 50 lakh for property situated in all areas has been provided. Due to this proposal, properties located in areas other than urban areas may be out of purview of this section. Further, proof of deposit of TDS which was mandatory for registration of property, as proposed in Finance bill 2012, has been ignored in section 194-IA.

Procedural Requirements:

Buyer of the property is required to deduct tax, at the time of credit of the consideration to the account of the seller or at the time of payment of such sum in cash, cheque, draft or any other mode. A simple, one pager, Form 26QB has been introduced for compliance of this section. Buyer of the property is not required to obtain TAN no. Buyer is required to furnish information as prescribed in Form 26QB which includes

 Full Name, Address & PAN of Buyer and seller

 Address of the property

 Value of property, Date of agreement / booking

 Amount paid / Credited, payment in installments or lumpsum

 TDS etc.

Subsequently, Buyer can make the payment online or offline, within 7 days from the end of the month in which deduction is made. TDS certificate [Form 16B] will be issued by the buyer to the seller within 15 days from the due date of payment of taxes. The same needs to be generated from www.

Penal Provisions for non compliances:

As per section 201, In case assessee fails to comply with the procedural guidelines of TDS provisions [deduction or payment], then the assessee will be treated as an assessee in default.

As per section 201(1A), in case of failure to deduct Tax or short deduction of TDS, interest @1% will be levied for every month or part of the month, on the amount of tax, from the date on which tax was deductible to the date on which the same is deducted. Further, when the buyer has failed to deposit wholly or partly tax so deducted, Interest @1.5% will be levied, for every month or part of the month, on the amount of tax, from the date of deduction till the date of actual payment.

As per section 271C of the Income Tax Act, penalty for non deduction / non-payment of TDS are equal to the amount of Tax which the assessee failed to deduct or pay [This penalty shall be imposed b the joint commissioner]. Further, Sec 221 provides for penalty to be paid as directed by the assessing officer which shall not exceed the amount of TDS.



TDSMAN updated with FVU ver. 3.9 & FVU ver. 2.135

TDSMAN software has been updated for the newly released File Validation Utilities (FVU ver. 3.9 and FVU ver. 2.135).

All licensed and trial users are advised to immediately update their software for preparing the TDS / TCS returns for FY: 2013-14.

Click here to view the key features of FVU version 3.9

Click here to view the key features of FVU version 2.135

Download Trial Version

Place Order for TDSMAN software


Procedure for online e-Filing of Income Tax Return for A.Y. 2013-14

Income tax department has published the latest Online e-File Income Tax Return Procedure for Assessment Year 2013-14.  In this new procedure, tax payee can free download ITR-I to ITR-4S (Excel Base) to upload online XML.

The complete procedure is as follows:

e-File Income Tax Return Online

1. Income Tax Return (ITR-1/ITR-4S) is available online. To avail this feature, Assessee should register, LOGIN and GO TO ‘e-File’ –> ‘Prepare and Submit ITR online’. Fill the information and click SUBMIT.

2. Download Income Tax Return and Upload XML

3. To file an Income Tax Return electronically, you should download the Income Tax Return (ITR) Utility applicable, fill and generate an XML. This XML should be uploaded in the application post LOGIN.

4. You can also pre-fill Personal and Tax information, a new feature in this application.

5. You can import the details of the previous version into the new version of the utility using the “Import Previous Version ” facility. Click on the “Import Previous Version” button and select the path where the previous version is available and click OK. The data is uploaded successfully.

Steps to Download ITR

1.On home page, GO TO ‘Downloads’ section and select applicable Income Tax Return Formof the desired Assessment Year OR Login to e-Filing application and GO TO ‘Downloads’–>’Income Tax Return Forms’ and select applicable Income Tax Return Form of the desired Assessment Year.

2. Download the excel utility of the Income Tax Return (ITR).

3.Fill the excel utility and Validate. (Please refer the “Steps to pre-fill in Income Tax Return” as mentioned below).

4. Generate an XML file and save in desired path/destination in your desktop/system.

5. LOGIN to e-Filing application and GO TO –> e-File –> Upload Return.

6. Select the Income Tax Return Form and the Assessment Year.

7. Browse and Select the XML file.

8. Upload Digital Signature Certificate, if available and applicable.

9. Click ‘SUBMIT’.

10. On successful upload, Acknowledgement details would be displayed. Click the link to view or generate a printout of Acknowledgement/ITR-V Form.

Steps to pre-fill in Income Tax Return

1. LOGIN to e-Filing application and GO TO ‘Downloads’ –> ‘Income Tax Return Forms’.

2. Download the excel utility of the selected Income Tax Return.

3. GO TO ‘Downloads’ –> ‘Download Pre-fill XML’ and download.

4. Open the excel utility.

5. Click the button ‘Import Personal/Tax Details from XML’. An option to BROWSE a file is displayed.

6. Click on ‘BROWSE’ and select the path where the downloaded Pre-Fill XML file is stored.

7. Click the SUBMIT button.

8. The Personal and Tax information is pre-filled in the respective fields of the excel utility (ITR). You can edit the Tax information, if needed.


Correction Statements for F.Y. 2013-14 can now be prepared using FVU 3.9

As observed, the FVU version 3.8 released by NSDL was not allowing the preparation of Correction Statements for F.Y. 2013-14.

On 12th August 2013, New File Validation Utlity (FVU version 3.9) has been released using which you can prepare your Correction Statements for F.Y.  2013-14. 

For more details, Click here