In Budget 2022 the finance minister proposed that the 1% TDS on non-agriculture immovable property of Rs 50 lakh or more will be calculated based on the sale price or the stamp duty value, whichever is higher.
The Income Tax Act will have an amendment to incorporate this change in Section 194-IA. It is amendment will be applicable from April 1, 2022.
TDS was deducted now only on the consideration value of the immobile properties and not on the stamp duty.
This amendment will remove inconsistencies in TDS computation where the property’s value is Rs 50 lakh or more.
The tax department will also track tax evasion where a property is bought below the stamp duty value.
The government proposed the amendment in Section 194-IA of the Income Tax Act, to remove inconsistency with Section 43CA and 50CA of the law.
Earlier Section 194-IA provided a deduction of 1% TDS on the amount of consideration paid by the transferee to the transferor.
Another thing that Section 43CA, Section 50C of the Act had provisions for calculating income under the head profits and gains from business or profession and capital gains.
The stamp duty value was also considered. This inconsistency is now addressed as per the new amendment.
Property buyers will have to deduct the TDS, deposit the same in the government treasury by quoting his PAN and the seller’s PAN.
They will have to furnish information regarding the transaction online on the TIN website.
After successfully providing details of the transaction the buyer can either make the payment online through the e-tax payment option immediately or make the payment.
Subsequently through the e-tax payment option net-banking account by visiting any authorized bank branches.
That such bank branches will make e-payment without digitization of any challan. The bank will get the challan details from the online form filled out on the TIN website. The transaction details will reflect in Form 26AS of both buyers, sellers.
The income tax department may launch an inquiry in case of any mismatch. The new provisions are expected to bring more transparency in property transactions and remove inconsistencies in TDS calculation.
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