TDS

Transfer Of Immovable Properties U/S 194-IA

As a property buyer of a property,it is important for one check if the property is situated at a place that has got good re-sale value,good ground water levels,neat ambiance,and proximate amenities.But apart from the above,it is also mandatory to know the legal aspects with respect to income tax act which you must know before purchasing a property in india.

If you are resident of the country, i.e,you have stayed in india for a period of more than 182 days,and if you are purchasing a property from another resident seller,you have an obligation to deduct TDS if either the consideration or the stamp duty value of the property you purchase is exceeding Rs.50lakshs which is as per section 194-1Aof incometax Act.The applicable rate of TDS is 1% of the value of the consideration paid or the stamp Duty value whichever is higher.Here consideration includes all charges in the nature of club membership fees,car parking fees, electricity or water facility fee,maintenance fees,advance fees,or any other charges or similar nature which are incidental to the transfer of immovable property.this TDS must be deducted at the time of payment made to the resident seller and it has to be deposited to the government within 30 days from the end of the month of deduction.A from 26QB also hands to be deposited to the government within to fill in the details of the buyer,details of the property transferred.This is a mandatory From before registering the property in your name. TDS certificate in form 16B shall be generated and sent to the seller within 15days of filling from26QB.

Where if a resident is purchasing an immovable property from non-resident then the rules are slightly different. The TDS has to be deducted under section 195 in this case and you need to obaitan the TAN number mandatorily.The rate of TDS depends on whether the property is a long-term capital asset or ashort-term capital asset or a short-term capital asset to your seller.This is determined by the period of holding of the property by the seller,i.e if the property is held by the seller for more than 2years, then it is a long-term capital asset andif it's held for less than a period of 2years,it is short term capital asset In case of long-term capital asset being purchased by you the rate of TDS is a given below:

particulars	<50laksh< /th>	>50lakhs but <100lakhs< /th>
Tax	20%	20%
Surcharge	NIl	10%
Education cess	4%	4%
Total	20.80%	22.88%

In the case of short-term capital assets,the TDS rate is 30% plus the applicable surcharge and 4% Education cess. It is to be noted that if the NRI seller has applied to the assessing officer and obtained a certificate for shorter deduction of TDS then the TDS can be calculated on the capital gains amount else,this TDS has to be deducted on the value of consideration or stamp duty value whichever is higher.

The TDS has to be deducted by the buyer at the time of payment and the same has to be paid on or before the 7th of the next month except for the month of march where the due date for payment is 30th April.From 27Qhas to be filed at the end of the quarter by the buyer and the TDS certificate in form 16A shall be generated by him and sent to the seller within 15days of filling form 27Q.

In addition to this Form 15CA and 15CB has to be complied with where from 15CA is a declaration made by the person remitting the money wherein he states that he has deducted the tax from any payment so made to the non-resident.From 15CB is a certificate issued by a chartered accountant These are mandatory if the payment is done directly to the foreign account of the seller,but if you are transferring the funds to the NRO account of the seller this is not mandated by the banker but the obligation to file the form still lies with the buyer of the property and there are penal implication on non-filing on the same.

The whole article is summarized as under.

Buyer	seller	consideration	period of holding	LTCG/STCG	From No.	Rate of TDS
Resident	Resident	Below Rs.50Lakhs	>2years	LTCG	N.A	NiL
Resident	Resident	Below Rs.50lakhs	<2years< /td>	STCG	N.A	NIl
Resident	Resident	Rs.50lakhs and above	<2years< /td>	STCG	26QB	1%
Resident	Resident	Rs.50lakhs and above	>2years	LTCG	26QB	1%
Resident	Non-resident	BelowRs.50lakhs	>2years	LTCG	27Q	20.80%
Resident	Non-Resident	Rs.50lakhs&above but lessthan 1crore	>2years	LTCG	27Q	22.88%
Resident	non-resident	Rs.1crore&above	>2years	LTCG	27Q	23.92%
Resident	Non-Resident	Any value	<2years< /td>	STCG	27Q	31.20%

HEAD

To Query the TDS Form

TDS Query Form

273.1 Interest not subject to tax deduction -Tax is not deductible in the following cases-

where the amount of interest credited or paid(likely to be credited to paid)during a financial year doesnot exceed the amount given below-

Interest paid or payable by-
	Bank/co-operative bank/post office	Any other person
During financial year 2018-19 From april 1,2019	Rs.10,000 (Rs.50,000 if recipient is senior citizen)	Rs.5,000
	Rs.40,000(Rs.50,000 if recipient is senior citizen)	Rs.5,000

where interest is credited or paid to any banking company co-operative bank public financial institutions the life of insurance corporation the unit Trust of Indian,an insurance company or a co-operative society carrying on the business of insurance,or(or institution notified before April 1,2020)

Where interest is credited or paid by the firm to its partner(s);

Where interest is credited or paid by a co-operative Society(other than a co-operative bank)to its members or to any other co-operative society:

Where interest is credited or paid in respect of deposits under the schemes of postoffice(Time Deposits) post office(Recurring Deposits),Post office Monthly Income Account kisan vikas patra national savings certificate VIII issue,and INDIRA Vikas patra;

Where interest is credited or paid in respect of deposits (other than time deposit)With a banking company or(Recurring Deposits),with a co-operative bank.

where interest is credited or paid in respect of deposit (by non-members)with a primary agricultural society etc;

Where interest is credited or paid by the central Government under different provision of the direct taxpayers.

where the interest is paid on compensation awarded by the motor accident claims Tribunal if the amount of payment the aggregate amount of such payment does not exceed Rs.50,000;

where income is payable in relation to zero coupon bonds by an infrastructure capital company or infrastructure capital funds or infrastructure debt funds or public sector company or scheduled bank;

Interest referred to in section 10(23FC)

Interest paid or payable by an off shore banking unit on deposit (or borrowing )made on or after april 1,2015 by a person who is resident but not made(or shall be made at such specified lower rate) from such by a person who is resident but not ordinarily resident in india

Notification by central government-under section 194A(5),the central government has power to notify that tax deduction under this section shall not be made (or shall be made at such specified lower rate)from such specified payment to such person or class of person as may be specified in the notification.

Tds by co-operative society referred to in (d)or(g)(supra) tax is liable to be deducted,if-

a.total sales turn over or gross recipient of the co-operative society exceed Rs.50crore during the financial year is immediately preceding the financial year in which the interest is to be credited or paid;and

the amount of interest (or the aggregate amount of such interest)paid/credited during the financial year is more than Rs.40,000(rs,50,0000 is a senior citizen)

273.other points-The following points should be noted -

1.person responsible for tax deduction undersection 194A can make adjustment for any excess deduction or any deficiency arising out of any previous deduction during the same year.

2.Interest on time deposit by bank on daily/monthly basis in cbs software -such interest is credited in software by different banks for the purpose of macro monitoring pur[ose only.No effective credited is actually given to the depositors Tax need not deducted in such cases -circular no.3/2010,dated march 2,2010.

WHEN AND HOW TAX IS TO BE DEDUCTED AT SOURCE FROM SALARY[SEC.192]

270.The summarized provision of section 192 are given below-

who is the payer	Employer
Who is the recipient	Employee
Payment covered	Taxable salary
At what time Tax has to be deducted at source	At the same time of payment
maximum amount which can be paid with out tax deduction	The amount of Exemption limit
Rate of tax deduction at source	normal rates applicable to an individual [see para 269.2 and appendix 1]
when the provision are not available	-
Is it possible to get the payment without tax deduction or with lower tax deduction	The employee can make an application in form no.13 to the assessing officer to get a certificate of lower tax deduction or tax deduction.

270.1 HOW TO COMPUTE TAXBLE SALARY AND TAX THEREON-For copulating taxble salary,refer chapter 4 and chapter11 At the time of deducting tax at source,the person responsible for paying salary during the financial 2022-23 should keep the following points in consideration.

House rent allowance exemption-Exemption pertaining to house rent allowance shall be calculated by the employeer on the basis of specified limits provided by section10(13A).These limits have been givin in the book in para 42.1 this exemption depends upon rent paid name of landlord address of the property and PAN of lanlord(pan is required only if rent paid is more than Rs.1,00,000per annum) along with rent receipt given by the landlord However for the purpose of tax deduction the central board of direct taxes has given concession that rent receipt is not required if house rent allowance is Rs.3,000 per month or less.

other incomes of employee An employee(at his option)can declare his other income to the employer.He cannot declare negative income (except house property loss)

Deduction from gross total income-Employer should take into consideration deductible under section 80C,80CCC,80CCD 80CCG,80D,80DD,80DDB,80E,80EE,80GG,80GGA,80TTA,80TTBand 80U.

Tax liability-Tax is deductible on the taxble income at the rates applicable for the financial year.These rates are givin in appendix 1.if the employee does not have PAN tax is deductible either at the normal rate or at the raye of 20per cent,whichever is higher tax is not deductible if estimated salary of an employee does not exceed exemption limit(this rule is applicable even if the employee does not have PAN).At the request of am employee the employer can give relief under section 89.However this facility is available only if the employer is government or public sector undertaking or company,co-operative society local authority university institution or association or body.

When a person is employed by two or more employers during the financial year-In such case tax will be deducted by each employer separately However the employee is under obligation to declare salary received (and tax deducted thereon) From other employers to one of the employers by submitting information in Form no.12B.The employer to whom From no.12B is submitted shall deduct tax on the basis of aggregate salary.

Nature of claim	Evidence or particulars
House rent allowance	-Name and address of landlord/landlords -Amount of rent paid/payable -pan of landlord/landlords(where the aggregate rent paid during the financial year exceed Rs.1lakhs)
Leave travel concession or assistance	Expenditure and evidence pertaining to expenditure
Deduction of interest under the head"Income from house property	name,address,PAN of the lender and interest paid/payable
Deduction under section 80C,80CCC,80CCD,80CCG,80D,80DD,80DDB,80E,80EE 80GG,80GGA,80TTA,80TTB,AND 80U	Amount of investment/expenditure evidence of investment/expenditure

TDS certificate-TDS certificate will be given to the employee in form no.16 annually on or before may 31 after the end of the financial year This certificate has to be given in paper format However if a few condition are satisfied From no.16 can be given with digital signature.The employer should also give a statement of perquisites/profit in lieu of salary in from no.12BA (if salary exceed Rs.1,50,000).

salary without TDS or with lower TDS-To get salary without TDS or with lower TDS,the employee will have to approach the assessing officer by submitting an application in From no.13 under section 197.These provision are given in para289.7.

Deffering TDS in respect of income pertaining to employee stock option (Esop)of start-up-If employer is a start-up (qualified for deduction under section 80-1AC)and it allots any specified security/sweat eqity shares/ESOP to its employees,TDS on the perquisite may be deducted under section 192 within 14days-

a.after the expiry of 48 months from the end of the relevant assessment year;or

b.From the date of the sale of such specified security or sweat equity share by the assessee;or

WHEN AND HOW TAX IS TO BE DEDUCTED AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES [SEC.194A]

Who is the payer	Domestic company
Who is the recipient	Resident shareholder
Payment covered	Dividend
At what time tax has to be deducted at source	At the time of payment
Maximum amount which can be paid without tax deduction	Rs.5,000
Rate of tax deduction at source	10%
Is it possible to get the payment without tax deduction or with lower tax deduction	see paras 287.7and 289.8

Tds provisions of section 194 are not applicable if the recipients of dividend is Lic,General Insurance corporation any other insurance service provider business trust or a person notified by the central government.

273.The provision of section 194A are given below

Who is the tax payer	Any person paying interest other than interest on securities(not being an individual or a Hindu undivided family whose total sales turn-over or gross recipient from the business or profession carried on by him exceed Rs.1 crore in the case of business or Rs.50lakhs in the case of profession during the financial year immediately preceding the financial year in which the income is to be credited or paid).
Who is the recipient	A resident person
Payment covered	Interest other than interest on securities
At what time tax has to be deducted at source	At the time of payment or at the time of credit whichever is earlier
maximum amount which can be paid without tax deduction	see para 273.1
Rate of tax deduction at source	10%
when the provision are not applicable	For a few cases,see para 273.1
IS it possible to get the payment without tax deduction or with lower tax deduction	see paras 287.7and 289.8

Which are currently in force are printed in the book

WHEN AND HOW TAX IS TO BE DEDUCTED AT SOURCE FROM WITHDRAL FROM EMPLOYEES PROVIDENT FUND SCHEME[SEC.192A]

270A.Under section 192A,tax is deductible as follows-

1.who is deductor-Tax is to be deducted by the trustees of employees'provident Fund Schmes,1952 or any other person authorized under the scheme to make payment of accumulated sum to employees.

2.who is amount is subject to tax deduction -Tax is deductible from "taxble premature withdrawal"In other words,tax is deductible from accumulated lump sum payment (at the time of retirement or the time of leaving job)in the case the employee has not rendered continuous service of 5 years and he does not fall in any 4cases given below

.If the employee has rendered continuous service with his employer for a period of 5 years or more For the purpose of calculating 5-years time-limit service rendered with the previous employer shall be included,if the previous employeer also maintained recognized provident funds and te provident funds balance of the employee was transferred by him to the current employer.

If the employee has been terminated because of certain reason which are beyond his control (e,g ill health of the employee discontinuation of business by employer,completion of project for which the employee was employed,etc).

If the employee has resigned before completion of 5 years but he joins another employer(who maintains recognized provident funds and provident funds and provident funds money with the current employer is transferred to the new employer).

If the entire balance standing to the credit of the employees is transferred to his account under a pension scheme referred to in section 80CCD and notified by the central Government (i.e,NPS).

3.Time of tax deduction-Tax is deductible at the same time of payment.

4.Rate of TDS-Tax is deductible under section 192A at the rate of 10per cent (no surcharge/education cess if recipient is resident,surcharge/education cess applicable if recipient is non-resident)of "taxble pemature withdrawal"If pan of the recipient is not available,tax is deductable at the maximum marginal rate of tax (i.e 42.744 per cent).

5.what is threshold limit-Tax is not deductible if "taxble premature withdrawal"is less than Rs.50,000 .

6.Is it possible to get lower TDS certificate under section 197-Lower TDS certificate under section 197 is not possible.

7.Is it possible to avoid TDS by submitting From no.15G/15H under section 197A-THE receipent can given a declaration in from no.15G to the effect that his total income including taxble premature withdrawal from provident funds does not exceed the maximum amount not chargeable to tax and on fuenishing of such declaration no tax will be deducted similar facility of filling self-declaration in from no.15H for non-deduction of tax under section 197A is available to senior citizen receiving pre-mature withdrawal

271.1 securities interest which is not subject to tax deduction-no tax is deducible at source from the amount of interest payable on the following:

a.debenture issued by any co-operative society (including a co-operative land mortage Bank or co-operative land development bank) or any other institution or authority or a public sectorcompany notified by the central government;

b.any security of the central/state government [However,interest exceeding Rs.10,000 payable during a financial year on 8per cent saving (Taxable)bonds,2003 or 7.75 per cent savings(Taxable)bonds 2018 (popularly know as relief bonds)are subject to tax deduction at source]

c.securities beneficially owned by the life insurance corporation of india or the general insurance corporation of india or to any of the four companies formed by virtue of the schemes framed under section 16(1) of the general insurance business (national station ) Act 1972 or any other insurer;

d.interest on debenture up to Rs.5,000 paid or payable by widely-held company by an account payee cheque to a resident individual or a resident Hindu unindidived family and.

e.any listed Demat security.

WHEN AND HOW TAX IS TO BE DEDUCTED AT SOURCE FROM INTEREST ON SECURITIES [SEC.193]

271.The provision of section 193 are given below-

Who is the payer	payer of interest on securities
who is the recipient	A resident holding securities
payment covered	Interest on securities
At what time tax has to be deducted at source	At the time of payment or at the time of credit which ever is erlier
maximum amount which can be paid without tax deduction	-
Rate of deduction at source	10 per cent(no surcharge education cess,etc.)

The employee may at the sme time of deducting tax at source increase or decrease the amount to be deducted for the purpose of adjusting any previous deficiency or excess deduction.

194-IB Will be applicable for Individual and Hindu Undivided Family

In order to widen the scope of tax deduction at source to cover such individuals (who are exempted from tax deduction under section 194-I), section 194-IB has been inserted with effect from June 1, 2017. The provisions of section 194-IB are given below

Who is responsible for tax deduction: Any individual/HUF responsible for paying to a resident rent of Land or building, is liable to deduct tax under section 194-IB. However, provisions of section 194-IB are not applicable in case rent is paid/credited by an individual/HUF whose total sales turnover or gross receipts from the business or profession (carried on by him) exceed Rs 1 crore in the case of business or Rs. 50 Lakh in the case of profession during the financial year immediately preceding the financial year in which rent is to be credited or paid. Moreover, tax is deductible under this section only if the quantum of rent is more than Rs. 50,000 per month (or part of month).

Time of deduction: Tax shall be deducted only at the time of credit of rent (for the last Month of the previous year or last month of tenancy if the property is vacated during the year) to the account of payee or at the time of payment thereof iin cash or by cheque/draft, whichever is earlier

Rate of tax Deduction: Tax is deductible at the rate of 5 per cent (3.75 per cent during May 14,2020 and March 31, 2021) of rent paid/credited during the financial year. However, no tax is deductible where rent is Rs. 50,000 per month (or less). If PAN of receipent is not available, tax is deductible at the rate of 20 per cent (however, in such case the amount of TDS cannot exceed rent payable for the last month of previous year or last month f tenancy)

Provisions of Tax not applicable: Provisions of section 203A (pertaining to TAN) shall not apply in respect of tax deducted under section 194-IB

X owns a building situated at T Nagar, Chennai. It is given on rent to Y (rent being Rs. 60,000 per month).Discuss whether TDS provisions are applicable for the financial year 2022-23 in the following three different situation

Situation 1: Y is a businessman and his annual turnover from business is more than Rs. 10 crore since 2005. However, building is used by him for his residential purposes.
Situation 2: Y is a businessman. His turnover for the financial year 2021-22 is Rs 90 lakh.
Situation 3: Y is a salaried employee. He gets hours rent allowance from the employer. On the basis of rent paid to X, he claims exemption under section 10(13A) pertaining to house rent allowance.

Solution

In Situation 1

In Situation 2 and 3

194-I will be not applicable for Individual or Hindu Undivided family

Section 194-I has been inserted with effect from June 1, 1994

Who is responsible for tax deduction: Any Person (Not being an individual or a Hindu undivided family ) responsible for paying rent to a resident is required to deduct tax at source under the provisions of section 194-I
When tax has to be deducted: The person responsible for paying rent should deduct tax at source.Tax is to be deducted at source either:

a. at the time of credit of such income to the account of payee. or

b. at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode

which ever is earlier

No Tax is deductible if Payment during a FY does not exceed threshold limit: No Tax is deductible if the amount of rent credited/Paid during the financial year does not exceed Rs. 2,40,000 (1,80,000 during July 1, 2010 and March 31, 2019)

The Payee may not be owner of the building- Section 194-I Is applicable even if the person to whom rent is paid is not the owner of the building. In other words, tax is deductible even in the case of sub-lease of a building