1 % TDS on Property

[Aman Singh]

Hi,

I bought an apartment with a sale consideration value of around 60 lakh and currently under-construction. Construction started in 2014 and will get hand-over in Feb'18. Usually as per rule I was suppose to deduct 1 % TDS from instalment and submit to government but not yet done as I'm paying whole amount to builder directly until now. Is there a provision if I will pay whole lump sum amount of 1% TDS now to government before possession, then I would not be liable for any late charges or fines? Kindly suggest.

Regards,

Aman

[ANITA BHADRA]

Dear Sir ,

Tax needs to be deducted at the time of payment either it is payment of entire amount or installment. If the payments are being made in installments then at the time every installment payment.If the entire amount is paid in single installment than entire TDS amount should be deducted at the time of making complete payment

If you have paid any installment and going to pay whole amount in one go , you would not be liable for late charges or fine .

Regards

[Aman Singh]

Hi Anita,

Thanks for your response. After initial 20% down payment, rest other payments are done in instalments.Now only the final payment is pending which will happen during property registration. Whatever amount I paid until now in instalments, I paid the whole instalment to builder but didn't deduct 1% TDS. Now if I'll pay 1% TDS for total booking value then shall I be liable for late charges or fines ?Thanks.

[ANITA BHADRA]

Dear Sir

You have not deducted tax at the time of down payment and installments,you will be liable to pay interest of one percent (1%) for every month on the amount of such tax from the date on which you paid the down payment/ installment amount to the date of your deducting tax (paying whole amount to builder ) ..

In addition to this , there is a provision of late fee and penalty for submission of Form 26QB .

Relevant provisions :-

section 201 of Income Tax Act,1961 Act expressly states that any person liable to deduct TDS on the income distributed, makes default in deduction and / or payment of TDS shall be treated “assesse in default”. Such interest shall be paid before furnishing the Form 26QB.

• If TDS has deducted but not paid: In this case one and one-half percent (1.5%) for every month or part of a month on the amount of such TDS from the date on which such TDS was deducted to the date on which such TDS is actually paid.
• If TDS is not deducted: In this case one percent (1%) for every month or part of a month on the amount of such tax from the date on which such TDS was deductible to the date on which such TDS is deducted.
• Late fee on default in furnishing statement of TDS (26QB)

No filing or late filing of statement of TDS / TDS returns (Form 26QB) shall invite late fees under section 234E. It should be filed with challan within a period of seven days from the end of the month in which the deduction is made. Deductor will be liable to pay by way of fee of ₹ 200 per day till the failure to file TDS statement continues. .

• Penalty on default in furnishing statement of TDS (26QB)

No filing or late filing of statement of TDS / TDS returns (Form 26QB) shall invite penalty under section 271H. It should be filed with challan within a period of seven days from the end of the month in which the deduction is made. As section 271H which provides that a deductor shall pay penalty of minimum ₹ 10,000/- to ₹ 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement.

• Penalty under section 271H will be in addition to late filing fees
•  

Regards

AI Summary

TDS on property payments: failure attracts monthly interest and late filing penalties; file Form 26QB promptly. Obligation to deduct 1% TDS on payment for purchase of an under construction property arises at the time of each payment or on payment of the entire amount; failure to deduct attracts interest (one percent per month if not deducted, one and a half percent per month if deducted but not paid), a daily late filing fee for non submission of Form 26QB, and a separate penalty for delayed filing, with the deductor treated as an assessee in default until liabilities are cleared.