TDS Salary
TDS Return on Salary Payment (Form 24Q)
Every person or entity who has deducted TDS while disbursing salary to its employees must file your quarterly TDS returns. A delay in filing the returns attracts interest and penalty levied by the Tax Department. Witcorp provides you with a prompt mechanism to comply with all the TDS compliance on salary payment.
About This Plan
Get Witcorp’s help to help you comply to all the compliances for Salary Payments & Filings.
Timeline
It usually takes 3 to 5 working days.
Services Covered
- Registration on TRACES
- Form 24Q Up to 100 employees (1 no.)
- Fulfillment using ClearTDS Returns Software
- Bulk PAN Verification
- Challan Verification
- Online FVU Generation and Submission
- Generation of Form
Who Should Buy
- Any individual who is required to make a payment of salary and has to deduct TDS
- Any organisation such as corporate, partnership firm etc required to make salary payment after deduction of TDS
- Any branch of principal business office
How It’s Done
- Purchase of plan
- FIll in the details in the template provided
- Upload documents on vault
- Return form prepared by Tax Expert
- Generation of Form 16
Documents Required
- Details of deductor
- Details of responsible person
- Details of deductee
- Challan details
- Deduction details
TDS on Salary under Section 192
Section 192 of the Income Tax Act, 1961 deals with tax deducted at source (TDS) on salary. Your employer will deduct TDS from the salary payable to you. The salary you receive from your employer is categorised in ‘Income’ under the head ‘Salary’ and the employer will be responsible for deducting TDS at normal income tax rates applicable to you on your estimated income for the relevant financial year. The TDS deducted u/s 192 is reflected in Form 16, which is issued by the employer to the employee.
Who can Deduct TDS under Section 192
The employer’s can be-
- Companies (Private or Public)
- Individuals
- HUF
- Trusts
- Partnership firms
- Co-operative societies
All these employers are required to deduct TDS monthly and deposit it to the government within the specific time period. According to section 192 of the Income Tax Act, there must be an employer-employee relationship for the deduction of tax at source. The employer’s status such as HUF, firms or company is irrelevant for the deduction of tax at source under this section. Moreover, the number of employees employed by the employer does not matter while calculating and deducting TDS.
When is TDS Deducted under Section 192
Under Section 192, TDS is deducted at the time of actual payment of salary and not during the accrual of salary. It means tax will be deducted if your employer pays salary in advance or at the time of salary payment in arrears.
In case your estimated salary is not more than the basic exemption limit, tax amount will be zero and hence, TDS will not be deducted.
This rule is applicable even to those who do not have a PAN. To know the income tax rates applicable to you, click here.
The table below shows the basic exemption limit as per the age that does not require TDS to be deducted:
Age | Minimum Income |
Resident in India below 60 years | Rs 2.5 lakh |
Senior Citizens between 60 to 80 years | Rs 3 lakh |
Super Senior Citizens above 80 years | Rs 5 lakh |
How is TDS Deducted on Salary
Calculation of Taxable Income of the Employee
At first, the employer estimates employee’s salary for the relevant financial year. This should include basic pay, dearness allowance, perquisites granted by the employer, other allowances granted by the employer like HRA, LTA, meal coupons, etc., EPF contributions, bonus, commissions, gratuity, salary from the previous employer, if any, etc.
In the next step, the employer calculates exemptions under Section 10 of the Income Tax Act. The exemptions can be applicable on allowances like HRA, travel expenses, uniform expenses, children’s education allowances, etc. Also, reduce the amount of professional tax paid, entertainment allowance and standard deduction of Rs 50,000.
The employer reduces such exemption from the gross monthly income and the net amount will be treated as the taxable salary income.
If the employee has provided the information about other incomes such as rental income from house property or bank deposits, etc. In that case, such amounts should be added to the net taxable salary. Further, the interest paid on housing loans are deducted from the house property income, but if there is no income from house property, there will be a negative figure under the head ‘income from house property’. After adding or reducing the said amounts, the calculated figure will be the employee’s gross total income.
Now, the employer reduces the investments for the year, which fall under Chapter VI-A of the Income Tax Act declared by the employees as per the investment declaration submitted. The declaration may include the amounts of investments such as PPF, employee’s provident fund, ELSS mutual funds, NSC, Sukanya Samridhi account. It may also income expenditures such as home loan repayment, life insurance premiums, NSC, Sukanya Samridhi account, etc. Similarly, the employer allows deduction under various other sections such as Section 80D, 80G, etc.
Note: If the employee wishes to opt for a new tax regime, he/she may intimate the same to the employer about exercising the option each year. And the employer may deduct his/her income tax according to the new tax regime.
Also, if the employee has declared to calculate income tax as per the new tax regime, then the Income Tax act does not allow 70 specified exemptions and deductions allowed in the old tax regime. Hence, the employer will calculate the net taxable income as per the income tax regime chosen by the employee.
Rate of TDS Deduction
Section 192 does not specify a TDS rate. TDS will be deducted as per the income tax slab and the rates thereof applicable to the taxpayer for the relevant financial year for which the salary is paid.
The tax calculation is usually done by the employer at the beginning of the financial year. The TDS to be deducted by dividing the estimated tax liability of the employee for the financial year by the number of months of his employment under the particular employer.
However, if there is no PAN of employee, TDS shall be deducted at the rate of 20% plus 4% cess.
The employer adjusts any excess or deficit arising out of any earlier deduction by increasing or decreasing the number of subsequent deductions during the same financial year.
If the employee has made any payment as an advance tax, then the same can be adjusted for calculation of TDS. The employee needs to intimate the same to the employer.
Salary from More Than One Employer
If you are engaged with two or more employers simultaneously, you can provide details about your salary and TDS in Form 12B to any one of the employers. Once the employer receives all kinds of information from you, he/she will be responsible for computing your gross salary to deduct TDS.
Subsequently, if you resign and join a different employer, you can provide details of your previous employment in Form 12B to your new employer. This employer will consider your previous salary and TDS will be deducted for the remaining months of the financial year.
If you choose not to provide details of income of other employment, each employer will deduct TDS only from the salary paid by him respectively.
Frequently Asked Questions:
- What is TDS in salary?
TDS or Tax Deducted at Source is a tax levied by the Indian government wherein taxes are collected based on ‘pay as you get’. The taxes are deducted at payments source, such as salary & commission.
The employer deducts the Tax before making the payment to the employee and is deposited with the govt. The employer later issues form 16 to its employees, which serves as proof of tax payment in the employee’s hands. - When is online return mandatory?
For certain people, it is compulsory to be submit the quarterly return online. If the deductor is :
A Government office A company’s principal officer Assessee who is required to have its accounts audited for the previous year under 44AB of the Income Tax Act, 1961. If there are 20 or more records of deductees in a statement for any quarter of a particular financial year. Annexure I and Annexure II are also forms that require submission along with this form. Annexure I has to be filled in for all four quarters of the year. Annexure II needs to be filed only for the final quarter of the year. Witcorp Experts will guide you on the same.
- Is there any minimum amount upto which tax is not deducted on salary payment?
If the expenditure incurred/payment made during the year is below the threshold limit, then there is no requirement to deduct tax at source. If net taxable income is less than maximum amount which is not chargeable to tax Rs. 2,50,000 for an individual Rs. 3,00,000 for Senior Citizens Rs. 5,00,000 for Super Senior Citizens - Is their any interest and penalty for non or late filing of Form 24Q?
In case you have not deposited TDS by the due date, the following penalties are applicable: Late filing fee (if you do not file by the deadline) Interest (if you do not deposit the TDS amount in time) Penalty (if TDS is not filed within one year of the due date) - I need to file my TDS returns for more than 100 employees. Can you advise?
Our plan caters to filing TDS returns for up to 100 employees. If your firm has more than 100 employees, our representatives will advise you on the fees. Please submit your enquiry here or write to us at
Non-Salary/Business
This plan enables you to file your quarterly TDS returns related to all specified payments where TDS is required to be deducted, and return is required to be filed via Form 26Q without any hassles. A delay in filing the returns attracts interest and penalty levied by the Tax Department. Hence, paying TDS within the due date is essential, and subsequent return filing is equally crucial.
About This Plan
File your returns with Witcorp and avoid tax notice
Timeline
It usually takes 3 to 5 working days.Services Covered
- Registration on TRACES
- Form 26Q upto 10 deductees (1 no.)
- Bulk PAN Verification
- Challan Verification
- Online FVU Generation and Submission
- Generation of Form 16A
Who Should Buy
- Any individual who is required to make a payment other than salary and has to deduct TDS
- Any organisation such as corporate, partnership firm etc required to make specified payments (other than salary) after deduction of TDS
- Any branch of principal business office
How It’s Done
- Purchase of plan
- FIll in the details in the template provided
- Upload documents on vault
- Return form prepared by Tax Expert
- Generation of Form 16 & 16A
Documents Required
- Details of deductor
- Details of responsible person
- Details of deductee
- Challan details
- Deduction details
Sections covered in Form 26Q
- 193 – Interest on securities
- 194 – Dividend
- 194A – Interest other than Interest on Securities
- 194B – Winnings from lotteries and crossword puzzles
- 194BB – Winnings from horse race
- 194C – Payment of contractor and subcontractor
- 194D – Insurance commission
- 194DA – Maturity of life insurance policy
- 194EE – Payment in respect of deposit under national savings scheme
- 194F – Payments on account of repurchase of Units by Mutual Funds or UTI 94F
- 194G – Commission, prize etc., on sale of lottery tickets
- 194H – Commission or Brokerage
- 194I(a) – Rent
- 194I(b) – Rent
- 194J – Fees for Professional or Technical Services
- 194K – Income in respect of units
- 194LA – Payment of Compensation on acquisition of certain immovable property
- 194LBA – Certain income from units of a business trust
- 194LBB – Income in respect of units of investment fund
- 194LBC – Income in respect of investment in securitization trust
- 194N – Payment of certain amounts in cash
- 194O – Payment of certain sums by e-commerce operator to e-commerce participant
- 197A – Details of payment where there is no deduction of tax in certain cases
Details to be mentioned in 26Q
As against 24Q which contains 2 annexures, Form 26Q contains only one annexure. Challan details (BSR code, date of payment, total amount etc.), details of deductor and deductees are to be mentioned. Along with this, if the deductor hasn’t either deducted TDS or deducted it at a lower rate, reasons are also to be mentioned in the form.
Due Date to file Form 26Q
April to June – 31st July
July to Sept – 31st Oct
Oct to Dec – 31st Jan
Jan to Mar – 31st May
Rate of Interest on delayed payment of TDS
If TDS is not deducted – 1% per month, from due date of deduction to actual date of deduction.
Penalties for late filing of Form 26Q
Late Filing Fees – under section 234E, a fine of Rs. 200 per day is to be paid until the return is filed. This amount has to be paid for each day until total fine becomes equal to the TDS amount. The penalty under 271H – In addition to fees to be paid under 234E, AO may charge the penalty of minimum Rs. 10,000 and maximum Rs. 1,00,000/-
No penalty will be charged under 271H if –
- TDS is deposited to the government
- Late filing fees and interest (if any) is also deposited,
- Return is filed before expiry of 1 year from due date
Remember these points
- Verify all the PAN numbers,
- Verify the challans, and try to match them through OLTAS or NSDL
- Signed Form-27A is to be filed with the TDS return
Frequently Asked Questions:
- What is TDS in salary and other payment?
TDS, or Tax Deducted at Source, is a tax levied by the Indian government wherein taxes are collected based on ‘pay as you get’. The taxes are deducted at payment sources such as salary paid to an employee or other commissions earned by a broker. The employer deducts the taxes before making the payment to the employee and is deposited with the govt. The employer later issues form 16 to its employees and form 16B to other deductees, which serves as proof of tax payment in their hands. - Is their any interest and penalty for non or late filing of Form 24Q & Form 26Q?
- In case you have not deposited TDS by the due date, the following penalties are applicable: Late filing fee (if you do not file by the deadline) Interest (if you do not deposit the TDS amount in time) Penalty (if TDS is not filed within one year of the due date)
- Do all deductors require to quote their PAN?
It is compulsory to quote the PAN for non-Government deductors, whereas “PANNOTREQD” has to be mentioned on the form in the case of Government deductors. - What is form 26Q?
Form 26Q is submitted for TDS details on all payments other than salary every quarter by the deductor. Form 26Q is applicable for TDS deducted under section 200(3) of the Income Tax Act for TDS under sections 193 & 194 being interest on securities, Dividend securities, professional fees, directors’ remuneration etc. - When is online return mandatory?
For certain people, it is compulsory to submit the quarterly return online if the deductor is: A Government office A company’s principal officer Assessee who Is required to have their accounts audited for the prior year under 44AB of the Income Tax Act, 1961. Suppose there are 20 or more records of deductees in a statement for any quarter of a particular financial year. Witcorp Experts will guide you on the same. - I need to deduct TDS returns for more than 10 vendors. Can you advise?
Our plan offers TDS returns filing for 100 employees of a single firm. For companies with more than 100 employees will get a customized fee plan from our experts
TDS on Sale of Property
The buyer has to pay several taxes, however, while making a purchase of the property, the buyer is liable to deduct and pay taxes. Section 194IA deals with the requirement of TDS deduction by the buyer at the time of purchase of the property.
TDS on Sale of property is required to be deducted @1% if the property value is more than Rs. 50 Lakhs. This TDS is required to be deducted for all transactions after 1st June 2013 if the property transaction value is more than Rs. 50 Lakhs. This is applicable on sale of all properties except on sale of Agricultural Land. It is also important to note here that 1% TDS is applicable only if the seller is Resident in India. If the seller is not-resident in India i.e. he is an NRI, then the rate of TDS will change.
The rate of TDS in case of sale of property by Non-Resident would be 20% + Surcharge + Cess. TDS on Sale of Property by NRI would be levied even if the Transaction Value is less than Rs. 50 Lakhs.
About This Plan
File your returns with Witcorp and avoid tax notice
Timeline
It usually takes 3 to 5 working days.
Services Covered
- Registration on TRACES
- Form 26QB (1 no.)
- Bulk PAN Verification
- Challan Verification
- Online FVU Generation and Submission
- Generation of Form 16A
Who Should Buy
- Any person buying property and need to comply to TDS Provision as per Income Tax Act
How It’s Done
- Purchase of plan
- FIll in the details in the template provided
- Upload documents on vault
- Return form prepared by Tax Expert
- Generation of Form 16 & 16A
Documents Required
- Details of deductor
- Details of responsible person
- Details of deductee
- Challan details
- Deduction details
- Property Details
Requirements of Section 194IA
Are you planning to purchase property in India? If so, you should be aware of the TDS (Tax Deducted at Source) that is applicable on property transactions. Under the Indian Income Tax Act, TDS is applicable on sale of property at the rate of 1% of the transaction value. The TDS is deducted by the seller at the time of sale and is payable to the government.
As a buyer, you should be aware of the TDS that is applicable on property transactions so that you can plan your finances accordingly. Make sure to factor in the TDS when budgeting for your property purchase.
From 1 June 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than Rs 50 lakhs, he has to deduct tax at source (TDS) when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.
- The buyer has to deduct TDS at 1% of the total sale consideration. Here, the buyer is required to deduct TDS, not the seller
- No TDS is required to be deducted if sale consideration is less than Rs 50 lakhs.
- If the payment is made by instalments, then TDS has to be deducted on each instalment paid.
- ‘Consideration for immovable’ property shall include all charges like nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of the immovable property. This is applicable for immovable property purchased on or after 1 September 2019 as per Budget 2019.
- TDS is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55lakh, you have to pay TDS on Rs 55 lakh and not on Rs 5 lakh (i.e. Rs 55 lakh – Rs 50 lakh). This is applicable even when there is more than 1 buyer or seller. Post the budget 2019 amendment to section 194-IA, in the above example, if on 1 September 2019, you have paid Rs 2 lakh towards parking fee, Rs 1 lakh for water facility fee and Rs 1 lakh for electricity fee, your sale consideration would be Rs 59 lakh (55+2+1+1). You will have to pay TDS on Rs 59 lakh @ 1%. Your TDS payable would be Rs 59,000. In case the transaction is carried out from 14 May 2020 to 31 March 2021, the rate is 0.75%.
- The buyer of any immovable property need not obtain a TAN (Tax Deduction Account Number) for making payment of the TDS on immovable property. You can make the payment using your PAN.
- For the purpose of making payment of TDS on immovable property, the buyer has to obtain the PAN of the seller, else TDS is deducted at 20%. PAN of the buyer is also mandatory.
- TDS is deducted at the time of payment (including instalment payments) or at the time of giving credit to the seller, whichever is earlier.
- The TDS on the immovable property has to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.
- After depositing TDS to the government, the buyer is required to furnish the TDS certificate in form 16B to the seller. This is available around 10-15 days after depositing the TDS. The buyer is required to obtain Form 16B and issues the form to the seller.
Steps to pay TDS through challan 26QB and to obtain Form 16
The steps to pay TDS through challan 26QB and to obtain Form 16B (for the seller) are as follows:
e-Payment through Challan 26QB (Online)
Step-1: Log in to your account on the Income Tax e-filing portal. Select e-File > click on e-Pay Tax from the dropdown as shown below
Step-2: Click on ‘+ New Payment’
Step-3: Click on the proceed button on the tab ‘26QB- TDS on Property’ as highlighted below
Note: In the next few steps, you will have to add the following details:
- Add Buyer’s Details
- Add Seller’s Details
- Add Property Transferred Details
- Add Payment Details
Step-4: Add Buyer’s Details
All your details will be auto-filled, but you can also change them if needed. After entering the details, click on ‘Continue’
Step 5: Add Seller’s Details
Add all the details of the Seller like their PAN, address
Step 6: Add Property Details
Add all the property details like type, address and also the sale details like date of agreement, value etc. The tax amount will be calculated automatically. Once done, click on ‘continue’
Step 7: Add Payment Details
Select the payment mode and proceed to complete the payment. Once the payment is done, a challan will be generated.
Step 2: Register in TRACES
- If you are a first-time user, register on TRACES as a Tax Payer with your PAN Card Number and the Challan number registered during payment.
Once you register, you will be able to obtain approved Form 16B (TDS certificate) and you can issue this Form to the Seller.
Check your Form 26AS seven days after payment. You will see that your payment is reflected under “Details of Tax Deducted at Source on Sale of Immovable Property u/s 194(IA) [For Buyer of Property]”.
Part F gives you details such as TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgement number (which is the same as the one on your Form 26QB), date of deposit and TDS deposited.
Step 3: Download your Form 16B
After your payment in Form 26AS has been reflected, log in to TRACES. Go to the Download tab at the tab and click on “Form-16B (for the buyer)”.
To finish this process, fill PAN of the seller and acknowledgement number details pertaining to the property transaction and click on “Proceed”.
Verify all the details once and click on “Submit a request”.
After a few hours, your request will be processed. Click on the Downloads tab and select Requested Downloads from the drop-down menu.
You should be able to see that the status of your Form 16B download request is ‘available‘.
If the status says ‘submitted‘ wait for a few hours more before repeating the last step.
Download the ‘.zip file’. The password to open the ‘.zip file’ is the date of birth of the deductor (the format is DDMMYYYY). Your form will be available inside the .zip file as a pdf. Print this out.
Notice for Non-Filing of Form 26QB
The income tax department receives an Annual Information Return (AIR) from the registrar/sub-registrar office regarding the purchase and sale of property regularly. From this report, the department can figure out if you have made a property transaction exceeding Rs.50 lakh.
If the buyer has not deducted tax at source at 1% (or 0.75%) of the transaction amount or not filed TDS within the specified time, the IT department will send a notice to the buyer.
Mandatory Filing of Form 26QB
As per the Finance Act of 2013, TDS is applicable on the transfer of immovable property, wherein the consideration of the property exceeds or is equal to Rs 50 Lakhs.
Section 194 IA of the Income Tax Act, 1961 read with Rule 30, 31 & 31A of Income Tax Rules states that:
For all such transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration.
Tax so deducted should be deposited to the Government Account through e-tax Payment option (Netbanking) or any of the authorised bank branches.
Any sum so deducted under section 194-IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made.
PAN of the seller, as well as Purchaser, should be mandatorily furnished in an online form (Form 26QB) for furnishing information regarding the property transaction. Facility for furnishing information regarding the transaction of sale of immovable property and payment of TDS thereof is available on the website www.tin-nsdl.com (http://www.tin-nsdl.com/).
TDS certificate in Form 16B is required to be issued by the Buyer of property to the Seller, in respect of the taxes deducted and deposited into the Government Account.
Form 16B will be available for download by registering on the website of Centralized Processing Cell (TDS) www.tdscpc.gov.in (http://www.tdscpc.gov.in/).
Implications of Non-Late Filing of TDS Statement
For Buyer of Property
In case of default on account of non/late filing of Form 26QB, a fee shall be levied u/s 234E of the Act.
He shall be liable to pay, by way of fee, a sum of Rs. 200 (two hundred) for every day during which such failure continues.
The buyer would also be liable for defaults of Late Deduction, Late Payment and Interest thereon. Penalty under Section 271H may also be levied on him by the Assessing Officer.
For Seller of Property
In case of non/ late filing of Form 26QB, the seller will not be able to claim the TDS Credit.
Tax so deducted should be deposited to the Government Account through the e-tax payment option (Netbanking) or any of the authorised bank branches. Any sum so deducted under section 194-IA shall be required to be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made.
Foreign/NRI payments
TDS Returns – Payments outside India (Form 27Q)
Foreign payments on your mind? Make sure TDS form 27Q is filled when applicable. Buy this plan from us and leave the filling to us.
About This Plan
Foreign payments on your mind? Make sure TDS form 27Q is filled when applicable. Buy this plan from us and leave the filling to us.
Timeline
It usually takes 3 to 5 working days.
Services Covered
- Registration on TRACES
- Form 27Q upto 10 deductees (1 no.)
- Challan Verification
- Online FVU Generation and Submission
- Generation of Form 16A
Who Should Buy
- Indians who are making payments to NRIs or any other payments outside India
How It’s Done
- Purchase the plan
- Send us all the details regarding payments made outside India
- Witcorp experts will prepare and file the TDS return – Form 27Q
Documents Required
- Details of deductor
- Details of responsible person
- Details of deductee
- Challan details
- Deduction details
- The documents needed shall depend on the service you need at a particular point of time. The same shall be communicated to you by our experts based on your requirements.
Applicability of TDS on Sale of Property by NRI
Whenever any property is purchased/sold, TDS is required to be deducted. When paying the amount to the seller, the buyer will deduct some amount (technically called TDS) and pay the balance to the seller. This amount the buyer has deducted would then be required to be deposited with the Income Tax Department by the buyer. The amount to be deducted would depend on the residential status of the seller. If the seller is a resident Indian, the amount of TDS to be deducted would be 1% of the Sale Price, whereas if the seller is an NRI, the amount of TDS to be deducted would depend on the quantum of money received by the seller. The residential status of the seller would be considered and not the buyer for computing the amount of TDS to be deducted. The manner and amount of deduction of TDS in case the seller is a Resident Indian has been explained in detail here – TDS @ 1% on the property sale by Resident Indian. If the seller is an NRI, then the manner and amount of TDS deduction have been explained in detail below.
What is Rate of TDS on Sale of Property by NRI?
TDS on Sale of Property by NRI is required to be deducted as per the rates mentioned below. Please note that Surcharge and Cess would also be levied on the amount:
Nature of Capital Gains | Description | TDS Rate on Sale of Property by NRI |
Long Term Capital Gains | Property held for more than 2 years | 20% |
Short Term Capital Gains | Property held for less than 2 years | Income Tax Slab Rates of Seller |
What is Rate of TDS on Sale of Property by NRI?
Therefore, the effective rate of TDS on sale of property by NRI in case of Long Term Capital Gains would be as follows:
| Particulars | Property Sale Price (Rs.) | ||
Less than 50 Lakhs | 50 Lakhs to 1 Crores | More than 1 Crores | ||
| Long Term Capital Gains Tax | 20% | 20% | 20% |
(Add) | Surcharge | Nil | 10% of above | 15% of above |
| Total Tax (incl Surcharge) | 20% | 22% | 23% |
(Add) | Health & Ed. Cess
| 4% of above | 4% of above | 4% of above |
| Applicable TDS Rate (incl. Surcharge & Cess) | 20.8% | 22.88% | 23.92% |
| Particulars | Property Sale Price (Rs.) | |
1 Crore to 2 Crores | 2 Crores to 5 Crores | ||
| Long Term Capital Gains Tax | 20% | 20% |
(Add) | Surcharge | 25% of above | 37% of above |
| Total Tax (incl Surcharge) | 25% | 27.4% |
(Add) | Health & Ed. Cess | 4% of above | 4% of above |
| Applicable TDS Rate (incl. Surcharge & Cess) | 26% | 28.496% |
In case of Short Term Capital Gains (i.e. if the Property has been held for less than 2 years by the seller), this Surcharge and Cess would be added to the applicable Tax Rate as per the Income Tax Slabs in the same manner as explained above for Long Term Capital Gains.
This TDS is required to be deducted whenever any payment is made to the NRI for purchase of property. Even if any advance is being paid for purchase of property – TDS is required to be deducted.
This TDS is required to be deposited by the buyer with the Income Tax Dept stating that this is the TDS which he has deducted from the payment made to NRI.
Moreover, this TDS on purchase of Property from NRI is required to be deducted irrespective of the Transaction Value of the Property. Even if the value of property is less than Rs. 50 Lakhs – this TDS is required to be deducted.
Amount on which the TDS is required to be deducted
The TDS on sale of property by NRI is required to be deducted under Section 195 and is ideally required to be deducted on the Capital Gains. However, this computation of Capital Gains cannot be done by the Seller himself and should be done by the Income Tax Officer.
The seller shall file an application in Form 13 with the Income Tax Dept and request them to compute his Capital Gains. The procedure for filing of this form is a bit complicated and the seller can take the services of a chartered accountant for filing an application with the Income Tax Dept.
The Income Tax Department will compute the Capital Gains of the seller and will issue a certificate for Nil/ Lower deduction of TDS depending on the capital gains arising on the sale of property.
The seller is required to give this certificate to the buyer and the buyer will deduct the TDS as per the rates mentioned in the income tax certificate.
In case this certificate is not obtained by the seller from the Income Tax Department, the TDS should be deducted on the Total Sale Price and not on the Capital Gains. Therefore, it is very important for the seller to obtain this certificate from the Income Tax Officer.
It is advisable that the details of the TDS deducted shall be mentioned in Property Sale Agreement. It should also be noted that it is not the responsibility of the Property Registrar to ensure the TDS Deduction. The Registrar will register the Sale Agreement even if the TDS is not deducted or wrongly deducted.
If the TDS is wrongly deducted or not deducted, the Income Tax Dept will not do anything to the seller but will catch hold of the buyer of property to deposit the TDS. If the buyer forgot to deduct the TDS or deducted less TDS – the Income Tax Dept will recover the TDS from the buyer.
TDS Payment, TDS Return and TAN No.
There are a lot of compliances to be taken care of when buying a property from a NRI. Firstly, the buyer should have a TAN No. for deduction of TDS. TAN No. is not required in case the property is purchased from a Resident Indian but is mandatory in case the property is purchased from a Non Resident Indian.
TAN No. stands for Tax Deduction and Collection Account No. and is different from a PAN No. Only the buyer is required to have this TAN No. and not the seller. In case the buyer does not have the TAN No., he should apply for the same before deduction of TDS. It is important to note here that in case there are 2 buyers, both of them would be required to apply for a TAN No.
The TDS so deducted by the buyer shall be deposited with the Income Tax Dept within 7 days from the end of the month in which the TDS has been deducted. For example: If TDS is deducted in the month of June, then the TDS should be deposited with the Income Tax Dept on or before 7th July.
This TDS is required to be deposited along with Challan No./ ITNS 281 and can be deposited online as well as through various bank branches.
After the deposit of TDS, the buyer is required to furnish a TDS Return. This TDS Return is required to be furnished in Form 27Q and is required to be furnished separately for each quarter in which the TDS has been deducted. This TDS Return is required to be deposited within 31 days from the end of the quarter in which the TDS has been deducted.
After the deposit of TDS and filing of TDS Return, the buyer is also required to furnish Form 16A to the seller of property.
Things to be taken care of by the Seller
The following points should be kept in mind by the seller with respect to the deduction of TDS on Sale of Property by NRI
- Try to get the Certificate from the Income Tax Department for computation of Capital Gains which will lower the TDS to be deducted.
- The Income Tax Officer may take around 2 to 4 weeks to issue to certificate for lower deduction of TDS and will ask for various documents for checking details like Purchase Price, Date of Purchase, any expenses on Renovation/ Construction etc.
- In case the Seller is unable to get the Certificate, the TDS would be deducted on the Sale Value and will lead to excess deduction of TDS.
- Apart from the Property Registration Documents, the seller should also collect Form 16A from the Buyer.
- The seller can reduce his Capital Gains which will lead to lesser TDS and Tax Liability if the seller intends to reinvest the Capital Gains in India.
- In case the seller does not opt for this certificate, he can also apply for Refund of the excess TDS deducted at the end of the year. (Recommended Read: Should NRI’s opt for Refund or Certificate for Lower Deduction of TDS?)
- In case there are 2 sellers (i.e. Co-owners), both of them would be required to file Form 13 separately for reducing the TDS Rates.
Things to be taken care of by the Buyer
There are a lot of responsibilities of the Buyer in case of purchase of property from a NRI. The buyer shall:-
- Deduct TDS at the time of each payment and not at the time of Registration of Property
- The TDS so deducted shall be deposited with the Income Tax Dept as per the schedule for deposit of TDS.
- TDS Return shall also be furnished with the Income Tax Dept as per the schedule for filing of TDS Return
- The Buyer shall also issue Form 16A to the seller after filing the TDS Return. Form 16A is a TDS Certificate which states that the buyer has deposited the TDS with the seller.
- In case of late payment of TDS – interest would be levied @ 1%/1.5% per month
- In case of late filing of TDS Return – Penalty of Rs. 200 per day would be levied. The Income Tax Officer may also levy a penalty of upto Rs. 1 Lakhs.
- In case of Home Loan, TDS is to be deducted when payment is made to the Seller and not when the EMI is paid to the Bank
How to avoid Double Tax on Sale of Property by NRI in 2 Countries
Many Countries levy Tax on sale of property by their Residents irrespective of the location of the property. For eg: An NRI residing in US sells property in India, then both US and India will levy Tax on this transaction. US will levy tax because the NRI is residing in US and India will levy tax because the property is located in India leading to double taxation.
However, to avoid levy of double taxes, India has entered into Double Taxation Avoidance Agreements with several countries. These agreements state that if a person has paid Tax on sale of property in India, then he can get a tax credit of the taxes paid in India which will reduce his tax liability in the other country.
Proper Disclosures are required to be made in this case in the country where the tax credit is being claimed. For instance, if you are an NRI based in the US and you sell your property in India, you would be required to declare such gains/losses on sale of property in your US Tax Return under Section D of Form 1040. And while paying taxes to the US Govt, you can deduct the taxes paid in India since India has a Double Taxation Avoidance Agreement with United States.
Repatriation of money outside India by NRI
To repatriate the money outside India received on sale of property in India, the NRI would also be required to submit Form 15CA & Form 15CB to the Bank. These forms are required to be generated from the Income Tax Website and then submitted to the Bank.
Form 15CA may be generated by the NRI himself or by his Chartered Accountant but Form 15CB can only be generated by a Chartered Accountant. The Chartered Accountant is also required to sign and stamp the Form 15CB
In these forms, various disclosures including the source of funds to be repatriated is required to be made along with declaration that all taxes have been paid on such funds in India.
NRI’s are allowed to repatriate a maximum of $1 Million (USD) outside India per calender year. (Refer: RBI Circular)
Reduce your TDS Liability by filing application in Form 13
To reduce the TDS on Sale of Property by NRI, the NRI is required to file an application in Form 13 with the Income Tax Department for issuance of Certificate for Nil/ Lower Deduction of TDS. This Certificate helps the NRI’s in reducing the TDS Liability to a great extent and therefore, most NRI’s opt for this certificate.
However, filing this form is a complicated task and therefore most NRI’s hire a Chartered Accountant for filing this application. You can avail our services for filing application for Nil/Lower Deduction of TDS.
Details Required for Filing Form 27Q
Following features are required to file Form 27Q:
Sl.No | Entity | Details |
1 | Deductor | PAN, TAN, Name, Address and Contact Details |
2 | Responsible Person | Name, PAN, Address and contact details |
3 | Challan | Challan serial number, BSR Code, TDS, Surcharge and Education Cess paid |
4 | Deduction | Deductee name, PAN, Amount paid or credited, TDS deducted and deposited |
In case of non-availability of PAN with NRIs, additional details of NRI such as Tax Identification Number (TIN), Permanent Address, Country of residence, Email and Contact details are needed to be furnished in Form 27Q.
Due Date for Filing Form 27Q
The due date for Payment of TDS deducted on salary for every month is seventh of the next month. For March, it is thirtieth April of the next year. The due date for filing the Form 27Q for every quarter is as follows:
Quarter | Period | The due date for Filing Form 27Q |
Q1 | 1st April – 30th June | On or before 31st July |
Q2 | 1st July – 30th September | On or before 31st October |
Q3 | 1st October – 31st December | On or before 31st January |
Q4 | 1st January – 31st March | On or before 31st May |
Some more details about 27Q
Statistics of Vouchers
All transactions, whether recorded correctly, inadequately or incorrectly will be captured and categorised in the Form 27Q as follows:
Included Transactions
Transactions considered as included for generating form 27Q are given here:
- Booking entries with or without TDS deduction
- TDS deduction entries
- Advance payments made to parties
- TDS adjustment entries in the case of government entities
- Entries accounting for TDS reversals and TDS deduction concerning escalations and de-escalations
Excluded Transactions
Transactions considered as Excluded for generating Form 26Q is explained in detail below:
- All entries where TDS is not applied
- Entries recorded using any of the following Voucher Types:
- Payment
- Contra
- Inventory Vouchers
- Sales Order
- Purchase Order
- Debit Note (recorded for purchases with no TDS implications)
- Credit Note (entries with no TDS implications)
- Vouchers marked as Optional
- Payroll Vouchers
Uncertain Transactions
These transactions do not fulfil the criteria of the Included and Excluded categories. The transaction will be listed as Uncertain when there is insufficient information entered in:
- Masters
- Transactions
Deduction Details
This section denotes the type of deduction under which each of the included transaction is grouped. Deduction details are classified into the following types:
- Deduction at Normal Rate
- Deduction at Higher Rate
- Lower Rated Taxable Expense
- Zero Rated Taxable Expense
- Under Exemption Limit
- Except instead of PAN Available
The tax-deductible, assessable value and the tax deducted for transactions grouped in the above categories are displayed here.
Payment Details
This will contain the statistics of all TDS payments (deemed or actual) that exist in the data till date. This will not contain any of the payment entries that are not related to the current period. Any payment entries are other that TDS payment entry will not appear here.
This section will display the payments against two fields:
- Included Transactions
- Excluded Transactions
Frequently Asked Questions:
What is TDS return?
A deductor has to deposit the deducted TDS to the government and the details of the same have to be filed in the form of a TDS return. A TDS return has to be filed quarterly. Different types of TDS deductions have to be filed using different TDS return forms.
What is Quarterly eTDS/eTCS statement?
TDS/TCS returns filed in electronic form as per section 200(3)/206C, as amended by Finance Act, 2005, are quarterly TDS/TCS statements. As per the Income Tax Act, these quarterly statements are required to be furnished from FY 2005-06 onwards. However, as advised by Income Tax Department, acceptance of e-TDS/TCS statements pertaining to Financial Years prior to 2007-08 has been discontinued at the TIN. The forms used for quarterly e-TDS statements Forms are 24Q, 26Q and 27Q and for quarterly e-TCS statement is Form No. 27EQ. These statements filed in CD/Pen Drive should be accompanied by a signed verification in Form No. 27A in case of both, e-TDS/TCS statements.