What is TDS? TDS is the Tax deducted at source. This is nothing but a way of collecting income tax in India as stated in the income tax act of 1961. When a payment is made under the provisions given in the tax, a prescribed percentage will be deducted. It is handled by the central board of Direct taxes and is a part of the revenue service.
Here are some of the objectives of TDS:
- To allow the salaried people to pay the taxes as they receive it. This helps the tax to be paid in instalments.
- Collecting tax at the time of payment of income to different assesses like the contractors or professionals and other such people.
- Helps the government get the funds which are required to run the government well.
So, the next point of worry is the TDS on sale of property or immovable property:
Section 194IA of the income tax act states the following:
- This provision came into being on or after June 1, 2013.
- It aims at deducting the tax at source on the transfer of immovable property other than agricultural land to a resident transferor.
- A person who is a transferee and is liable to pay to a resident only 10%
- No TDS is to be deducted if the sale consideration or the value of the property is less than 50 lakhs.
- The buyer of the property needs to reduce TDS at 1% of the total sale consideration. It is important for you to know that the buyer needs to reduce the TDS and not the seller.
- TDS is to be paid for the entire sale amount. You cannot pay it in parts.
- A buyer of the fixed property does not have to get a tax deduction account number for paying the TDS. They can easily pay the TDS using their PAN card.
- The TDS needs to be paid using the form 26QB.
If you are paying TDS on rent, the TDS is to be deducted at 10% during the financial year if the rent paid is more than 2.4 lakhs during that year.
Here is a step by step guide to obtain form 26QB and pay TDS:
- Payment through Challan 26QB: this can be done either online or offline. You can pay through net banking as well and pay online.
- Register in TRACES: being a first-time user, you need to register on TRACES as a taxpayer providing your PAN card number and the challan number that was registered at the time of payment.
- Download form 16B: this is the last step, where you need to fill the PAN details of the seller and other details. You need to submit the request, and, in a few hours, it will be processed.
Being a first time TDS payer, it can get quite overwhelming, however, you need not worry. Following the above steps, you should be able to pay your taxes with ease. TDS on rent and TDS on sale of property are some of the most important things you need to take care of immediately.
