What happens if TDS is not deducted on purchase of property?

If you buy a property or sell a property worth more than Rs. 50 Lakhs then on that property transaction TDS will be applicable. TDS stands for Tax Deducted at Source, this means that the buyer will deduct the TDS amount from the purchase price and the deducted amount will be paid to the Tax Department of India. Now you must be wondering ‘

what happens if TDS is not deducted on purchase of property’. Well here I have explained the situation that may arise if a person avoids paying TDS.

• If you don't pay TDS then your application for property registration at the sub-registrar office will be disapproved.

• And you might need to pay a penalty for breaching laws in the country.

• Also Income Tax Department many send you the legal notice for TDS payment 

• TDS is only applicable if the property value is more than Rs 50 lakh.

• 1% TDS will be deducted from the payment that buyer needs to to the seller

• If the payment is made on installment then on each installment 1% TDS will be deducted. For example if the property is purchased of rupees 1cr and the entire amount is paid in one go then TDS will be deducted of Rs 1Lakh. Now another case when the property is purchased on 4 installment, so on each installment 1% TDS will be deducted.

• A person is required to pay TDS online within 30th of the next month from the date TDS has been deducted. For example if the TDS is deducted on 15 June then till 30 July buyer needs to submit TDS to the government of India by generating form 26QB or 16B online.

These are the conditions and rules for TDS in India. Hope your query “what happens if TDS is not deducted on purchase of property” is resolved by reading this answer.

How to pay TDS on property online to Income Tax Department

How to pay interest on late payment of TDS online?

How to download form 16B TDS on property?

Here are the details about TDS on property purchase from builder.

TDS on property transactions is governed by Section 194-IA of the Income Tax Act, 1961. The implications of

what if TDS is not deducted

on property purchase include:

• The Income Tax Act imposes a penalty for not deducting TDS or not depositing it to the government. It can be up to the TDS amount that should have been deducted.

• Non-deduction of TDS can result in legal consequences. It includes potential legal proceedings and fines.

• If TDS is not deducted as required, the buyer is not able to claim the cost of the property, as a deduction for income tax purposes.

• It can also create difficulties in transferring the property in the future.

• The seller of the property can also face difficulties in their own tax compliance and filing if the TDS is not deducted and paid.

To avoid these consequences, it is essential for the buyer of the property to deduct and deposit TDS. The TDS rate is currently 1% of the property's sale consideration. It can be deposited online through the Income Tax Department's website.

These are the details for

TDS on property purchase from builder.

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First of all, you shouldn’t miss out on the TDS deduction. Because I faced it twice and it led me to pay a penalty for not deducting the TDS on time. TDS must be deducted from every payment, whether it is provided in one single payment or over time. Now let’s find out what if TDS is not deducted.

What if TDS is not deducted on sale of property?

There is an imposition of penalties for failure to deduct TDS or for delaying deductions. Delayed TDS deduction or payment penalties (under section 201). Every month that TDS is delayed from the date it was deductible to the date it is really deducted is subject to a 1 percent interest charge. From the day that TDS was deducted until the actual date of payment, there is a 1.5 percent penalty for each month that the TDS is not paid on time.

Penalty for failing to file or filing late with Form 26QB?

According to section 234E of the Income Tax Act, a penalty cost is applicable in cases of late or defaulted submission of Form 26QB. A fee of Rs 200 must be paid for each day that this failure persists.

What happens if TDS not deducted on purchase of property?

The investigating officer has the authority to impose a fine under section 271H. When a declaration that is required by the tax rules is not filed on time, this section is relevant. The maximum fine under this section is Rs 1 lakh and is greater than Rs 10,000. However, no penalty under this shall be imposed if TDS is submitted with fee & interest and the statement is presented within one year of the specified time. Therefore, if you failed to deduct TDS or it wasn't submitted in a timely manner, you can obtain an income tax notice.

Now you know what if TDS is not deducted, so you shouldn’t miss out on one.