Income tax notices: Many taxpayers, especially home buyers, are saying on social media that they have received notices from the Income Tax Department regarding reduction in TDS. These home buyers are being asked to also deposit the remaining TDS (including interest), which is approximately 20% of the value of the property purchased by them.
Tax Notices: Many taxpayers, especially home buyers, are saying on social media that they have received notices from the Income Tax Department regarding depositing less TDS. These home buyers are being asked to also deposit the remaining TDS (including interest), which is approximately 20% of the value of the property purchased by them.
According to income tax rules, if the value of the property is Rs 50 lakh or more, then home buyers have to pay 1% TDS. In case of absence of PAN number, TDS becomes 20 percent. Also, if the PAN number is not linked to Aadhaar, the PAN is no longer operative. In fact, many homebuyers had not linked their PAN number with Aadhaar and are receiving notices.
TDS on purchase of property
Suresh Surana, founder of tax consultancy RSM India, said, ‘According to Section 194 IA of the Income Tax Act, 1961, if the price or stamp duty value of the property is more than Rs 50 lakh, then 1% tax is to be deducted in the payment to the sellers to the home buyer. will be.’ If the property is worth Rs 75 lakh, then the home buyer will have to deduct 1% i.e. Rs 75,000 and pay the remaining Rs 74.25 lakh to the seller. The home buyer has to deposit this amount to the Income Tax Department within 30 days. The seller can adjust this amount in his income tax liability while filing the return.
TDS if PAN and Aadhaar are not linked
As per rules, more TDS should be deducted in case of absence of PAN card. Surana said, ‘If the seller of the property has not given PAN or the home buyer has not given PAN, tax will be deducted at the rate of 20 percent.’ Additionally, according to the CBDT circular, if a person has not linked his Aadhaar and PAN by June 30, 2023, the PAN card will no longer be operative from July 1, 2023. In such a situation, the rule of deducting TDS at higher rates will apply.
Problem regarding timing of notice also
What if the buyer has deducted 1% TDS before issuing the notice and has paid the remaining 99% amount to the seller? According to the Income Tax Act, if TDS rules are not followed, the homebuyer instead of the seller will have to pay the penalty and interest rate. Surana said, ‘It is the responsibility of the homebuyer to ensure whether the seller’s PAN number is linked to Aadhaar or not. If he fails to do so and deducts less TDS, the buyer will be responsible for it.
He said, ‘Homebuyers who have not been able to deduct tax at the rate of 20 percent and have received the notice, will have to deposit the remaining amount. Besides, interest at the rate of 1% per month will also be charged on the outstanding amount of TDS. However, homebuyers can demand additional 19% TDS from the seller.
What should home buyers do?
First of all you should check the PAN number of the seller online. When you check the seller’s name, date of birth and mobile, OTP will be sent to the seller’s mobile for verification. By entering the OTP, you will know through the website whether the PAN number is active or not. Additionally, if you are a home buyer, you have received a notice for not deducting correct TDS and you can prove that you were not aware of the rule for deducting excess TDS, you can also appeal to the Income Tax Tribunal. Can.
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