Income Tax News: Social media is ablaze with taxpayers, particularly property buyers, reporting that the Income Tax Department has sent them notifications about contributing less TDS. The remaining TDS (including interest), or about 20% of the purchase price of the property, is what these home purchasers are being required to deposit as well.
TDS Rates for Property Transactions
Homebuyers are required to pay 1% TDS if the property is valued at Rs 50 lakh or above, as per income tax regulations. Should a PAN number be missing, TDS rises to 20%. Furthermore, the PAN is no longer active if it is not connected to Aadhaar. Actually, a lot of homebuyers are getting alerts since they did not connect their PAN number to Aadhaar.
Tax Deducted at Source (TDS) Calculation
“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,” stated Suresh Surana, founder of tax consultant RSM India.
If the property is valued at Rs 75 lakh, the buyer must subtract 1%, or Rs 75,000, and give the seller the remainder Rs 74.25 lakh. Within 30 days, the home buyer must deposit this sum with the Income Tax Department. When completing the return, the seller has the option to modify this amount in his income tax liability.
Increased TDS Rate for Missing PAN Card
In accordance with regulations, if a PAN card is not present, more TDS must be withheld. “Tax will be deducted at the rate of twenty percent if the property seller or the home buyer has not provided PAN,” stated Surana. Furthermore, as per the CBDT circular, the PAN card will cease to function on July 1, 2023, if the individual has not connected their Aadhaar and PAN by June 30, 2023. The norm of deducting TDS at higher rates will be applicable in this scenario.
Buyer’s Responsibility for TDS Compliance
What happens if the buyer pays the seller the remaining 99% amount after deducting 1% TDS prior to sending the notice? The Income Tax Act states that the buyer would be responsible for paying the penalty and interest rate in the event that the TDS regulations are broken rather than the seller. “It is the buyer’s obligation to ascertain whether the seller’s PAN number is connected to Aadhaar or not,” stated Surana. Should he neglect to do so and deduct less TDS, the buyer shall bear the consequences.
Verifying Seller’s PAN Number Online
You should first check the seller’s PAN number online. An OTP will be issued to the seller’s mobile device for verification when you verify the seller’s name, date of birth, and cellphone number. You can check the website to see if the PAN number is active by entering the OTP. You can also file an appeal with the Income Tax Tribunal if you are a home buyer and you have got a notice for incorrectly deducting TDS. If you can demonstrate that you were unaware of the rule regarding deducting excess TDS, you can contest the notice.