Transfer of Immovable Property & Income Tax – Full Analysis

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Government
of India has Introduce a new area for collection of Tax at source with effect
from 1st June 2013 known as TDS on Transfer of Immovable
Property. The intention behind the Introduction of TDS is to put check on
Realty Sector and to ensure reporting of sale / purchase of Immovable property
which were earlier not reported anywhere or reported at later stage
i.e. after the end of the financial year in which actual transaction
was taken place.
  
Since
major portion of India’s population still following the Tradition of
holding land/ properties as their status symbol and making sale of it only when
there is urgent requirement of money. So in this arena, it is important for
every individual to understand the implications of this move and how
they would actually be impacted when they go to purchase or sale of an
immovable property. 
What
to be included
  
The
applicability of the provisions are a significant part of the process and for
this purpose it is very clear that the new tax deduction at source will have to
be made for immovable property. This will then broadly include land and house
property and which is also an area where a lot of investments are taking place.
  
What
to be excluded
 
The
term immovable property by itself ensures that various movable property like
vehicles and other assets are excluded from the list. There is one more
specific exclusion present in the process and this is that of agricultural land
so while other types of land will be included under the definition the
agricultural  land would be excluded.


Value
on Which TDS applicable
 
When
the transaction value is over 50 Lacs TDS shall be applicable on that. So there
is a built in provision for the protection of the small individual as they will
not be covered in the bracket of 50 lakhs. However another angle to
the entire situation is that the prices of properties has risen so much in the
last few years that even in smaller cities it is not surprising to find that
the value of the property crosses the Rs. 50 Lacs mark.
Responsible
for TDS & rate of TDS
 
The
next question that arises in the process is about the responsibility for making
the TDS. In this case this has been put squarely on the shoulders of the
transferee/ buyer. This means that the person who will get the ownership of the
immovable property would have to fulfill the conditions. The person is the
buyer who will actually make the necessary payment to the seller and then
take the possession of the property. The rate at which the deduction
has to be made is important because this is fixed at 1 percent but if there is
no submission of the PAN then this could have to be done at 20 percent.
  
Compliance
requirement
 
Usually
complying with the requirements for the tax deduction at source is very
complicated and involves a lot of procedures. This involves getting the tax
deduction at source number (TAN) which is like a PAN for those who are actually
deducting the tax. The tax that has been deducted has to be deposited with in
the specified time and then a return has to be filed.
  
In
this case there is an online form for making the TDS payment. Details
required for the form will include the PAN of both the parties, their addresses
along with the address of the property and the amount of the tax. In this case
there would be a situation wherein the TDS could be a one-time action because
there will be people who are not normally covered under these provisions but
they have to make the deduction for this purpose. The requirement for TAN has
been done away with and even the return filing process has been
simplified so this should provide some relief for the individual.
However
for people who have never done this before it might seem to be a difficult task
and they might require some professional help in completion of the process.
Knowing the details and the fine print is important so that
there are no mistakes that are made when it is actually completed.
Conclusion

A look
at several of the conditions related to this provision will ensure that there
is a proper way in which the details are considered and this will also help in
ensuring that the conditions related to the TDS are met and fulfilled so that
there shall not be any issue arise in relation to default at the later stage.
RECOMMENDED READ  Income Tax Calculator FY 2013-14 (AY 2014-15)

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