“PROCEDURE TO ISSUE TDS CERTIFICATE ON SALE OF IMMOVEABLE PROEPRTY”

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Query 1]

I have read with interest your last issue of Tax Talk covering applicability of TDS on immoveable property. I have a further query arising from your issues. How the Form 16B (TDS Certificate) is to be generated for issuing by the Deductor to the Deductee? It is rather easy to download a blank Form 16B from the website of Income Tax Department, fill all its columns, affix signature of the Deductor and issue to the Deductee.

But I have a doubt that this is not the right procedure and it appears that Form 16B duly filled in with complete details has to be generated from the website of TRACES and then signed by the Deductor before issuing to the Deductee. Please enlighten the right procedure in this regard. In my case, I will have maximum of 4 occasions of TDS in all, which will be limited to two each in two quarters. Please deal with this issue at the earliest possible, considering the time limits involved, as I did my first TDS on 31-Dec-2013 relating to purchase of a residential property. [Krishna Kumar- k_kumar39@hotmail.com]

Opinion:

The entire process of TDS payment & issue of TDS certificate thereafter is system driven and works very smoothly. The following sequential steps will be required to obtain Form 16B (for the Deductor) and Form 26QB for the Deductee:
First Part (Payment):

  1. Firstly one has to go to the following link: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
  2. Once this link is opened, click on Form 26QB (Payment of TDS on sale of property).
  3. Select (0021) in case of non corporate payer and 0020 in case of corporate payer.
  4. On filling in the various details called for in that form, click on ‘Proceed’ at the bottom of the page, this will then take you to the next page, which will give you the option to select your bank.
  5. Once you select the bank, then login using the normal online process for your bank.
  6. Once the payment is made, the bank will let you print challan 280 with a tick on (800), which is payment of TDS on sale of property.
  7. Take a printout of the challan and keep the same for your records and for the seller if required.

Second Part (Issue of TDS Certificate):

  1. Once the first part is completed, one has to wait for around seven days for details to be reflected on TRACES website (https://www.tdscpc.gov.in).
  2. As a first time user, one has to register on this website. Once registered, whether as seller or buyer, user will be able to obtain Form 16B or 26QB which has been approved and is reflected against PAN in Form 26AS.
  3. Check Form 26AS after seven days and you will notice that the payment you had effected against TDS on sale of property is reflected in Part F of the Form 26AS under ‘Details of Tax Deducted at Source on Sale of Immoveable Property u/s 194(IA) [For Buyer of Property].
  4. This will give you details such as the TDS certificate number (generated by TRACES), name of Deductee, PAN of Deductee, acknowledgement number, total transaction amount, transaction date, TDS deposited, date of deposit, status of booking and date of booking.
  5. Once the payment is reflected in 26AS as above, you will have to go to the TRACES again.
  6. Login to the website, and click on ‘Downloads’ tab. In the dropdown menu click on ‘requested downloads’. If no application has been made you will be asked to make a request for download, here fill in the acknowledgment number (nine digit number) which is reflected on Form 26AS, Part F as mentioned above. Once this is done, you will be able to view the status of your application, which generates an application request number. Within a couple of hours, the application gets processed and you will be able to view your Form 16B by putting in the request number which you have obtained.
  7. You can take a printout of the same for your records as well as for handing over to the seller of the property. A similar process has to be followed by the seller to obtain form 26QB.

Query 2]

I am a housewife. I had purchased a plot from the developer along with my friend jointly on 09.03.2004 at a cost of Rs. 45,000/-. Each of us had contributed Rs. 22,500/-. We sold the plot on 25.07.2013 at Rs. 5,38,000/- and each of us received an amount of Rs. 2,69,000/- through draft. I want to keep the amount in bank in form of FDs or any other form as I require the amount for my daughter’s higher education during last quarter of 2016.

I will not be using this money for construction/purchase of house in anyway in near future. However, I am the joint owner (2nd owner)in the home loan and my husband pays the EMIs for the loan. My contribution for the home loan EMIs is “NIL”. We may renovate our house in future with regard to wood works and painting. My annual income from all sources (FDs, tuition to students and others) will be around Rs. 1, 12,000/- for the FY 2013-14. I have not filed income tax return till date in my life.

In this regard, please advise me the followings:

  1. Tax implication on the income (details shown below), Long Term Capital Gain and how I will be able to save my tax? Can I keep the amount in PPF account or invest in NHAI fixed deposits so that I can save the LTCG? If at all I have to file the income tax then which income tax return form will I use?
  2. Can I repay the part of home loan (Rs. 2,69,000/-) to save the LTCG for which my husband is paying the EMIs alone or renovation of house will in anyway help to save LTCG?
  3. How can I invest in NHAI deposits to save LTCG?

Approximate Details of my Income for FY 2013-14

a] Income from Bank FDs, interest and Dividend : Rs. 30,000/-

b] Income from tuition to students: Rs. 50,000/-

c] Short Term Capital Gain from Shares: Rs. 15,000/-

d] Long Term Capital Gain from Shares: Rs. 17,000/-

e] Long Term Capital Gain from Selling of property: Rs. 2,27,596/- (I presume)

Please tell me the tax on this income. I will be thankful to you if you please guide me in this regard. [P. Sumita- niroj_p@yahoo.com]

Opinion:

Computing Long Term Capital Gain (LTCG):

  1. You have sold the capital assets (i.e., plot) after a holding period of more than 36 months. You would be entitle for the indexation benefit on sale of the plot.
  2. Cost Inflation Index (CII) for the relevant F.Y. 2003-04 & F.Y. 2013-14 are “463” & “939” respectively.
  3. Purchase expenses (like registration exp, stamp duty etc could be add to purchase price to arrive at the cost of acquisition) and the expenses in connection with transfer (like brokerage, legal exp etc) could be reduce from the amount of sale consideration while computing the amount of LTCG.
  4. The LTCG would be require to be compute by taking the Stamp Duty valuation if it is higher than the actual sale consideration of Rs. 5.38 Lacs.
  5. LTCG in your case, ignoring (c) & (d) above, is Rs. 2,23,368/- [ Rs. 2.69 Lacs less (Rs. 22,500/- * 939/463)]

 

Taxability of your other income:

Long term capital gain of Rs. 17,000/- would be exempt from income tax if the shares sell is subject to Securities Transaction Tax (STT) i.e., if the shares are sell through the stock exchange. Similarly, Dividend amount (included in Rs. 30,000/-) would be tax free is it is receive on shares of an Indian company.

With above basic preface, it may be note that

  1. Your other income during the FY 2013-14 is anticipat to be below the basic exemption limit. The amount of unutiliz basic exemption limit (i.e., difference between your taxable income & the basic exemption limit) could further reduce the amount of LTCG & the balance LTCG amount would only be taxable. As a tax planning tool, you can invest up to a maximum of Rs. 1 Lacs in the investment specified in section 80C (like PPF/LIC/NSC etc). It will increase the amount of unutilized basic exemption limit adjustable against the amount of LTCG.
  2. Since you don’t want to invest the amount for purchase/construction, you can save LTCG tax by investing the leftover LTCG (i.e., LTCG after adjusting the amount of unutilized basic exemption limit) in the specified bonds issued by Rural Electrical Corporation (REC) or National Highway Authority of India (NHAI). It may be note that investment in the fix deposits etc won’t offer the intended tax benefit against LTCG Tax. The investment in the NHAI/REC Bonds has to be do within a period of 6 months from the date of transfer. The application form for subscription is available at recindia.nic.in or at www.nhai.org.

  3. Renovation or repayment of the Home loan won’t enable you in saving your LTCG Tax.home  Submit Article   Ask Question

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