Anyone buying real estate worth more than Rs 50 lakh has to deduct 1% of the sale price of the property before paying the seller. That TDS has to be deposited with the tax department using Form 26QB. Earlier you had to deposit this TDS within seven days of the following month of making the payment. Now, it can be deposited within 30 days from the end of the month in which it was deducted. So, those who make purchases towards end of a month would get more time to fill up the extensive 26QB challan and deposit the income tax.
“Earlier if you bought a property on 30-31st of a month, you only had seven days to submit Form 26QB. Now, the buyer would have at least a month to comprehend and comply by the rules,” says Archit Gupta, founder and CEO, ClearTax.in
The rule will come into effect from from 1 June 2016. However, there is a confusion about payments made during the month of May on whether they should follow the old-7 day rule or the new 30-day time period. While some CAs are of the opinion that if any property payments are made before 1 June, TDS will have to be deposited within 7 June, others believe that you should be allowed to submit the TDS by 30 June for transactions that took place in May.
Last month several taxpayers had received I-T notices for failing to deposit the TDs with the department on time. The forfeit for late filing is an interest on the TDS–1% per month if tax wasn’t deducted and 1.5% in case this was done but not paid, which is calculated from the date of payment. There is also a Rs 200 per day flat fine for missing the deadline. The AO, under Section 271H, can also put penalty of up to Rs 1 lakh for defaulting. So, to be on the safe side, it is better to submit the taxes for May within the seven-day deadline.
Credits ET Personal Finance News