Income TAX Services

Income Tax Return or ITR represents an individual's income and the taxes that are to be paid on that income during the financial year starting on 1st April and ending on 31st March. The ITR form which is submitted to the Income Tax Department of India contains information about various forms of income like:

  • Income from Salary
  • Income from House Property
  • Income from Business or Profession
  • Income from capital gains
  • Income from Other Sources

The Income Tax Department has outlined 7 types of ITR forms that need to be filled basis the nature and amount of the tax payer's income:

ITR-1: Resident individuals earning a total income upto Rs 50 lacs from Salary, lotteries, races, one house property or agriculture, should file this.

ITR-2: Individuals and HUFs who do not qualify for ITR-1 (not generating profits from a profession or business) should file for this.

ITR-3: Individuals and HUFs who are earning profits from business or profession should file for this

ITR-4: Resident individuals, HUFs and firms (except LLPs) earning a total up to Rs 50 lacs and generating income from business or profession calculated under sections 44AD, 44ADA and 44AE should file for this.

ITR-5: LLPs, Body of Individuals (BOI), Association of Persons (AOPs), Artificial Juridical Person (AJP) Estate of Insolvent, Estate of Deceased, Business Trust and Investment should file for ITR-5 form.

ITR-6: A taxpayer registered as a Company (in the ambit of Companies Act of 1956 or any other law) and not seeking exemption under section 11 should file for ITR-6.

ITR-7: A taxpayer registered as a Company, Trust, AJP, AOP or a local authority can file for this.

TDS On Purchase of a Property

TDS (Tax Deducted at Source) on Property is related to the purchase of properties like a piece of land, a building or just a part of a building. Section 194IA decrees that the buyer of an immovable property needs to deduct TDS at specified rate from the sale consideration payable to the seller of the property. This tax is applicable only when the value of property being purchased is more than Rs. 50 lac. At present, the rate of deduction is 1%.

Features of TDS on Purchase of a Property

  • It is deducted from the sale consideration by the buyer of the property
  • After deduction the buyer is obliged to deposit this to the Govt account through a challan cum return Form 26QB.
  • After the Form 26QB is processed by the Income Tax Department, the buyer is obliged to download Form 16B from Traces and issue the same to the seller.
  • Based on Form 16B, the seller will be able to claim TDS on Property while filing his tax return
  • If the value of the property being purchased is less than Rs. 50 Lakhs, no TDS is required to be deducted
  • If the transaction is worth more than Rs. 50 lakhs, then TDS should be paid on the entire amount and not just on the sum above Rs. 50 lakhs. For instance, if the property value is Rs. 75 lac then TDS should be deducted on Rs 75 lac and not on 25 lac.
  • Under section 194IA, both the buyer and the seller should furnish their PANs while filing Form 26QB
  • If the payment is made in installments, the TDS is required to be deducted from each installment
  • If the buyer fails to obtain the seller's PAN, the TDS is to be be deducted at a higher rate of 20%

Steps to File TDS on Property (Form 26QB)

Select "TDS on sale of property" to access the applicable challan

  • In order to fill the form, provide details like buyer and seller's PAN, property details, residential address of seller, contact detail of buyer and seller, tax deposited and the entire amount credited
  • After filling up all the details, submit the form
  • You will receive a confirmation and you can take the printout of the form if you would like to
  • In case, you want to make the payment online, please proceed to the "Submit to bank"" option and pay
  • Once the payment is done, the TDS Challan displays CIN, name of the bank through which you have made the payment

What happens if you don't file TDS?

  • Under Section 271H, the penalty of not paying TDS on property can actually go up to Rs 1 lakh
  • Under section 201, it's mandatory for you to pay an interest of 1% every month if the tax has not been paid at all
  • You have to pay 1.5% interest if the tax has been deducted but not deposited with the government
  • If you have defaulted on account of non/late filing of form 26QB, you will have to pay a fee u/s 234E of the Act
  • In case the property seller has already paid capital gains tax, the fee for late filing can be reduced or entirely waived
  • The late filing fee covered under Section 234E is Rs 200 each day, reliant on the maximum amount of tax that's due

Secure Payments

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