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In this post, let us take a look at several types of taxes that a buyer is required to pay during the property buying process. There may be some type of taxes that the buyer of property needs to pay regularly even after becoming its owner.

Note: Matters related to tax (direct or indirect) including that on property fall under the purview of the Income Tax Act, 1961 and its amendments.

In simple terms, Tax is a mandatory charge or fee that is levied by the government on:

• the income or profit of an individual/business or
• added to the price of goods or services or transactions

In relation to buying a property, taxes like TDS, GST, stamp duty and property tax are important categories that a buyer needs to know properly at all times.

Disclaimer: You must consult a property tax lawyer to make right tax calculations and payments. Any slippages with respect to tax matters are viewed as tax evasion by the taxation authorities and attracts fines and penalties.

Let us now understand each one of them individually.

Readers also read:  Stamp duty and registration charges are mandatory: Buyers should take utmost care on this front

What is Tax Deducted at Source (TDS)?

TDS is a type of tax that is deducted by the buyer at the rate of 1 percent of property’s declared value and paid to the tax authority. It is mandatory for a buyer to deduct TDS if the value of the property is Rs. 50 Lakhs or above. Also, once the buyer deducts the TDS, it is mandatory to deposit the TDS amount with tax authority within 30 days of deduction. Once deposited, buyer needs to give the receipt/challan to the seller of the property as a proof of payment.

What is stamp duty and registration fee?

As explained in the previous post, stamp duty is the tax levied by the state government that acts as a proof of property sale and purchase transaction. The rate of stamp duty may vary from one state to the another. However, usually the stamp duty rates range between 5 percent to 7 percent of the declared property value.

The property registration fee, on the other hand, is a charge levied by the state government for maintaining the records of property document – conveyance deed or sale deed. This fee also may vary from one state to another. For more details, you can read our exclusive blog stamp duty and registration fee.

Also Read:  Planning to transfer a property? Know the process and costs involved

What is property tax?

This is a type of tax that is paid by the owner of a property on annual basis to the local municipal corporation where the immovable property is located. Property tax is calculated on the basis of the following parameters:

• area of the property
• construction – old, new, kuccha or pucca
• locality – rural, semi-urban or urban
• age of the owner – adult or senior citizen
• gender – male or female

The property tax paid by the owner is utilised by the municipal corporation for providing civic services like maintenance of roads, parks, sewerage systems, sanitation, waste management, electrification of public spaces, etc.

What is Goods and Services Tax (GST)?

GST is the newest form of tax that has been introduced by the Government of India in 2017. Besides other categories, real estate (only under-construction properties) was also included as part of the taxation law. Here, a buyer of an under-construction property is required to pay GST on the total value of the property to the builder.

The GST rates are as below and may be subject to change from time to time:

• 1 percent of property value when bought under affordable housing scheme
  • A property is considered under affordable housing scheme if the value of property is upto Rs 45 lakhs with carpet area of upto 60 square metres.
• 5 percent of property value when bought under non-affordable housing scheme

An important point to note here is that buyers who have purchased flats or apartments especially in completed projects are not required to GST to the builder.

Why should I consult a professional property tax consultant ?

Filing incorrect taxes is considered as tax evasion by the tax authorities. Dealing with the tax man is not a pleasant experience. Rather it is a very stressful one and no buyer would want to land up in such a situation. Hence, role of a qualified property tax lawyer becomes all the more important. The property tax lawyer advises you with the correct prevailing tax rates applicable to your property transaction. Not only this, the property tax lawyer also can help in computation and filing of different taxes with respective competent authorities. This not only smoothens the entire process but also ensures that the buyer or owner of property remains tax compliant thereby minimising the risks of getting tax evasion or penalty notices from the tax authorities. Thus, it only becomes prudent to consult a property tax lawyer at every stage of your property transaction – before, during and post completion of the transaction.

Also read Form 16 – Here Is About Tax Deducted At Source. 

The TDS return is submitted to the Income Tax Department of India. If one fails to do so, the department may initiate penalties and legal action against the firm’s owner. The TDS return should be filed before the due date.

What Are The Penalties For Non-filing/Delay?

As per the case and situation, penalties can range from ₹10,000 to ₹ 1,00,000.

How Do We File Quarterly TDS Return?

Well, TDS can be filed through both online and offline processes quarterly.

Here is the Procedure to File TDS Returns Quarterly. As stated, it can be filed through both online and offline methods:

 Online Process

1. Visit the TIN website and download RPU version 4.1 (4.1 is the latest version.)
2. The following features are mandatory for installing and extracting the rpu file.

• Java run-time environment Version 1.6.
• The operating system should be windows 2003 and above.
• The Java RPU utility should be installed on the same path as e-TDS/TCS FVU utility jars

1. If you have all these features, the below screenshot page will appear.
2. You should choose Form No. from the drop-down as per the purpose for which you have charged the TDS.

• 24 Q for TDS on Salary
• 26 Q for TDS on Other than Salary
• 27 EQ for TCS
• 24 Q for TDS on Non-Residents

1. You should have all the data of the owner or firm for whom you are filing the TDS, such as PAN, TAN, address, all the challans, etc. If you file for yourself, you should keep the data readily available. You can even save the data in the form of an excel file and easily copy-paste it.

Also read The Income Tax Calculator - The Tool That Helps You Calculate Your Tax. 

Herein, you need to Select ‘type of statement to be prepared’: Then you should Choose Regular for fresh quarterly TDS returns and you should select Correction in order to make corrections in the previously filed TDS returns.

Besides, you should select Regular if you are filing for fresh quarterly TDS return using the online method

1. You should click on continue, then a page will come up wherein you got to fill only three sections. The following three sections:

• The form
• The challan
• The deductee details

The next few how to fill all these sections correctly is mentioned in the next steps.

1. On the form page, Under, Particulars of statement – You are only required to fill in the details marked with a star (*) symbol.

Fill in these details-

• PAN number*
• TAN number*
• Financial year*
• Type of Deductor* (Choose your Deductor for which you are filing the TDS. For instance, company in case you are filing for the company).
• For quarter Ended* (Choose a quarter like first, second, or third for which quarter you are filing the return).

You should fill in all the details very carefully. Always cross-check the financial year.

1. Now, after filling in the particulars of the statement, go below and fill in Particulars of Deductor (Employer)- You have to fill in all the basic details, Such as-

• Name
• Branch if any
• Mobile number
• Address
• Has the address changed Since the last return (select yes if yes, no if not)

1. Now, You have to fill out the Person’s Particulars responsible for Deduction of Tax – You have to fill in all the basic details, such as:

• Name
• Branch if any
• Mobile number
• Address

In case the person is the same as the one for whom Deductor’s particular details have been filed, you can choose the same above box.

1. The last detail for this page you have to add is the Receipt number of the previous TDS return filed for the first quarter (Q1), and then click on save and save your file.
2. Now come to the Challan page and fill in the details. For adding challan details

•  Click on Add Rows present at the bottom of the page
• Enter the number of rows to be added- You have to enter the number of rows you want for entering the number of challans you want to add. Ex- If you have one challan, enter one. If you have ten challans, enter ten.
• Now, you have to fill in specific details of every challan. Suppose you have prepared data in excel for challan details, you can directly paste it.
•  Only those fields will be vacant which are relevant to your TDS return filing online, such as.
• TDS
• Surcharge
• Education Cess
• Interest
• Fee
• Penalty/others
• BSR code/Receipt number
• The date on which amount deposited through challan
• Serial number of challan
• Mode of deposit through book adjustment
• Interest to be allocated
• Others
• Minor head of challan 200-TDS payable by taxpayer 400-TDS regular assessment

Fill all the challan details in this manner correctly.

1. Go to the following page, go to Deductee Details, and fill in the deductee information. If you have two deductees on one challan, insert two rows. If you have four deductees, enter four, and so on.

• To enter rows, go to the bottom of the page and click insert rows, then fill in all of the deductee information.

Charges Per  Deductee

• When you've finished filling out all of the fields, click the Create File button. The flash message box will inform you if there is a mistake and how to correct it. Then the screen below will show.
• In this stage, you must upload the challan file. Click here to get the challan file. You will be directed to the TIN website.
• Enter the TAN number and Quarter period details in the Tan-based view, then save the downloaded file. It's fairly straightforward.
• You already have the file, so go ahead and select the challan. Simply type the path to the area where you wish to see the error reports in the second column. Sort them if there are any.
• Select Validate from the drop-down menu.

Offline Process

You must submit your TDS statements to your local TIN facilitation centre, which will issue a receipt if the submission is proper and successful.

• If your application is turned down, you will receive a memo explaining why.

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Also read The Income Tax Calculator - The Tool That Helps You Calculate Your Tax.

You can File your TDS Return Online :

Online TDS return is a statement given to the IT department every quarter. It is essential for every deductor to deposit income tax and file for TDS return on time.

On online TDS return, there are 3 easy steps:

• Information Collection

• Return Preparation

• Return Filing

TDS Return can be for individuals and businesses

An employer or company that has a valid TAN - Tax Collection and Deduction Account Number can file for online TDS return. Any individual or business who makes a particular payment which is stated under the I-T Act needs to deduct tax at source. The deposit for the same has to be made within the stipulated time. The payment categories include the following :

• Salary

• Insurance commission

• Income from winning horse races

• Income by way of “Income on Securities”

• Income by way of winning the lottery, puzzles, and others

• Payment in respect of National Saving Scheme and many others

An assessee can submit an e-TDS return if the same was deducted from their income. As mentioned earlier, it is the obligation of the assessee to file within the due date or be liable to pay a penalty for delay. The categories of assessees eligible to electronically file TDS return every quarter are:

• Company

• Persons whose accounts are audited u/s44AB

• Persons holding an office under the Government

The Advantages of TDS Return Filing

As per the IT Act of 1961 filing TDS return is mandatory as well as it fetches some benefits to person or company. A few advantages of submitting a return and knowing the refund status are:

• A steady inflow of income to the government.

• Facilitates a smooth collection of taxes used for welfare.

• No burden of paying tax lump sum as the payment is done every three months for the whole year

The Filing Of TDS Return
It is mandatory for every deductor to submit TDS return to the Income Tax Department of India in quarterly statements. Every detail of the returns has to be accurate and precise. Keeping up with the quarterly payments can be cumbersome and if not done on time, you may attract huge penalty.

The rate of TDS is set by the IT department based on expense recognized by them. Hence the prescribed rate of deduction varies. Keeping the threshold limit in mind while making payments can be tedious.

These things should be taken care of: 

Computing your TDS payments
e-filing the TDS return
Adherence to compliance with regulations
Things to remember before Filing TDS Return on time
For any person who has TDS reduction in their pay, TDS return can be filed online. Return preparation has to be done within the prescribed time frame because for individuals who are deemed as a regular defaulter in India, a grave penalty can be charged. Therefore submitting e-TDS Return in the prescribed time is essential.

For the deductor, it is vital to deposit the subtracted TDS to the concerned government department along with the details.

The time period within which the deductor should deposit the amount and the deductee has to file for TDS refund are given below. It is important to stick to the schedule to avoid incurring a penalty.

For online TDS return, every single person who has made the TDS deduction should file the TDS return without fail. The deductor should make the quarterly submissions at the Income Tax department. There are different types of forms available in accordance with the change in the intent of the TDS deductions made. The PAN details of both the deductees and the deductor should be added in the statement. The statement should also contain information about TDS challan and the tax details among other important details.

In online TDS return, the statement/ TDS return is defined as the summary of every transaction made in relation to the quarterly TDS payments. This statement should be submitted by the deductor to the department of income tax.

For all deductors, the submission of TDS return is mandatory. It contains the details of TDS deductions and deposits made by the deductor. It should also contain PAN card details of both deductees and deductor, tax paid particulars, information about TDS challan and any other extra information the form demands.
 

About Filing Revised TDS Returns

In the case of online TDS return, if there are any errors committed due to incorrect challan details, incorrect PAN details or lack of PAN card details, the amount which is credited as the tax will not be reflected in the Form 16A/Form16/Form 26AS. In such cases a revised TDS return must be filed.

Also read Form 16 – Here Is About Tax Deducted At Source

To file a revised TDS return, we need two files - a consolidated file containing the details of the deductions made in the quarter; and the one is the justification report containing the information on the errors filed in the return.

When Are We Eligible For TDS Refund?
While filing online TDS returns, if you pay in excess than the actual tax amount payable, you will be eligible to claim TDS refund.

The time within which the refund is done depends on whether you have made the income tax return filing before or after the due date. In case the returns were filed on time, then you will receive the refund of the excess amount within 3-6 months.

In online TDS return, if there is a case of late filing or failure to file the returns, the individual or the company will have to face two types of penalties:

The late filing fee- U/s 2 and 234E
Non-filing penalty - U/s 271 H
Due dates for online TDS Return Submission
A TDS return has a time frame same as a tax payment. Though the return can be filed online, there is a due date for each quarterly submission. You will be receive a notification of the approaching due date well in advance and never incur a penalty for missing it.

Documents needed to file TDS Return online

The following documents have to be submitted for filing the TDS returns.

• TAN details

• PAN details

• Last TDS filing details, if applicable

• The period for which TDS has to be filed

• Date of incorporation of the business

• No. of transactions for filing TDS returns

• Name of the entity - Proprietorship/ Partnership/ Company/ LLP.

You may also read Sole Proprietorship Firm: The Power Of The Single. 

A Conveyance Deed is a legal document that conveys some rights over an immovable property from one person to another. The developer must execute the Conveyance Deeds of flats and common areas to transfer their ownership rights to the respective owners and the housing society. Thus, the buyers will then become the owners of their respective flats, and all the buyers will then become the common owners entitled to jointly use the common areas.  

How to Execute the Conveyance Deed 

Keep the following pointers in mind while executing each required Conveyance Deed: 

1. It must be written and signed by the parties. 

2. It must be attested by at least two independent witnesses. 

3. The required stamp duty must be paid. To ensure this, the Deed must be executed on non-judicial stamp paper of the same value as the stamp duty required to be paid. 

4. It must be compulsorily registered with the local Sub-Registrar of Assurances. 

5. It must clearly identify, at the very least, the land and other properties being transferred, the identity of the parties, the title history of the land and properties in question, and the fact that ownership rights are being transferred. 

People Also Read This: Buying a House? Have You done your Legal Checks?

Documents Required for Conveyance Deed

1. The duly executed and stamped Conveyance Deed must be presented to the office of the local Sub-Registrar of Assurances for registration. 

2. Some states may require the advocate, or registered deed-writer, who drafted the Conveyance Deed to affix a declaration, and their registration number, on the Deed. 

3. Proof of payment of the registration fees payable, if any. 

4. Identity, and Address, Proofs of all the parties and the attesting witnesses. 

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In practice, members of housing societies often have trouble getting developers to execute Conveyance Deeds for their buildings. In such cases, some states allow the members of the housing society to request the State Government to provide them a Deemed Conveyance Deed. For instance, Maharashtra allows members of housing societies in the state to request a Deemed Conveyance Deed. 

Deemed Conveyance Deed

Once the State Government provides a Deemed Conveyance Deed, although the developer has not really executed the required Conveyance Deed, the law will consider that it has been executed. This is a fiction of the law. Consequently, the members of the housing society will be entitled to the same rights they would have possessed had the developer executed the required Conveyance Deed. 

If your state allows you to obtain a Deemed Conveyance Deed, you have to file an application for this purpose before the competent authority, supported by the required documents. The authority will usually hear both the parties and pass a reasoned order. Accordingly, they will either accept or reject your application. If they accept the application, you will be able to obtain the Deemed Conveyance Deed. The documents typically required to obtain a deemed conveyance deed are:

• Relevant land records, such as municipal records, land revenue records, etc. 

• Copy of development agreement between landowner and builder. 

• Copies of registered and stamped agreements of each flat

• Approved building plan. 

Conveyance deed cost varies from state to state. In Maharashtra, the fee for deemed conveyance is INR 2000. Earlier, there was also a need to submit an occupation certificate from the builder, but now this requirement has been scrapped. The housing society can obtain an occupation certificate from the municipal corporation after the conveyance has been done. 

It is always preferable to take legal help while drafting a Conveyance Deed. Many builders do not adopt the Conveyance deed new rules, and the flat-owners have to resort to deemed Conveyance.