Income Tax on Property sold with multiyear interest free payment plan
9 months ago
This is related to Sale of an Apartment between two Parties: First Party is Father & Mother (Seller), and Second Party is Daughter & Son-in-law (Buyer). I have following questions:
1. After initial lumpsum payment, remaining due balance will be paid in next 5 years - On which amount (total buying price or considering the down payment and monthly instalment made) the buyer should deduct the tax?
2. When and how the seller can claim the Tax Benefit on the property - based on the payment received (down payment and yearly instalment) or anything else?
3. If the tax is deducted based on down payment and later based on every month’s instalment, then how to fill 26QB?
A.Dear client,
At the time of sale of property, buyer is required to deduct TDS on property and deposit the same with the government. But, the seller is allowed to avail credit of the same or claim TDS refund by filing his ITR.
Within 30 days after the end of the month in which the tax deduction is made, the buyer must submit Form 26QB.
Take this illustration to help you understand: Vikas sold the property to Shaam. On December 15, 2020, a sales consideration of Rs. 54,00,000 was paid. Here Form must be submitted on or before January 30, 2021. If the form is raised beyond the due date, there are late costs of Rs. 200 per day.
At the time of sale of property, buyer is required to deduct TDS on property and deposit the same with the government. But, the seller is allowed to avail credit of the same or claim TDS refund by filing his ITR.
Within 30 days after the end of the month in which the tax deduction is made, the buyer must submit Form 26QB.
Take this illustration to help you understand: Vikas sold the property to Shaam. On December 15, 2020, a sales consideration of Rs. 54,00,000 was paid. Here Form must be submitted on or before January 30, 2021. If the form is raised beyond the due date, there are late costs of Rs. 200 per day.
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