Notice from Income Tax Department for TDS on Property

Why does one receive an Income Tax notice under Section 201?

The Income Tax Department has started issuing intimation under section 200A of the Income Tax Act’1961 to the deductors under section 194IA i.e the buyers of property who have paid TDS Under section 194IA late. The CPC TDS is not only charging interest under section 201, but also late fee under section 234E of the Act. The main objective for introducing this rule is to track all the high value real estate transactions, which are not being registered.

As per section 194IA of the Income Tax Act, buyers of property must deduct TDS from payment made to seller, if the sale price exceeds Rs 50 lakhs. This rule has been in effect since June 1, 2013. So, if you did not deduct TDS while making the payment then you might receive a notice.

How does the Income Tax Department know you have purchased a property?

Annual Information Return (AIR) is submitted by Registrar/Sub-registrar, denoting and specifying the details of all the buyers who have purchased a property exceeding Rs 50 lakhs.

Why is the notice being sent now?

The income tax department recently matched the TDS data with the data they received from the property registrar for property transactions over Rs 50 lakh. Wherever there was a discrepancy , either the buyers failed to deduct or deposit the TDS, a notice has been sent

What to do if you received the notice under section 201 for non payment or late payment of TDS on property From Income Tax Department ?

For those who have received a notice, the immediate corrective step to avoid paying a penalty is to pay the TDS along with the applicable interest and late filing fee. The interest payable under Section 201 is 1% per month if tax wasn’t deducted and 1.5% in case this was done but not paid

How to make payment of such demand raised by IT department

Under e-Payment option of taxes of NSDL, a link has been given as Demand Payment i.e. Demand Payment for TDS on Property which is a facility to make payment of demand raised by CPC-TDS against TDS on Sale of Property.

  • Calculate payment according to the provisions specified under section 201 and under section 234E
  • Go to:
  • Select Demand Payment. 
  • s takes you to another window, all you need to enter details kike PAN of Transferee/Buyer, PAN of Transferor/Seller, demand Acknowledgement number. Enter these details and selection relevant assessment year and proceed for payment of demand amount.

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