There is a statutory
requirement under section 1 39A of the Income-tax Act read with rule 11 4B of
the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents
pertaining to purchase or sale of immovable property for value of Rs.5 lakh or
more. However, the information furnished to the department in Annual
Information Returns by the Registrar or Sub-Registrar indicate that a majority
of the purchasers or sellers of immovable properties, valued at Rs.30 lakh or
more, during the financial year 2011-12 did not quote or quoted invalid PAN in
the documents relating to transfer of the property.
Under the existing provisions of the Income-tax
Act, tax is required to be deducted at source on certain specified payments
made to residents by way of salary, interest, commission, brokerage,
professional services, etc. On transfer of immovable property by a
non-resident, tax is required to be deducted at source by the transferee.
However, there is no such requirement on transfer
of immovable property by a resident except in the case of compulsory
acquisition of certain immovable properties. In order to have a reporting
mechanism of transactions in the real estate sector and also to collect tax at
the earliest point of time, it is proposed to insert a new section 194-IA to
provide that every transferee, at the time of making payment or crediting of
any sum as consideration for transfer of immovable property (other than
agricultural land) to a resident transferor, shall deduct tax, at the rate of
1% of such sum.
In order to reduce the compliance burden on the
small taxpayers, it is further proposed that no deduction of tax under this
provision shall be made where the total amount of consideration for the
transfer of an immovable property is less than fifty lakh rupees.
This amendment will take effect from 1st June,
2013.
