Is TDS deducted on real estate brokerage paid?
These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.
Is TDS applicable on brokerage paid by an individual seller to an individual real estate broker? If yes, how should the seller remit the TDS amount to the government?
Umesh Kumar Jethani Founder, ApkiReturn: Under Section 194H of the Income Tax Act, 1961, an individual seller is generally not required to deduct TDS on brokerage payments made to a real estate broker. This exemption applies as long as the individual’s gross receipts, turnover, or sales in the preceding financial year did not exceed Rs 1 crore in a business or Rs 50 lakh in a profession. If the individual seller falls under the tax audit provisions due to exceeding these thresholds, then TDS would be applicable. In such a case, the seller must deduct TDS at the rate of 2% from the brokerage amount if the total payment to the broker in a financial year exceeds Rs 20,000. The TDS amount should be deposited with the government using Challan No. 281 and the seller would also need a Tax Deduction and Collection Account Number (TAN) to do so. The TDS must be remitted by the 7th of the next month for payments made from April to February, and by 30 April for payments made in March. Additionally, the seller must file a quarterly TDS return in Form 26Q and issue a TDS certificate in Form 16A to the real estate broker.
Also read | What’s the right way to gift my share of land to my sisters, gift deed or relinquishment deed?
I am managing both distribution and servicing of mutual funds for my clients. I started this business last year. Please advise if I am required to pay GST on my brokerage payments.
Shubham Agrawal Senior Taxation Adviser, TaxFile.in: Yes, you must charge GST on your brokerage income if your total brokerage earnings exceed Rs 20 lakh in a financial year. Before doing so, you are required to obtain GST registration and a GSTIN (goods and services tax identification number). Once you have registered, you must continue charging and paying GST in subsequent financial years, regardless of the turnover. The applicable GST rate on brokerage income is 18%. You are also eligible to claim input tax credit on goods and services used to provide brokerage services. The GST law mandates compliance with invoice formatting, periodic tax payments, and return filing requirements. As a registered taxpayer, you must adhere to these regulations to ensure compliance.
Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
Is TDS applicable on brokerage paid by an individual seller to an individual real estate broker? If yes, how should the seller remit the TDS amount to the government?
Umesh Kumar Jethani Founder, ApkiReturn: Under Section 194H of the Income Tax Act, 1961, an individual seller is generally not required to deduct TDS on brokerage payments made to a real estate broker. This exemption applies as long as the individual’s gross receipts, turnover, or sales in the preceding financial year did not exceed Rs 1 crore in a business or Rs 50 lakh in a profession. If the individual seller falls under the tax audit provisions due to exceeding these thresholds, then TDS would be applicable. In such a case, the seller must deduct TDS at the rate of 2% from the brokerage amount if the total payment to the broker in a financial year exceeds Rs 20,000. The TDS amount should be deposited with the government using Challan No. 281 and the seller would also need a Tax Deduction and Collection Account Number (TAN) to do so. The TDS must be remitted by the 7th of the next month for payments made from April to February, and by 30 April for payments made in March. Additionally, the seller must file a quarterly TDS return in Form 26Q and issue a TDS certificate in Form 16A to the real estate broker.
Also read | What’s the right way to gift my share of land to my sisters, gift deed or relinquishment deed?
I am managing both distribution and servicing of mutual funds for my clients. I started this business last year. Please advise if I am required to pay GST on my brokerage payments.
Shubham Agrawal Senior Taxation Adviser, TaxFile.in: Yes, you must charge GST on your brokerage income if your total brokerage earnings exceed Rs 20 lakh in a financial year. Before doing so, you are required to obtain GST registration and a GSTIN (goods and services tax identification number). Once you have registered, you must continue charging and paying GST in subsequent financial years, regardless of the turnover. The applicable GST rate on brokerage income is 18%. You are also eligible to claim input tax credit on goods and services used to provide brokerage services. The GST law mandates compliance with invoice formatting, periodic tax payments, and return filing requirements. As a registered taxpayer, you must adhere to these regulations to ensure compliance.
Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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