Tds on property

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Pawan Gupta (Querist)
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23 March 2016 Hi,
I have purchased a flat in Pune of which agreement was signed on 1st January 2013. The builder used to send Demands and I used to pay the entire amount to builder. Now my Builder suddenly says that I have to pay TDS on all the installments which I have paid till date.

The total cost of the flat is Rs. 57,17,500 and I have paid 11 lac in January 2013. Section 191IA came in 1st June 2013 and after that I have paid only 41 lac which is below 50 lac.

So, my questions are
1) Who pays the TDS(builder or buyer)?
2) Will I need to pay TDS as the total amout I have paid after June 2013 is less than 50lacs?

Thank you

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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23 March 2016 As per section 194-IA any person being a transferee (purchaser) while making payment to the transferor (seller) for transfer of any immovable property (other than agricultural land) shall deduct TDS @1% at the time of payment.

Normally, in case of execution of a construction agreement (i.e. other than sale deed) for a flat, there is no transfer of immovable property except for transfer undivided share of land. In such a case sec. 194-IA will be applicable only if land value exceeds Rs. 50 lakhs. Your query does not provide details with regard to this.

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Pawan Gupta

Pawan Gupta (Querist)
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23 March 2016 Thanks for your reply. I didn't get which information you need. I have bought a flat and not land. And the total flat cost as mentioned in Index 2 is 57 lakhs. Out of which I have paid 11 lacs at the time of agreement i.e. before June 2013. Just wanted to know if I am applicable to sec 194-IA and do I need to pay TDS?

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CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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23 March 2016 Applicability of TDS depends on the nature of documents executed by you. The term 'TDS' stands for 'tax deducted at source', that means tax has to be deducted from the payment to be made by the payer (i.e. from the source of payment). After deducting, the same has to be deposited with the government using Form 26QB i.e. TDS payment form cum return of TDS.

On purchase of flat under construction from a builder, the builder registers in the name of purchaser to avail the benefit of loan. The below documents will be executed and registered normally:
1) Sale deed (i.e. conveyancing of property) for transfer of undivided share of land; and
2) Agreement for construction of flat.

Alternatively a composite sale deed may executed comprising of undivided share of land and flat.

In the first case normally TDS is not required to be deducted.