Capital gain and tds deduction on joint property

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

26 November 2015 We are selling home and my mom is joint holder

She has not made any contribution in the purchase of home. All payments are made by me.

Now buyer of property wants to deduct TDS 194(1A) in equal ratio.

1) Please advice is it ok for buyer deduct TDS in my name only.
2) Will registrar or ITO have any objection if 100% TDS is deducted in my name?

CA CS LAVESH VASYANI

CA CS LAVESH VASYANI (Expert)
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26 November 2015 As per the provisions of sec. 184(1A) tds of seller is to be deducted by buyer of the property @ 1%. In your case you both are the joint holders then tds is to be deducted in both the joint names i.e. in equal ratio.

The buyer can not deduct tds only in your name as the agreement and transaction has been executed in both the names.

It does not matter if all the payments made by you only for purchase of new house.

The ITO may have objection if 100% tds is deducted in your name.

Mohit Singla

Mohit Singla (Expert)
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26 November 2015 Adding further, if your mother has no income or income is below taxable limit, then she will get the refund of the entire TDS amount deducted by the buyer in her name.

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CA CS LAVESH VASYANI

CA CS LAVESH VASYANI (Expert)
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26 November 2015
If there is no income or below taxable income of mother then there will be whole refund of tds deducted by buyer. But return of income is to be filed compulsorily.

Querist : Anonymous

Querist : Anonymous (Querist)

27 November 2015 Well going by this logic, any person can save huge tax….if he had one or more joint holders.

In this case, I am in higher tax bracket and to avoid tax I make one or more joint holder. Then at time of sale they get equal ratio, tax of 10 rs is divided among 2 holders. Is this not wrong?

I have read on this forum , where experts has replied that ,>>

--Ratio of seller will be taken on basis of ratio mentioned in registration paper, in abscence of this ratio, will taken in ratio of money contributed by them.

Assuming total sale value of Rs 100 and indexed cost of Rs 90/- gain of Rs 10 is divided in equal ratio.

2) In mom case if we take sale at 50 Rs ( half of Rs 100 total sale value) what is cost of acquistion. Since there is no cost incurred by her? If we take Rs 45, then is it not wrong?

3) My problem is that I have booked a flat in my name and wife name and we will be getting allotment in 2-3 months. So I will save tax under section 54. But there is no investment in my mom name.

I think best solution is -- That mom has invested 5% then Rs 5 is sale value for her, indexed cost is Rs 4.5 and capital gain is Rs .5. and accordingly TDS u/s 194(1A) be deducted in ration of 5%.

Expert opinion is awaited?