TDS for an Under Construction Property

This query is : Resolved

pokhare media (Querist)
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01 February 2024 Hi Team,
I have purchased a house and paying the builder in installments. I did the last installment on 30th Apr 2023. But I havent made the TDS payment of 1% on this payment. How much fine I'll have to pay to file the TDS now?

Is the Late filing fees under section 234E applicable to me in this case?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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11 July 2024 If you have made a payment to the builder for purchasing a house and haven't deducted TDS (Tax Deducted at Source) on the last installment paid on 30th April 2023, here are the implications and penalties you might face:

1. **Late Deduction of TDS:**
- TDS is applicable on payments made for purchasing property if the transaction amount exceeds Rs. 50 lakhs. The TDS rate applicable is 1%.
- Since you haven't deducted TDS on the payment made on 30th April 2023, you are liable to pay interest under Section 201 of the Income Tax Act. The interest is calculated at the rate of 1% per month (or part thereof) from the date on which TDS was deductible (30th April 2023 in your case) to the actual date of deduction/payment.
- You should calculate the interest for the period of delay until the date you actually make the TDS payment.

2. **Late Filing Fee under Section 234E:**
- Section 234E applies when there is a delay in filing TDS returns. However, since you are concerned about TDS deduction and payment, not return filing, Section 234E may not directly apply to your situation. It primarily pertains to late filing of TDS returns, not late deduction or payment of TDS.

3. **Procedure for Payment:**
- Use Challan 281 to make the TDS payment. Select the appropriate nature of payment as "200 - TDS payable by taxpayer."
- Fill in the details including PAN of the builder, assessment year, type of payment, and other required information.
- Pay the TDS amount along with applicable interest.

4. **Interest Calculation Example:**
- Suppose the payment made on 30th April 2023 was Rs. 50 lakhs. The TDS deductible would be Rs. 50,000 (1% of Rs. 50 lakhs).
- Calculate the interest for the period of delay (from 30th April 2023 to the actual payment date) at 1% per month.

5. **Consultation with a Tax Professional:**
- It's advisable to consult with a tax professional or CA for accurate calculation of interest and compliance with TDS rules. They can provide specific guidance based on your individual circumstances and ensure timely compliance with income tax laws.

By paying the TDS amount along with applicable interest promptly, you can mitigate further penalties and ensure compliance with tax regulations.