E.KALAIKOVAN (Sr. Accounts Manager ) (340 Points)
13 February 2014An individual wants to purchase a residential house by cash payments. (eg 50 lakhs). What are the problems will come to buyer and seller.
Rohit Gupta
(Audit Executive)
(271 Points)
Replied 13 February 2014
Dear E.KALAIKOVAN,
There is no restriction in Income Tax Act, 1961 to purchase any immovable property in cash. However, the person who is purchasing the property should have the explannation that from where he got this money. Otherwise the AO will add that amount to his income and will also levy the penalty.
The person who is purchasing the property also has to deduct TDS and deposit in Central Government Account @ 1% in case the value of immovable proprty exceeds Rs. 50 lacs as per Section 194-IA of the Income Tax Act,1961.
Regards
Rohit Gupta
Mihir
(Wealth Manager)
(5293 Points)
Replied 13 February 2014
The source of this cash will be questioned and enquiries will be made. Not such a good idea.
CAclubindia
