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Query on tds on property

Amit Dhingra (CEO) (25 Points)

02 January 2014

as per new rules If the value of property is more than 50 lakhs then TDS will be deduction of one percent of total money paid after june 1, 2013.

Do the following components of the last and final Demand made by the builder after June 1,2013, attract TDS deduction u/s 194-1A :

1. Stamp Duty Charges

2. Registration Charges

3. Club Membership Charges;

4. Service Tax on Car Park

5. Electrification Charges;

6. Monthly Maintenance charge (staken in advance for one year)

7. Water Charges( taken in advance for one year)

Any help here will be highly appreciated.

thanks

amit

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3 Replies

Madhu Hegde (article assist) (62 Points)
Replied 02 January 2014

As per Budget-2013,,Any person purchasing immovable property of Rs. 50 lacs or more not being Agriculture Land has to deduct TDS @ 1% from the price of immovable property paid to seller.

Details of this provision:-

TDS applicable on which property?

Applicable to – Immovable property of Rs. 50 lacs or above

Not Applicable to – i) Agriculture Land and ii) Immovable Property having value less than Rs. 50 lacs

Who is liable to pay TDS?

Mainly there are two parties – i) Buyer of Property and ii) Seller of Property. The responsibility to deduct TDS is on Buyer of the Property.

How much TDS ?

1% on the Total Price of the Property

From when TDS on Immovable Property applicable?

It is applicable from 1st June 2013.

What Buyer of the Property has to do?

1) Deduct TDS on payment made to Seller of the Property

2) Take the PAN of Seller and compare the same with original Permanent Account Number PAN card

3) e-Payment of TDS though online form (e-payment of TDS is compulsory. If buyer does not have facility to pay online, he can go to any authorized bank and pay thought them)

4) File online form 26QB providing details of deal of the property.

5) If TDS is not deposited withing 7 days of filling of Form 26QB, already filled Form26QB will consider invalid and one has to file it again.

6) Download TDS certificate from traces website, and give it to Seller of the property.

What Seller of the property has to do?

1) Give valid PAN to Buyer of the property to quote.

2) Check TDS credit in form 26AS from here.

Regards,

Madhu Hegde.

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Amit Dhingra (CEO) (25 Points)
Replied 02 January 2014

but the query is if TDS shall be deducted from registration amount being deposited with developer for onward registration with govt.

will there be TDS on it. assume registration charges is 10 lakhs. now we pay 9.9 lakhs to developer and pay 10k to govt as TDS.

now if developer goes for registration, then it will have to put in 10k from its pocket to get registration done. how it can be. need help on this.

amit

Bhavin J. M. Dedhia (Chartered Accountant) (47 Points)
Replied 02 January 2014

Sec. 194IA requires the transferee (purchaser) to deduct TDS at the rate of 1% on any sum paid/payable to the transferor (seller) by way of consideration for transfer of an immovable property.

Since only the amount payable to the transferor as consideration for transfer of property is subject to tds deduction u/s.194IA.

Now the amount paid to transferor on account of stamp duty, registration charges is not the consideration for transfer of property payable to transferor but is to be deposited to the concerned authorities on account of transfer. (And, correct me if i am wrong, it is in fact the responsibility of the buyer to pay stamp duty, registration charges which is only discharged by seller on behalf of buyer - hence it may be considered as reimbursement.)

Therefore according to me there need not be any tds deduction u/s.194IA on the amount of stamp duty and registration charges.