If we give work order to contractor for renovating our house. Should we deduct TDS in this case. If no, then how to show this expenses in cost of improvement to get reduction in LTCG while selling the house.
10 Replies
gagan
(student)
(105 Points)
Replied 04 October 2019
you ask the contractor for bill for your renovation of your house then you claim the cost of improvement against the invoices
Manjunath
(Business)
(23 Points)
Replied 04 October 2019
Thank you for your reply Gagan. What if the contractor is individual and do not have the GST bill to provide. Else we should find a registered contract?
Kapadia Pravin
(17264 Points)
Replied 05 October 2019
No TDS on personal renovation expenses
Get the bill from contractor for renovations with GST or Without GST
Add these expenses to asset Account
Get the PAN Xerox of each contractor particularly Non-GST wala
Get the bill from contractor for renovations with GST or Without GST
Add these expenses to asset Account
Get the PAN Xerox of each contractor particularly Non-GST wala
(Guest)
| Originally posted by : Manjunath | ||
 |
If we give work order to contractor for renovating our house. Should we deduct TDS in this case. If no, then how to show this expenses in cost of improvement to get reduction in LTCG while selling the house. |  |
If the total payment is above 50 lac, then 5% tax is deducted. This was introduced in the latest budget.
Treatment of cost of acquisition or improvement remains same whether tax is deducted or not.
Kapadia Pravin
(17264 Points)
Replied 05 October 2019
Under 194M w.e.f. 1-9-2019
If the total of payments to any single contractor for wedding functions, house renovation or to a single professional during a financial year exceeds Rs 50 lakh then TDS @ 5% would be deductible by the payer.
If the total of payments to any single contractor for wedding functions, house renovation or to a single professional during a financial year exceeds Rs 50 lakh then TDS @ 5% would be deductible by the payer.
Darshan Jain
(CA)
(137 Points)
Replied 05 October 2019
The provisions of Section 194C(4) mentions that no TDS is required to made if the amount is paid exclusively for personal purposes of the individual. Assuming that your house is used for personal perposes, TDS would not apply. However, the FA, 2019 has brought in Section 194M where if the payments exceeds Rs. 50 Lakhs, TDS is required to be made at the rate of 5%.
However in any case your deduction for cost of improvement for the purposes of calculation of LTCG is not affected for non-deduction of Tax. Of course if your payment exceeds 50 Lakhs do deduct tax and pay tax u/s. 194M.
Kapadia Pravin
(17264 Points)
Replied 06 October 2019
So long as it is within the provisions of the Act , it's okay. By tax planning you can avoid /reduce taxes.
There is nothing like simply avoid or easily avoid. The proper is Action has to be on BASIS
There is nothing like simply avoid or easily avoid. The proper is Action has to be on BASIS
Baskar
(CMA)
(93 Points)
Replied 06 October 2019
Hi,
You should deduct tds @ 1or 2percent on basic amount(excluding GST) depends upon whether he is ind/ HUF or any other else as the case may be.
You can show and avail deduction for this amount as cost of improvement irrespective of this tds 1or 2 percent.
Regards,
Baskar
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