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Tds on purchase of property

K P BHANUSHALI (PROPRIETOR) (512 Points)

11 February 2014

Friends,

This question is with respect to purchase of property having value more than 50L.

Agreement for purchase of Flat was registered on 31.7.2012. Agr Value 58L. Payments made till date are 46.51L.

Building is under construction and builder demands money after completion of certain stages.

Payment of 50L may exceed after 31.3.2014.

What to do as far as deducting TDS is concerned?

As agreement was registered prior to 1.6.2013, am I required to deduct TDS?

Shall I deduct TDS after payment exceed 50L.

I understand that TDS is not required to be deducted on Service Tax portion as ST is demanded separately by builder.

Kindly, help.

T & R

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3 Replies

Rohit Gupta (Audit Executive) (271 Points)
Replied 11 February 2014

As per Section 194-IA of Income Tax Act, 1961 Any person, being a transferee (Means You), responsible for paying to a resident transferor(Your Builder) any sum by way of consideration for transfer of any land or any building or part of a building, shall, at the time of credit of such sum to the account of the transferor(Your Builder) or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon. No deduction under this section shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.

These provisions are applicable for FY 2013-14. So you have to deduct TDS on each installment paid by you during FY 2013-14.

You need not to wait when the payment will exceed 50 lacs as it is no where written in law.

You have to deduct TDS on all the payments made to builder during 2013-14 and afterwards.

Regards

Rohit Gupta

RHT1203 @ GMAIL.COM

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CA Nitin K. Varshney (FCA DISA CCA Peer Reviewer (ICAI)) (606 Points)
Replied 11 February 2014

if the amount is paying in installments, u should deduct tax on every installment paid after 01/06/2013. its not in provision that u ll hv to deduct tax after rs. 50 Lac. the provision is deduct tax on the purchase of property exceeding rs. 50 Lac.

mahendra jain (Advocate & Tax Consultant) (41 Points)
Replied 11 February 2014

my client has done sold agreement on stamp that they sold old agriculture land for Rs 1.5 crore and advance recd rs.20 lakh from cheque at time of sold agreement i.e. 23/01/2013.and hand over possesion of these land to his byer on dated 23/01/2013.As per agriment remaining amount given within 12 month of agrriment Now date 20/11/2013 byer give the 1.30 crore and complete the registry in own favor. and purchaser deducted tax u.s. 194 IA rs. 1500000/-.

Main problem is that agriculture land siuted in nagar palika ( non specified cities) area under 2 km. when the agreement done agriculture land are tax free from capital gain but after 01/04/2013 IT Rules changed that every agriculture land cover up in tax net which siuted in under 2 KM range of Nagr Palika.

My quesation is that in above condition my client comes under capital gain tax net or not because agriment done before the changes of rules ?