What if TDS on property is deducted and deposited under wrong section?

If i Have got short payment notice of tds..........what should be my further procedure.......!!

thanks in advance..
 

Please review and provide response,

A) Total Consideration Costas per Provisional Allotment Letter (Year 2012) is INR : 49,50,000.00
Break up is as follows,
Basic Price : 46,00,000.00
IDC             :   100,000.00
Car Parking :   200,000.00
Electric Sub-station : 50,000.00_
Total (INR) : 4,950,000.00

B) Additional Charges as per Provisional Letter are INR: 200,000.00
Break up is as follows,
IFMD : 60,000
Maintenance Advance for One Year : 20,000
Social Club Charges Rs : 100,000
Social Club Subscripttttion for One Year : 20,000
Total (INR) : 200,000.00

Total Cost (INR) : (A) + (B)
: 4,950,000.00 + 200,000.00
= 5,150,000.00
Service Tax (additional as applicable)

As can be observed, Total Consideration Cost is INR : 4,950,000.00 (which is less than 50.0 lacs) and Total Cost is INR 5,150,000.00 (that includes Maintenance and Social Club Charges). Service Tax as applicable will be additional.

In view of above, please advise if TDS 1% is applicable.

Originally posted by : Sanjay
	Please review and provide response, A) Total Consideration Costas per Provisional Allotment Letter (Year 2012) is INR : 49,50,000.00 Break up is as follows, Basic Price : 46,00,000.00 IDC             :   100,000.00 Car Parking :   200,000.00 Electric Sub-station : 50,000.00_ Total (INR) : 4,950,000.00 B) Additional Charges as per Provisional Letter are INR: 200,000.00 Break up is as follows, IFMD : 60,000 Maintenance Advance for One Year : 20,000 Social Club Charges Rs : 100,000 Social Club Subscriptttttion for One Year : 20,000 Total (INR) : 200,000.00 Total Cost (INR) : (A) + (B) : 4,950,000.00 + 200,000.00 = 5,150,000.00 Service Tax (additional as applicable) As can be observed, Total Consideration Cost is INR : 4,950,000.00 (which is less than 50.0 lacs) and Total Cost is INR 5,150,000.00 (that includes Maintenance and Social Club Charges). Service Tax as applicable will be additional. In view of above, please advise if TDS 1% is applicable.

Hi Sanjay

TDS is applicable on purchase of "immovable property". Thus all costs which can be attributed to the immovable structure, i.e. the flat, will form part of the eligible amount.

Please check with your developer/builder on what would be the total consideration value mentioned in the agreement of sale.

Usually the practice followed by most developers is, that they do not include car parking, society formation & advance maintenance type of charges in the agreement. They usually give a allotment letter for car park/ receipt for maintenance.

Going by your example, I do not think TDS would be applicable.

Hi Nilesh As mentioned in my email, consideration amount mentioned in agreement is Rs. 49,50,000/-. However service tax ia not mentioned in agreement but charged in each Invoice. Do we have to add service tax to consideration amount, then total will be more than 50 lacs andTDS will be applicable. Thanks

Service tax is not to be included in the consideration.  Accordingly, TDS should not apply to the facts of your case.

Thanks Nikhil for the response.

Strangely the builder (reputed and having largest project in Noida) is asking to deduct TDS. We are repeatedly trying to clarify with him through email communication.  

 

well if he wants, then you deduct TDS...for you its just a procedural burden.  doesn't have any additional financial burden

Originally posted by : Aryan Singhania (Pallav)
	TDS on sale of Immovable Property (Sec 194IA) – Detailed Overview   Provisions of TDS on sale of Immovable Property (Sec 194IA) – as stated:- The provisions of this section states that TDS on sale of Immovable Property should be deducted at source from payment on transfer of immovable properties (other than agricultural land) where the consideration paid or payable is more than Rs 50,00,000/-. Earlier, there was no such deduction in case of immovable properties as it is in the case of salary, interest, rent etc. Any person responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), is liable to deduct tax at source under section 194-IA.Where the transaction is less than Rs 50,00,000 /-, the liability to deduct tax at source will not be applicable.    Rate at which TDS shall be deducted :- Tax is deductible at the rate of 1% of the consideration payable to a resident transferor. If a valid PAN is not provided by the seller, the tax rate would go up to 20%.     Obtaining TAN:- Purchaser is not required to obtain a TAN for deduction.    Payment and return of TDS :- Tax shall be deducted at the time of payment or at the time of giving credit to the transferor, whichever is earlier.  If advance payment is being made then TDS would be required to be deducted at the time of advance payment itself. And if installment payment is made, the TDS would be required to be deducted at each such installment. The tax deducted shall be paid to the credit of Central Government within a period of seven days from the end of the month of deduction. Online payment u/s 194IA is mandatory and the tax should be deposited on challan-cum-statement on Form No.26QB. Form No 16B (TDS Certificate) will be issued by the deductor within fifteen days from the due date of depositing tax.     Applicability of section :- Section 194IA is only attracted for the transactions on or after 1st June, 2013. For example:- Sale agreement is made before 1st June, 2013 but consideration received after 1st June, 2013 – Sec 194IA is not applicable. Advance consideration of Rs 5000,000 or more is received before 1st June, 2013 but sale agreement made after 1st June, 2013. – Section 194IA is not applicable.     Where property is held by Joint-owners :- In case of joint owners, the threshold limit of Rs 50,00,000/- is to be determined property-wise and not transferee-wise. The number of buyer or seller would not matter at all. The value of property should be more than Rs 50,00,000/- for applicability of deduction of tax. For example:- A,B and C  jointly purchased an immovable property. The purchase price for each owner is Rs 20lakhs, Rs 15 lakhs and Rs 35 Lakhs respectively. In this case individual purchase price is less than Rs 50,00,000 but the aggregate value of the transaction is exceeds Rs 50,00,000. Thus section 194-IA would be applicable.   Scope :- Section 194-IA is applicable to all including relatives, minor, senior citizens etc. However, if transfer is made without payment of any consideration like in case of gift, then this section will not apply.     Provisions for Non Resident Indian:- If payment is made to a Non-Resident then section 194-IA will not be   applicable. Rather section 195 will be attracted and TDS is required to be deducted @ 20%+EC&SHEC on the sale consideration. Surcharge @ 10% will be applicable if amount paid exceeds Rs 1 crore. The limit of Rs 50,00,000/- is not applicable in case of payments made to NRI’s.     Non Compliance:- In case of failure to comply with the provisions, interest and penalty would be imposed to the purchaser.  Interest will be charged @ 1% p.m or part of the month for failure to deduct tax or short deduction of tax from the date the tax was deductible till the date the same is deducted.  Interest will be charged @ 1.5% p.m or part of the month for tax deducted but not paid to the government from the date of deduction till the date of actual payment.     Courtesy: Alok Patnia, ICAI.org, Journals   Aryan Singhania

Provisions for Non Resident Indian:- •If payment is made to a Non-Resident then section 194-IA will not be applicable. Rather section 195 will be attracted and TDS is required to be deducted @ 20%+EC&SHEC on the sale consideration. Surcharge @ 10% will be applicable if amount paid exceeds Rs 1 crore. The limit of Rs 50,00,000/- is not applicable in case of payments made to NRI’s. Please advise of possible ways to avoid or minimise TDS deduction for NRI sellers.

Dear Experts 

One assessee paid lumpsum amount (95 lakhs) to seller of immovable property from his own account and also deposit the amount of TDS on it on his own pan number.

However registry of land was done in name of his spouse, 

kindly suggest that validity of transaction. 

 

Regards 

Ritesh khurana 

Dear Ritesh, it should get covered under beneficial ownership.  still without doeubt you will face difficulty in making correct claims in tax returns.

 

the appropriate way to deal with this is to reflect the property in the husband's balanceshet only as a beneficial owned property

Dear Ritesh, it should get covered under beneficial ownership.  still without doeubt you will face difficulty in making correct claims in tax returns.

 

the appropriate way to deal with this is to reflect the property in the husband's balanceshet only as a beneficial owned property

Does Joint Development Agreement attract  TDS under 194IA  ?

Respected Sir, What about purchase of property from NRI? Property is of Rs 1.00 Cr. Whether TAN is required to be taken now?

Helpful...overall purview has been given.. thanks