Ranojit 28 June 2016

1% tds on immovable property

I have purchased a Flat in 2014 @ Rs 47,95,000/- ...which is the consideration amount paid to the seller.

During registration of the deed at the DSR office, Kolkata, the market value was derived @ Rs 50,73,000/- on which the stamp duty and other charges are calculated.

Currently, I have received a communication from TDS department to pay TDS @ 1%.

Section 194 IA of income tax rules, clearly states that the TDS is to be paid if consideration amount is more than Rs 50 Lacs.

I mail TDS department, they are saying the data is provided by DSR, Kolkata and they have vetted it OK. So I need to contact the DSR.

When I approached the DSR, if says he knows nothing and contact TDS department. He says that the TDS is to be calculated on the market value.

Now when approached the seller for payment of the money, since the same is to be dedcuted from the amount paid, he cites the IT law and says that the consideration amount is less than Rs 50 Lacs.

Please update whom should I approach for this and who could give me a written clarification so that I can present the same to my seller for retrieval of the money.

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JustAdvisor (IT) 28 June 2016

Generally a statute imposing tax is to be strictly construed. any doubt would go in favour of the assessee. section 50C talks about deemed consideration which in your case is above 50L. 194IA though talks about consideration which is below 50L. It may be noted that Finance bill 2012 proposed to work on deemed consideration but the word deemed is missing in the section. however courts in India rarely go into bills to see legislative intent. The section is still very new and there is no decided case in public knowledge as to whether you are liable or not. in such case it may be a safe bet to err on the right side rather than get on the wrong end of the taxation authorities in consultation with your CA and an able counsel.