The Central Board of Direct Taxes (CBDT) has notified the new provision of Tax Deducted at Source or TDS on immovable property. The buyer need to deduct tax while making the payment to the seller, if the cost of the immovable property (other than agricultural land) exceeds Rs 50 lakhs under section 194IA. Further the provision will apply to the primary booking with the builder and also the secondary resale in the market.
In this case the person required to deduct TDS would not necessary to obtain TAX Deduction Account Number (TAN). The rate at which tax is to be cut is 1%, but it would go up to as high as 20% if the seller does not disclose his/her permanent account number. The provision will apply even when the property has been financed through a bank loan. So the buyer will have to ensure either he himself or the bank deducts tax before disbursing the loan to the seller.
I need a view on one particular case.
Say the buyer has booked an under construction flat for Rs. 55 lacs with the builder in 2010. He has already paid Rs. 54 lacs to the builder before June 1, 2013 and remaining 1 lacs is due at the time of possession. Now while making the payment of 1 lakh whether he should deduct TDS on the total booking value of Rs. 55 lacs or only on Rs. 1 lakh which he is paying now after June 1.
Further if the flat value was less than 50 lacs at the time of booking but now at the time of registration of property, due to increase in circle rates, if the property is valued at more than 50 lacs for stamp duty purposes, whether this attracts TDS u/s 194IA?
what will happen if the property is jointly owned by 2 or more persons and share of each person is less than Rs. 50 lacs? Will they all deduct TDS in their proportionate ownership & paid separately
