Mumbai: In terms of purchase Immovable property Property (other than agricultural land) worth more than Rs 50 lakh from a resident seller, TDS The rate of 1% will apply even if there is more than one buyer and the contribution of each buyer is less than Rs 50 lakh. The same principle will also apply in case of multiple sellers, where the share of each seller is less than Rs 50 lakh but the total sale value of the property is more than Rs 50 lakh.
1% TDS is applicable on purchase price or stamp duty value, whichever is higher. This amendment is proposed budget 2024This rule will come into effect from October 1.
The clarification memorandum states that, “some taxpayers are interpreting that the consideration being paid or credited refers to the payment made by each individual buyer rather than the total consideration paid for the immovable property.” The memorandum states that based on this interpretation, if the buyers are paying less than Rs 50 lakh each, no tax is being deducted even if the purchase price or stamp duty value of the immovable property exceeds Rs 50 lakh. “This is against the intent of the legislature,” it states.
“Accordingly, it is proposed to amend sub-section (2) of section 194-IA of the Act to clarify that where there is more than one transferor (seller) or transferee (buyer) in respect of any immovable property, such consideration shall be the aggregate of all sums paid or payable by all the transferees to the transferor or all the transferors for the transfer of such immovable property.”
Tax experts say buyers should be aware of this change as the penalty for not deducting and depositing tax at source is quite high. Apart from deducting and depositing TDS, buyers will also have to issue a TDS certificate after generating it on the IT department's e-portal (TRACES). This amendment will increase the compliance burden on buyers.
1% TDS is applicable on purchase price or stamp duty value, whichever is higher. This amendment is proposed budget 2024This rule will come into effect from October 1.
The clarification memorandum states that, “some taxpayers are interpreting that the consideration being paid or credited refers to the payment made by each individual buyer rather than the total consideration paid for the immovable property.” The memorandum states that based on this interpretation, if the buyers are paying less than Rs 50 lakh each, no tax is being deducted even if the purchase price or stamp duty value of the immovable property exceeds Rs 50 lakh. “This is against the intent of the legislature,” it states.
“Accordingly, it is proposed to amend sub-section (2) of section 194-IA of the Act to clarify that where there is more than one transferor (seller) or transferee (buyer) in respect of any immovable property, such consideration shall be the aggregate of all sums paid or payable by all the transferees to the transferor or all the transferors for the transfer of such immovable property.”
Tax experts say buyers should be aware of this change as the penalty for not deducting and depositing tax at source is quite high. Apart from deducting and depositing TDS, buyers will also have to issue a TDS certificate after generating it on the IT department's e-portal (TRACES). This amendment will increase the compliance burden on buyers.