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Can TDS be deducted before making payment

Vicky Kumar (Job) (13 Points)

11 April 2024

Hi,

I am buying a flat for 90 lacs. My sellers are joint owner and have equal share in the flat. One of the seller is an NRI and other one is resident Indian.

I had signed agreement to sell on 05-Mar'24 and made a payment of 8 lacs to them ( 4 lacs each).

I will make the rest of payment in Apr'24 through bank loan and self funding. Also, registry of the flat will happen in Apr'24.

I had deducted the tds on complete 90 lacs in Mar'24 only and submitted it and filed the tds return. For NRI ( @ 20.8%) on 45 lacs and for resident indian ( @ 1%) on 45 lacs in Mar'24 only.

Is this fine as I deducted the complete tds on 90 lacs in March'24 only before making the complete payment to seller ?

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10 Replies

NARENDRA (ACCOUNTS MANAGER) (1492 Points)
Replied 11 April 2024

No issue ,if the amount isn't going to increase or decrease in the future.

Vicky Kumar (Job) (13 Points)
Replied 11 April 2024

Deal amount is fixed I.e. 90 lacs...but I only made 8 lacs payment in Mar'24 and rest of the payment in Apr'24.....but deducted and submitted and filed tds return on complete deal amount I.e. 90 lacs in Mar'23 only I.e. before making the payment to the seller. So, complete tds filed for Mar'24 but payment also made in Apr'24...... is it fine?

sabyasachi mukherjee (26103 Points)
Replied 12 April 2024

Study thoroughly sec 194

Nikhil Kaushik (Fellow CA) (85118 Points)
Replied 12 April 2024

Few issues to consider:

1. the sellers will get TDS credit in FY 2023-24 instead of 2024-25 and complicate their tax filing.

2. the data in TDS return (for NRI) and Form 26QB won't match the registrar records. This will mess up the AIS data.

3. AIS data for you would show purchase of high value property in 2024-25 but no corresponding TDS data will be there for the same FY. This may cause mismatch in your return too.

Vicky Kumar (Job) (13 Points)
Replied 15 April 2024

Hi Nikhil,

if due to mismatch incase any query comes from income tax department then if I reply and share the tds return form/challan then it will be fine... right?

Nikhil Kaushik (Fellow CA) (85118 Points)
Replied 15 April 2024

the problem is that it wont get resolved in the automated system and might lead to assessment which is a time consuming process. at the end of it, they can adjust the amounts. But not without a stretched process.

Vicky Kumar (Job) (13 Points)
Replied 16 April 2024

Hi Nikhil, Thanks for explaining.

One last question, since I had deducted the tds in Mar'24 itself and filed the return on the entire amount.....can it be changed now?

Nikhil Kaushik (Fellow CA) (85118 Points)
Replied 16 April 2024

you can make corrections to the filing. But I personally have not dealt with moving dates to a different financial year.

Vicky Kumar (Job) (13 Points)
Replied 16 April 2024

Hi Nikhil,

Also, is there any time limit under which these corrections can be done?

Vicky Kumar (Job) (13 Points)
Replied 16 April 2024

Hi Nikhil,

Also, seller can carry forward their tds to next financial year...right? If tds is credited in previous financial year but registry happens in next financial year.