Taxation query on under construction flat
This query is : Resolved
30 March 2024
Hello I have queries regarding taxation on property.
In this financial year, bought an Under-construction property - joint ownership - home loan EMI ongoing.
1. Is the principal component of EMI deductible under 80C for under-construction or is it deductible after completion certificate in 5 installments like the interest component.
2. After discussing with the developer, the overall property value has decreased . However , since sale agreement was registered and subsequent TDS were paid on demands, what will happen to the remaining stamp duty (on which value will the rest stamp duty be charged on) and TDS correction in 26QB?
In this financial year, bought an Under-construction property - joint ownership - home loan EMI ongoing.
1. Is the principal component of EMI deductible under 80C for under-construction or is it deductible after completion certificate in 5 installments like the interest component.
2. After discussing with the developer, the overall property value has decreased . However , since sale agreement was registered and subsequent TDS were paid on demands, what will happen to the remaining stamp duty (on which value will the rest stamp duty be charged on) and TDS correction in 26QB?
30 March 2024
YES, ON PRINCIPAL PORTION YOU CAN CLIAM 80C DEDUCTION
30 March 2024
So you mean I can claim the principal portion for the under-construction flat in this FY right?
Can you also clarify regarding question 2.
Can you also clarify regarding question 2.
31 March 2024
Tds should be deducted on sale consideration as per sale deed
31 March 2024
Tds should be deducted on sale consideration as per sale deed
01 April 2024
You can get under construction property tax benefit upto Rs. 150000/- per financial year on paid principal amount. However you can claim this benefit only after getting possession of the property.
The errors/mistakes in Form 26QB can be corrected online by the deductor (buyer of the property) by logging in at the TRACES website.
The deductor (buyer of the property) registered at the TRACES website can submit request for “26QB” correction available under the Tab “Statements/Forms”.
The errors/mistakes in Form 26QB can be corrected online by the deductor (buyer of the property) by logging in at the TRACES website.
The deductor (buyer of the property) registered at the TRACES website can submit request for “26QB” correction available under the Tab “Statements/Forms”.
01 April 2024
Thanks mam. I already paid 2% stamp duty on registered sale agreement on the original (incorrect) sale consideration.
Now the amount is different. Will the remaining stamp duty be charged as % of this updated sale consideration, or original consideration only?
Now the amount is different. Will the remaining stamp duty be charged as % of this updated sale consideration, or original consideration only?
26 July 2025
Great question — it’s a **common yet tricky issue** when property value changes *after* the sale agreement is registered, especially with **under-construction flats**. Let me break this down in response to both parts of your query:
---
## ✅ **1. Deduction for Principal Under Section 80C (Under-Construction Flat)**
You **cannot claim deduction** for the **principal repayment** under **Section 80C** until **possession** is obtained.
### 📌 Rules:
* **Interest** paid before possession is eligible for deduction in **five equal installments** under Section **24(b)** **after possession**, up to ₹2 lakh/year (for self-occupied).
* **Principal repayment** is **only allowed from the FY in which possession is obtained**, **not before**, even if EMI payments have started.
> ✅ So: **You can’t claim 80C on principal** for an **under-construction property** in the current FY.
---
## ✅ **2. Decrease in Sale Consideration After Registration — What Happens to Stamp Duty & TDS?**
### 🧾 **Stamp Duty Calculation:**
* **Stamp duty is payable on the *higher* of:**
* the **sale consideration** mentioned in the agreement, or
* the **circle rate (guideline value)** as on the date of registration.
If your original agreement was already registered and **stamp duty paid**, but later the property value decreased **(via builder credit note, price protection, etc.)**, here’s the treatment:
### ➤ **Stamp Duty Already Paid:**
* No refund **unless you cancel the agreement**.
* Additional stamp duty (if due) will be calculated on:
* The **updated (lower)** consideration **only if** a **supplementary agreement** is registered to that effect.
* Otherwise, **original consideration remains binding** for stamp duty calculation.
> ⚠️ **In most states**, once registered, **stamp duty is NOT adjusted downward**, unless cancellation or formal rectification deed is done. Check with your **sub-registrar** or a local property lawyer.
---
### 🧾 **TDS Under Section 194-IA (Form 26QB):**
* **TDS is to be deducted on actual amount paid** (as per sale agreement).
* If the **property value is reduced** *after* TDS and Form 26QB were filed:
* You can **correct 26QB** online on **TRACES** portal.
* If **excess TDS** was paid, you may apply for **TDS refund** (though refund of TDS on property can take time).
* If additional amount is payable, then **file fresh 26QB** for that part.
> 💡 **Important**: TDS must reflect the **actual amount paid**, **not just the registered sale value**, so you should correct the 26QB form accordingly.
---
## 📝 Example:
* Original sale value: ₹80 lakhs → registered and 1% TDS = ₹80,000 paid
* Revised value via builder negotiation: ₹75 lakhs
* You’ve already paid **stamp duty & TDS** on ₹80L
### What happens?
* **Stamp duty**: No refund likely. New stamp duty (if pending) will probably be calculated on ₹80L unless you **register an amendment deed**.
* **TDS**: You may submit a **correction request** on TRACES or apply for **TDS refund** (but only if excess TDS is clearly evident and acknowledged).
---
## ✅ Recommendation
* Talk to your **builder** and see if they’re executing a **rectification/supplementary deed** reflecting the lower price.
* Consult with your **sub-registrar** to confirm **stamp duty treatment** on revised price.
* File a **correction request on TRACES** for Form 26QB if the TDS doesn't reflect the actual amount paid.
---
Let me know if you'd like help with drafting a rectification deed or need step-by-step guidance on the TRACES TDS correction process.
---
## ✅ **1. Deduction for Principal Under Section 80C (Under-Construction Flat)**
You **cannot claim deduction** for the **principal repayment** under **Section 80C** until **possession** is obtained.
### 📌 Rules:
* **Interest** paid before possession is eligible for deduction in **five equal installments** under Section **24(b)** **after possession**, up to ₹2 lakh/year (for self-occupied).
* **Principal repayment** is **only allowed from the FY in which possession is obtained**, **not before**, even if EMI payments have started.
> ✅ So: **You can’t claim 80C on principal** for an **under-construction property** in the current FY.
---
## ✅ **2. Decrease in Sale Consideration After Registration — What Happens to Stamp Duty & TDS?**
### 🧾 **Stamp Duty Calculation:**
* **Stamp duty is payable on the *higher* of:**
* the **sale consideration** mentioned in the agreement, or
* the **circle rate (guideline value)** as on the date of registration.
If your original agreement was already registered and **stamp duty paid**, but later the property value decreased **(via builder credit note, price protection, etc.)**, here’s the treatment:
### ➤ **Stamp Duty Already Paid:**
* No refund **unless you cancel the agreement**.
* Additional stamp duty (if due) will be calculated on:
* The **updated (lower)** consideration **only if** a **supplementary agreement** is registered to that effect.
* Otherwise, **original consideration remains binding** for stamp duty calculation.
> ⚠️ **In most states**, once registered, **stamp duty is NOT adjusted downward**, unless cancellation or formal rectification deed is done. Check with your **sub-registrar** or a local property lawyer.
---
### 🧾 **TDS Under Section 194-IA (Form 26QB):**
* **TDS is to be deducted on actual amount paid** (as per sale agreement).
* If the **property value is reduced** *after* TDS and Form 26QB were filed:
* You can **correct 26QB** online on **TRACES** portal.
* If **excess TDS** was paid, you may apply for **TDS refund** (though refund of TDS on property can take time).
* If additional amount is payable, then **file fresh 26QB** for that part.
> 💡 **Important**: TDS must reflect the **actual amount paid**, **not just the registered sale value**, so you should correct the 26QB form accordingly.
---
## 📝 Example:
* Original sale value: ₹80 lakhs → registered and 1% TDS = ₹80,000 paid
* Revised value via builder negotiation: ₹75 lakhs
* You’ve already paid **stamp duty & TDS** on ₹80L
### What happens?
* **Stamp duty**: No refund likely. New stamp duty (if pending) will probably be calculated on ₹80L unless you **register an amendment deed**.
* **TDS**: You may submit a **correction request** on TRACES or apply for **TDS refund** (but only if excess TDS is clearly evident and acknowledged).
---
## ✅ Recommendation
* Talk to your **builder** and see if they’re executing a **rectification/supplementary deed** reflecting the lower price.
* Consult with your **sub-registrar** to confirm **stamp duty treatment** on revised price.
* File a **correction request on TRACES** for Form 26QB if the TDS doesn't reflect the actual amount paid.
---
Let me know if you'd like help with drafting a rectification deed or need step-by-step guidance on the TRACES TDS correction process.
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