TDS deduction for under-construction property assignment case

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This discussion concerns TDS (Tax Deducted at Source) implications when purchasing an under-construction property assigned from a seller. The buyer transferred funds to the seller's wife's account, deducting TDS. However, the home loan disbursement split the remaining payment between the husband and wife. The buyer is seeking clarification on how to correctly deduct TDS, especially when the payment proportions don't align with the property ownership split, and how to address any past discrepancies.

anish ratnawat

anish ratnawat (Querist)
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01 August 2023 Hi,

I have purchased property which is under-construction from the seller(Seller took it from builder). Seller made 90% of the payment.
Property allotment letter is in the name of husband and wife but only wife has made all the payment to the builder from her account as per the seller. They asked me to transfer the amount to wife account only. I did transfer 30L to the wife account and deducted TDS on it.

I applied for home loan for rest of the amount, now bank is giving 2 cheques stating that property is in the name of both husband and wife. Let's say, remaining loan is 50L so 25L to husband name and 25L to wife name.

What's TDS liability on my end ? In above case, Amount credited to wife account is 30+25 = 55L and amount credited to husband account is 25L. This seems not correct as there is no proportion to the property value to husband and wife.
Please suggest me what should be the right thing to do.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 August 2023 Out of this payment of 50 lacs deduct TDS on 40 lacs in the name of husband and 10 lacs in the name of wife to set right the earlier deduction.

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anish ratnawat

anish ratnawat (Querist)
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01 August 2023 @CA R Seetharaman: Amount transferred to the husband(only 25L) is less than 40 Lakh(TDS on 40 lakh) and amount transferred to the wife(55L) is more than TDS deduction(TDS on only 40 Lakh). Will that be issue ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 August 2023 No issues TDS adjusted for the past difference.

anish ratnawat

anish ratnawat (Querist)
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02 August 2023 @CA R Seetharaman: There is no past difference.
Amount crediting to wife : 55L
Amount crediting to husband: 25L

Ideally, I should deduct TDS on the amount transferred. So in this case, I should deduct TDS on 55L which is 55k to the wife.
And, deduct TDS of 25k on the 25L transferred to husband.

Ideally, I should transfer 50% amount to husband and 50% to wife. i.e 40L to wife an 40L to husband.
Will that be issue in this case ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 August 2023 Yes, equal amount to be transferred.

anish ratnawat

anish ratnawat (Querist)
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02 August 2023 @CA R Seetharaman : In my case, I won't be able to transfer 50% of the amount as I have already transferred 30L to wife. Now, if bank gives 25L each then my amount to wife will be 55L instead of 40L right ?

My question was , What would be the workaround for this ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 August 2023 Amount transfer is not relevant deduct TDS rightly based on equal share.

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