Tds on house property

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 April 2014 Dear All,

One of my client has purchased under construction House property from investor.

The client has paid 90% payment to the investor and 10% to the builder total amounting to 65lakhs.

However, the original deal between builder & the 1st purchaser(i.e. investor) was for Rs.48lakhs.
Hence, the agreement between the 2nd purchaser & builder will be of Rs.48lakhs only.
And the difference of Rs.17lakhs, 1st purchaser is taking separate as profit from 2nd purchaser.

Let me know the treatment of Rs.17lakhs in books and TDS implications on the same.

Whether the 2nd purchaser has to deduct TDS as total Payment he is making is 65lakhs(above 50lakhs) or
he should not deduct TDS as agreement value is 48lakhs( below 50lakhs)?

Thanks in Advance.

CA Umesh kumar Mantri

CA Umesh kumar Mantri (Expert)
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15 April 2014 As per the Provision of Section 194 IA

More than 1 Buyer or 1 Seller

In case there is more than 1 buyer and the individual purchase price of each buyer is less than Rs. 50 Lakhs, but the aggregate value of the transaction exceeds Rs. 50 Lakhs, Section 194IA would be applicable and the TDS on Property would be required to be deducted and deposited with the govt before the due date.

Similarly, if there is more than 1 seller and the individual sale price of each seller is less than Rs. 50 Lakhs, but the aggregate value of the transaction exceeds Rs. 50 Lakhs, Section 194-IA would be applicable and TDS would be required to be deducted by the buyer at the time of making the payment to the seller.

So u have to deduct the TDS@1% beacuse the consideration is exceed Rs. 50 Lacs