TDS on Purchase of Immovable property

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This discussion addresses whether Tax Deducted at Source (TDS) is applicable when purchasing immovable property under joint ownership. The query centres on whether the £5,000,000 threshold for TDS applies to each individual buyer or the total property value. While the Income Tax Act isn't explicit, a Delhi ITAT ruling suggests the limit is per transferee, meaning TDS may not be required if each buyer's share is below the threshold.

SANKALP

SANKALP (Querist)

27 June 2020 My client has purchased an immovable property of Rs.7700000 in joint ownership. There are 2 buyers (50% ownership each) and 1 seller. Do I need to deduct TDS@1% since the value is more than Rs.5000000. Or the limit of Rs.5000000 will be seen in case of each buyer individually and hence there will be no TDS.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

27 June 2020 Income tax Act is not clear on the issue raised. However, Income tax Appellate Tribunal, Delhi in the case of Mr. Vinod Soni Vs.ITO (decision fated 10-12-2018), said Rs. 50 lakhs limit is applicable with respect to the amount related to each transferee. But the registration department will accept the decision or not has to be seen.

Rahul varshney

Rahul varshney (Expert)

07 July 2020 Each transfree being the saperate income tax entity, law has to be applied with respect to each transfree.
No requirement of deducting TDS in this case.

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