1 percent tds on transfer of immovable property

   1% TDS COULD PUSH REALTY PRISES UP, DELAY IN TRASACTIONS

The Budget proposal to levy one per cent tax deducted at source (TDS) on the value of transfer of immovable properties priced above Rs.50 lakh could push up property prices in cities and delay realty transactions.

In order to have a reporting mechanism of transactions in the real estate sector, it is proposed that every transferee, at the time of making payment or crediting of any sum for transfer of immovable property (not agricultural land) to a resident transferor, shall deduct tax, at the rate of 1 per cent of such sum if the total transfer amount is more than Rs.50 lakh.

There is a chance that sellers will add this component in the overall price.

“There is no question of real estate-developers absorbing this cost. We will increase the value by one per cent and tell buyers to deduct the TDS,” said Sandeep Runwal, director of a Mumbai-based developer. Apart from increasing prices, the proposal is also likely to delay property transactions due to the procedures and process involved in TDS deduction, experts said.

“We cannot deduct unless you have a TAN number. To get a TAN number, you need between 15 days and three weeks. In property markets, you can lose a deal if you delay by three weeks,” .

 “This proposal would mean an additional incremental challenge for buyers. It is highly unreasonable for people in cities who are short of time.”

Real estate developers have to create cells in their offices to handle this work which includes deduction of TDS, submitting it to the government and so on, as buyers might lack knowledge on these issues.

Return of income filed without self-assessment is defective:

Many file returns of income without payment of self-assessment tax. Therefore, from June 2013 the return of income will be regarded defective unless a taxpayer has paid the self assessment tax with interest

on or before filing returns.

Source:Business standard,please find attached