Consideration amount for 1% tds

94-IA. Payment on transfer of certain immovable property other than agricultural land.—(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent. of such sum as income-tax thereon.

Reproducing a reply posted by CA from Pune in response to discussion on the same topic at the link below which may be useful for further discussions.

https://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17140

Sub: Sale of Under construction flats, whether immovable property

Article has touched upon very important issue that has potential for great trouble for flat buyers and builders.

Here I feel that since sale of under consturction flats, are taxed as Works Contracts under VAT and Service Tax, on the basis that property in goods is transferred as goods while contract is being executed, no scope is left for same sale of goods to be taxed again as sale of immovable property from builder to flat purchaser.

This is because property in building materials is transferred before said goods become immovable as part of the building. Service portion of such works contract also can by no stretch of imagination be conceived to be sale of immovable property.

This leaves only value of land contained in the price of flat, to be liable for being treated as sale of immovable property and new TDS shall be payable only to the extent of land price part of the total flat price.

I have booked an apartment in a housing project. I am expected to make payment in instalments after every stage of completion as agreed earlier. I have now received a request to pay an instalment on completion of 9th floor. The cost for Flat is Rs. 5,78,728/- And the service Tax is Rs. 29,454/- Total amount to be paid is Rs. 6,08,177/- My query is on which amount should the TDS of 1 % be deducted ? Whether it is on the cost of Flat of Rs. 5,78,728/- or on the Total amount including Service Tax of Rs. 6,08,177/- ? Appreciate if you could clarify the above point.