Suppose, I have purchased an under construction flat worth 1 crore.
Based on my eligibility I have availed a home loan of 80 lacs.
I have paid my contribution of 20 lacs to the builder.
My instalment as per work progresses is 10 lacs. This amount is being paid by the financial institution with whom I have home loan.
I pay a sum of Rs. 37,080/- towards Service Tax @ 3.708% on the above contribution.
Now, I am required to deduct TDS u/s 194-IA @ 1% for payments made during previous calendar month.
My Question is
1. Can I deduct 1% of 10 lacs instalment that is being funded by financial institution and issue a Service Tax cheque of Rs. 27,080/- (37,080 - 10,000) to the builder after adjusting the TDS deducted from him.
2. Another option for me is to ask the financial institution to do the needful. How will I be in a loop of whether TDS is being deducted properly and whether I am getting adequate credit for the amount deducted by the bank.
Another Question:
3. Since the flat is mortgaged with the bank as security and bank is paying the instalments, who (the financial institution or I) is responsible for deduction of TDS?
What is a better option?
Thanks all in advance.
CAclubindia
