Penalty adjusted by builder final payment

TDS 372 views 4 replies

Rahul Dixit

Business Man

24 Points Joined November 2018

HiI had booked a flat with a builder in Noida for which the poseession got delayed, on approaching the NCDRC, the commission ordered the builder to pay a simple interest of 8 % on the amount already paid to the builder and adjust the calculated penalty in the final demand to which the builder agreed. The builder subtracted the penalty from the final demand and sent a demand In July 2018 for the remaining amount but he has also deducted TDS on penalty @ 10 %, I have two questions:

1. Should there be a TDS deduction at all as the builder is only adjusting the penalty from the final demand and not paying any compensation in this case?

2. Even if the builder insists on deducting TDS, can this TDS be claimed in refunds in next year ITR?

Replies (4)

rama krishnan

12244 Points Joined May 2017

since the amount paid is in the nature of interest, TDS liability arises and you can avail the TDS credit in your ROI after showing the interest as your income

Rahul Dixit

Business Man

24 Points Joined November 2018

Hi Sir, there is no actual interest amount paid to me but the amount has been adjusted in the final demand by the builder. So my question is if adjustment done By the builder is also liable for TDS?

rama krishnan

12244 Points Joined May 2017

even if you have not received, it's deemed to be received and the same is adjusted towards the payments that is supposed to be paid by you. so it'll be charged to tax

Nitesh bind

Student CA Final

12692 Points Joined October 2012

Agree with Mr. Rama Krishnan. Tax Deduction would be there as it is simply in the nature of interest which is even adjusted still considered to be paid.