Short TDS on property sale

Hey Atul! Here’s how you can approach this situation with short TDS on your property sale:

Situation Recap:

• You sold a property, buyer deducted TDS but less than the required amount (short TDS).

• Buyer wants you to pay the shortfall or face legal action.

• You’ve already filed your ITR and it’s processed by the Income Tax Department.

What can you do?

1. Who is responsible for deducting and depositing TDS?
   The buyer is primarily responsible for deducting and depositing the correct TDS. If short TDS is deposited, the buyer may be liable for interest and penalties.

2. Buyer asking you to pay short TDS?
   Legally, the buyer should bear the shortfall because TDS is their responsibility. However, buyers sometimes ask sellers to help pay to avoid penalty or litigation.

3. Your ITR already processed?
   Since your ITR is processed, the Income Tax Department has accepted your return as filed.

   • If TDS is short, the department may raise a notice to the buyer for the shortfall.

   • You, as the seller, are not directly liable to pay the buyer’s short TDS shortfall.

4. Your options:

   • Clarify with the buyer: Inform that TDS deduction and payment is their responsibility.

   • You can verify TDS credits on your Form 26AS or TRACES portal to ensure all TDS claimed by buyer is correctly reflected.

   • If buyer insists, and you want to maintain goodwill, you may choose to help but legally you are not liable.

   • If buyer proceeds with legal action, you can present your case that buyer is responsible for TDS deduction and deposit.

   • You may also inform the buyer to rectify the TDS shortfall by paying the difference along with applicable interest to avoid penalties.

Bottom line:

• The buyer is responsible for short TDS and penalty if any.

• You should not pay the buyer’s short TDS demand as a legal obligation.

• Maintain your communication professional and if needed, get advice from a tax consultant or legal professional.