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Tds on immovable property

07 October 2016

I had purchased a flat and sale agreement was done of rs 49.5lakhs. Which means i had paid rs 49.5 lakhs to the seller. But market value (ready rekoner rate) of that flat was rs 52 lakhs. So do i have to pay tds? Is tds calculated on market value of property or the actual amount which the buyer pays to seller?

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5 Replies

CA Saba Naaz (Chartered Accountant) (8487 Points)
Replied 07 October 2016

Sec.194IA talks about deduction of tax at source on transfer of an immovable property in case the total amount of consideration for transfer exceeds Rs.50 lakhs.

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CA Saba Naaz (Chartered Accountant) (8487 Points)
Replied 07 October 2016

Section does not mention anything about market value.

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Rahim (Businessperson) (460 Points)
Replied 07 October 2016

The threshold limit is calculated as per the valuation charged for calculqting stamp duty by the registrar. So if the registrar values the flat at more than 50 L say 55 L then this value will be mentioned in rhe registered deed and stamp duty and tds will be calculated on 55L irrespective of what you pay. In somple words purchase price or government market value whichevwr is hiher will be considered for all income tax purpoaes. So check the valuation and then 1% will be deducted and deposited on each instalment payment without having a TAN.

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 07 October 2016

Under section 194IA, Tax should be deducted at the rate of 1% by the purchaser of the property on the value of the consideration received on transfer of immovable property.
The concept of adopting Guideline value as deemed sales consideration given in section 50C does not apply to tds provisions under section 194IA. As per my knowledge no case laws have been decided on this matter also there is no clarification from department too. Hence assessee will get the benefit of lacuna. I invite other senior members to enlighten our knowledge if I am wrong.

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