Sir . We have a cooperative house building society with 47 odd members . It is a self financing cooperative society wherein members are collectively contributing to the construction of their flats . My query is that while a member is making payment of his installment should he deduct tds .
Our land cost was approx 23 lakhs per member and flat construction cost is approx 53 lakhs per member . We are paying an avg bimonthly installment to society of 5 laks each
Hi Ankush, thanks for your question about TDS on installment payments made by members to a cooperative housing society. Let me break down the scenario and clarify the TDS implications:
Members pay installments to a Cooperative Housing Society for the cost of land and construction of flats.
Society is self-financing (members collectively contribute).
Payments are in installments.
Query: Should members deduct TDS on these installment payments?
Yes, a Cooperative Housing Society is a separate legal entity.
It earns income (though often exempt in some cases).
These payments are essentially capital contributions towards purchase/construction.
Not payments for services rendered.
They represent advances or instalments for asset acquisition.
No TDS is required by members on payments to the society when the society is collecting money towards flats (capital contribution).
These payments are not payments for professional/contractual services or rent, so Sections like 194C (contract) or 194I (rent) don’t apply.
Also, members are not deductors under these circumstances.
If the society makes payments to contractors, vendors, or employees, it needs to deduct TDS as per relevant sections (194C, 194J, etc.).
But TDS deduction by members on their installments paid to the society is not applicable.
If the society charges GST on the amount collected, members should pay GST as applicable, but that does not attract TDS by members.
If a member is making payments for services rendered by the society (rare in this context), TDS applicability may be different.
Cooperative societies generally file returns as per their income, and members do not deduct tax on installments.
| Question | Answer |
|---|---|
| Should members deduct TDS on installments to the society? | No, TDS is not required |
| Is installment a payment for services? | No, it’s capital contribution/payment for flats |
| Does the society deduct TDS on its expenses? | Yes, as applicable on payments it makes |
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