Tds on installment payment made by members to cooperative house building society

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:

🏢 Scenario:

• 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?

✅ TDS Applicability on Payments by Members to Cooperative Housing Society

1. Is the Society a 'Person' under Income Tax?

• Yes, a Cooperative Housing Society is a separate legal entity.

• It earns income (though often exempt in some cases).

2. Are these installment payments 'consideration' for services or goods?

• These payments are essentially capital contributions towards purchase/construction.

• Not payments for services rendered.

• They represent advances or instalments for asset acquisition.

3. Is there any TDS applicable on such payments?

• 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.

4. When TDS is applicable to the Cooperative Society?

• 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.

📝 Additional Notes:

• 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.

✅ Conclusion: