TDS ON LAND AND CONSTRUCTION

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112 Points Joined August 2016

Hi. Im buying land worth 50 lakhs. I will deduct TDS on that. 
One builder approached me for the construction for 70 lakhs including 5% GST.
Do i need to deduct any TDS (Excluding GST).? If yes then under which section.
If any Statutory compliance to be followed please guide me. 

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On 14 March 2025 at 13:58 Report
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Master in Accounts & high court Advocate
9442 Points Joined December 2011

As the buyer of the land, you'll deduct TDS on the land purchase. For the construction contract with the builder, you'll need to consider TDS deduction under a different section. TDS on Construction Contract: You'll need to deduct TDS under Section 194C of the Income Tax Act, 1961, which deals with "Payments to contractors" [1]. This section requires TDS deduction on payments made to contractors or subcontractors for carrying out any work, including construction. TDS Rate: The TDS rate under Section 194C is: - 1% for payments made to resident contractors - 2% for payments made to non-resident contractors However, since the construction contract includes GST, you'll need to deduct TDS only on the amount excluding GST. Calculation: Construction contract amount: ₹70 lakhs GST (5%): ₹3.5 lakhs Amount excluding GST: ₹66.5 lakhs You'll deduct TDS on ₹66.5 lakhs. Statutory Compliance: 1. *Obtain PAN*: Ensure the builder provides their PAN, as it's mandatory for TDS deduction. 2. *Issue TDS Certificate*: Provide the builder with a TDS certificate (Form 16A) for the TDS deducted. 3. *File TDS Return*: File the TDS return (Form 26Q) quarterly, providing details of the TDS deducted. 4. *Deposit TDS*: Deposit the TDS amount with the government within the prescribed time limit. Consult a tax professional or chartered accountant to ensure you comply with all the requirements and regulations.

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On 14 March 2025 at 15:51
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28001 Points Joined May 2017

Yes you need to deduct tds provided it exceeds some levels. Post details. 

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On 16 March 2025 at 11:38


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