TDS on Payment for Under Construction property

Hi this is a case from Bengaluru - 

Note - In Karnataka registration of property happens post last disbursement and completion of property.

I have booked a under construction property - it will take 3 years to complete. I am going to start disbursement to builder this month, question is on TDS deduction. As a part of first disbursement I have to pay 10L . My builder is asking to pay complete 10L now and so on till last disbursement - then just before the registration he would assist me paying the TDS - For ex : Last disbursement ask is 10L and property value is 1Cr then 1% = 1L would be reduced from asked disbursement and I will pay 9L to builder and 1L as TDS.

Question - Is it ok to pay TDS at the end as against paying it per installment. Is there any such rule which allows paying at the end? 

Replies (4)
Quick Summary
This discussion addresses the deduction of Tax Deducted at Source (TDS) on payments for under-construction properties in Bengaluru. The user is questioning the practice of some builders who suggest paying TDS only at the final disbursement, rather than on each instalment. While some builders in Bengaluru advocate for this approach, tax regulations generally require TDS to be deducted on every payment made towards the property.

Rule is to deduct TDS on each and every installment paid.

Thanks - makes sense.

Not sure why some of the prominent builders in Bengaluru are asking to deduct it in last payment (I know Sumadhura Infracon and Assetz Builder as pushing for TDS deduction in the last payment)

Purchaser can ask for certificate from their CA confirming the rule to deduct TDS in last installment.

And get bond from builder to reimburse any fine, interest and penalty that may be levied from ITD in case of such event.

Refer:: para.... Time of deduction  in following ....

https://taxadda.com/tds-on-transfer-of-immovable-property-section-194ia/

 

The Penalty Under Section 234E

https://blog.saginfotech.com/tds-deduction-property-sale-section-194ia#

 

 

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