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Tds on property

Deepak Anand (Finance) (53 Points)

08 September 2016

Respected Members,

My Query is related to TDS on Property u/s 194IA where agreement was made with the Builder for construction of a unit.

At the time of agreement the total consideration amount was below Rs. 50 Lakhs so the purchaser did not deduct the TDS on Instalments paid over the years.

However at the time of handing over of possession & issue of final demand notice, due to increase in the area, the builder has charged additional amount due to which the total consideration amount became greater than Rs. 50 Lakhs. Now, the liability to deduct tax arises on the purchaser.

My question is that whether the purchaser will be liable for delay in deduction and deposit of TDS or not for previous instalments.

If not, then how to deduct the tds prospectively without avoiding the Interest & Penalties on previous instalments ??

Thanks

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160943 Points)
Replied 10 September 2016

Is there any rectification deed for additional cost?

Deepak Anand (Finance) (53 Points)
Replied 12 September 2016

No Sir only through Final Demand Notice cum Possession Letter, additional amount is being charged !

After payment of which, single Sale deed will be registered covering the entire area.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160943 Points)
Replied 12 September 2016

"Final Demand Notice cum Possession Letter" can be taken as the date of TDS liability, in this special case. You can deduct the total TDS liability as applicable on this date.

In case of any enquiry, the same fact can be produce before the assessing officer.

Lakshmi Gopalakrishna (1 Points)
Replied 21 September 2016

Dear Sir,

We entered into an agreement with a builder to purchase a row house in Nov 2014 for total amount of 1 crore. 20% of down payment made at the time of agreement and subsequently instalments paid till date disbursed by my bank as part of home loan till date to the extent of 90 lakhs. I was not aware of TDS to be deducted at 1% on each payment and in addition no reference of this was mentioned either in the agreement or periodical demand notes from the builder. Recently one of the other property owners brought this up for discussion after which the builder sent a note to all property owners asking them to Pay the TDS and to adjust this in the final instalment. On asking on the penalty applicable the builder's CA said that it's not the responsibility of the builder to request in any form to deduct TDS.

I disagree to this and wanted to ask you if we have to bear the penalty completely in this case not knowing that TDS had to be deducted right from the first payment. I have seen demand notes from a few builders clearly mentioning buyers to deduct TDS before remitting the instalments. In my case we were completely unaware till recently that such thing had to be done. Please advise if builder is in no way responsible to make buyers aware of any such obligation to deduct TDS and an I completely eligible to bear the huge penalty for back dating the TDS payments

Thanks in advance

Lakshmi

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160943 Points)
Replied 21 September 2016

@ Lakshmi

".....the builder sent a note to all property owners asking them to Pay the TDS and to adjust this in the final instalment."

Take this words of the builder and deduct TDS amount with interest liable. With final payment attach copies of the total payments made. If you all unitedly take same action, builder will have to bear the burden.

But, let me tell you one thing, whether you know or not, by chance intake poison, who would be sufferer?