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Tds on purchase of property
My client purchase a residential flat for Rs. 50 lakhs in 2014-15. As he was not aware of TDS provision he did not deducted the TDS and made full payment to the builder. Now the builder is asking for TDS certificate.
My question is as law says "on sale of property exceeding Rs. 50 lakhs in India, a tax of 1% has to be deducted on the total sale consideration before making the payment to the seller." whether the client is liable to deduct TDS as his purchase amount is exactly Rs.50 lakhs and law says it should exceed 50 lakhs.
Please suggest as if he is liable he needs to pay Rs. 50000 as TDS and another 50000/- as penalty for not deducting TDS.
Replies (1)
Please read Section 194 - IA again - for exact INR 50 lacs, TDS liability arises.
There is a good chance that buyer can get a tax notice due to this default. There is no option but to pay tax and penalty otherwise he will otherwise be deemed as assessee in default.
He can request builder to refund 1% which he can then go ahead and deposit along with applicable interest and penalty and then provide builder with Form 16A.
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