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Tds on sale of property

Harshad (Assistant) (96 Points)

09 January 2016

I have a old family house and land attached to it. We (myself and my 2 brother and 4 uncles) intend to sell the above mentioned house. The value of house is 50 cr. A group of 3 pepole approched to buy the house and transaction is fixed at Rs. 48 cr. I live in the above said house and all others live in far cities. They have given me a Power of Attorney providing me all and full powers to carry out above mentioned transaction. Now the problem is how to do TDS?

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9 Replies

Shyam C.Pujara (Student (C.A Final)) (177 Points)
Replied 09 January 2016

Hi Harshad,

As per the provisions od Sec 194 IA

When there is more than 1 buyer and 1 seller, Form 26 Q has to be filled saparately for each buyer seller combination that means you will have to clarify share of individual persons in property and their repective sale consideration from respective parties. The clarification of share in property should be on both the side (ie on purchaser and seller).

Hope this is clear..... let us see what other learned members say

Thank You

1 Like

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 09 January 2016

First Thing I Have To Mention That You Are The Seller And Not The Buyer So Why You Don't Have To Take The Tension. To Deduct TDS is the Responsibility Of Buyer So He Will Bother About This. If All The Power of Attorney Is Draw In Your Favoiur Means All The Sale Proceed Is Credited In Your Account The He Will Deduct The TDS From Your Payment.

And Second Thing I Would Like To See Your House For Which You Are Getting 50 Crore

Harshad (Assistant) (96 Points)
Replied 09 January 2016

Mr. mehul this forum is for asking techinical questions so mind your language.

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 09 January 2016

Oh don't said me about langauge first see ur question urself

ankit gupta (CA IN PRACTICE) (104 Points)
Replied 09 January 2016

In its landmark judgement in case of Suraj Lamps & Industries Pvt Ltd. v. State of Haryana and another (Special Leave Petition (C) No.13917 of 2009-Decided on 11-10-2011) Hon’ble Supreme Court of India has declared that there cannot be transfer of title by GPA/SA/WILLs transactions. Only registered sale deed /conveyance is a valid mode of transfer of title in immovable property. However, A person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance.

Moreover, in consequence of an amendment in section 269SS, purchaser need to pay consideration exceeding Rs. 20000/- through a/c payee cheque or draft only.

Further, TDS has to be deducted by payer from the total sales consideration considering share of each seller in the property. Form 26 QB also provides space for multiple deductees.

Therefore, TDS may be made by buyer from whose bank a/c payment is being made from share of each seller and single Form 26 QB has to be submitted.

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Niraj Bista (A/C) (70 Points)
Replied 11 January 2016

Good, ankit g, I would agree with u. Harshad, Please note that for simplicity it is possible to treat one buyer and one seller as whole. Which reduce the burden of compliance of provisions, provided mutual understanding is required by each separate buyer and seller.

1 Like

Z ( ) (2960 Points)
Replied 11 January 2016

Even when there are 3 buyers and even if supposingly one of the buyers share is for less than 50 Lacs, then also TDS provisions would be applicable because the provision is attracted if the value of property exceeds 50 Lacs.

As mentioned by other learned members, Tax shall be deducted as per the basis of apportioned value i.e their share in the property.

At the outset you mentioned that the value is 50 Crores, and in the subsequent paragraph you have mentioned that the consideration would be 48 Crores. I wish to know whether this value of 50 Crore is as per the Stamp duty Value/ Guidance value (a value as fixed by state govt. for collecting stamp revenue) ?

If, the answer to the above is affirmative then provisions of S.50C would be applicable and the sales value shall be deemed to be 50 Crores (unless you appeal or request AO to refer it to Valuation officer).

Since there are multiple owners of the properties, it must be ensured that TDS certificate is issued accordingly so that all the co-owners can get the credit of the tax so deducted.