Thursday, June 13, 2013
Tds on immovable property, tds on proerty, sale and purchase of property, transaction of property, purchase of property, incresed cost of property
Tax on purchases of Immovable property
As tremendous increase in real estate volume, Government of India in
order to tighten the grip on real estate developer and persons involve in
sale/purchase of real estate to regularize of payments of income tax. Income
tax authority has imposed @ 1% tax on sale of immovable property except on
agricultural land as TDS. Every buyer of immovable property except agriculture
land has to deposit @ 1% of payments if the sale value of house/ immovable property
exceeds Rs 50L.
Question: What kind of
assets includes in Immovable property and on whom the section is applicable?
Answer:
As per explanation of section 194IA, immovable property includes
residential house, commercial complex, studio apartments, Land etc except
agriculture land, and the section is applicable on every assessee on each kind
of real estate transaction.
Every person (Individual or company, LLP Firm or every kind of assessee)
who have transaction or purchases of immovable property, is liable to deduct
tax @ 1% on sale value of immovable property and deposit with governments in
seller’s PAN accounts within time specified as per Income tax act, 1961. Such
person is dealer or else, tax deduction provision is applicable.
When Tax deducted at source: Every buyer of
immovable has to deduct and pay tax on purchase of immovable property at time
of making payments or accrued or credited in books of accounts, whichever is
earlier. Buyer of immovable property and are applicable on the payments made on
or after 1st of June 2013.
Example: Mr. Ram has
purchased a residential house on 11th June 2013 for Rs 55 L. he paid
the entire amount on 2nd July 2013. He has credited the entry in his
books of accounts on 12th June 2013. Tax deduction on the
transaction to be deducted on 12th June 2013 and paid within 7th
of next month.
In above example if Mr Ram had purchased the house on 2nd
May 2013 and make payment before 31st of May 2013. There is no
requirement of deduction and paying tax on such transaction because the
provision is applicable from 1st June 2013.
What
is rate of Tax to be deducted: Every buyer of immovable property has to
deduct @ 1% tax on paid or payable amount if cost of house exceeds Rs 50L. If seller of immovable property has no PAN,
then tax will be deducted @ 20% instead of @ 1% of transaction on value of
immovable property.
No
Requirements of TAN: Now there is a requirement of TAN to deduct tax
on purchase of immovable property. Instead of TAN buyer of immovable property
will have to quote their PAN and can deposit the amount.
Explanation
1: When Indian resident purchases immovable property from NRI. How much
tax to be deducted and paid to government of India?
As per section 194IA, tax is deducted and payable when immovable
property is purchased from resident assessee of India. When such kind of
transaction is undergone with NRI, then section 195 will be applicable and tds @10% will be deducted instead of 1%.
Explanation
2: Tax will be deducted on cost of immovable property or value of stamp
duty?
Every purchaser has to pay deduct and deposit tax on cost of property
if its cost will exceed Rs 50L. Tax on such transaction is levied on cost of
immovable property & not on stamp value of property.
Example Mr. Ram had purchased residential property of Rs 48 L and
its Stamp value cost is Rs 56L. There is no need of deduct tax @1% on stamp
duty value because real cost of house is less than Rs 50L.
Explanation
3: Weather cost of immovable property includes value of furniture and
other facilities provided with residential house or commercial complex etc.
Buyer has to deduct and deposit tax on cost of property only. If cost
of property includes value of amenity or furniture provided with immovable property,
tax will be deducted only on part of cost of house & not on whole value of
transaction.
Please refer following chart for clarification of the provisions:
Date of
registration
|
Cost
|
Date of
payments
|
Paid
|
Applicable
|
Tax
|
||
1st
April 13
|
40 L
|
2nd
April
|
40L
|
No
|
|||
Remarks
|
value of property is less than 50 L and purchases before
1st June 2013
|
||||||
1st
April 13
|
60L
|
2nd
April
|
60L
|
No
|
|||
Remarks
|
Purchases made before 1st June 2013
|
||||||
1st
April 13
|
40 L
|
2nd
June 13
|
40L
|
No
|
|||
Remarks
|
value of property is less than 50 L
|
||||||
1st
April 13
|
60L
|
2nd
June 13
|
60L
|
YES
|
1%
|
||
1st
April 13
|
60L
|
2nd
April
|
40L
|
NO
|
|||
2nd
June 13
|
20L
|
YES
|
1%
|
||||
Remarks
|
Rs 20 L is paid after 1st June 2013 , so TDs is
charged on Rs 20L only
|
||||||
1st
April 13
|
60L
|
2nd
June 13
|
20L
|
YES
|
1%
|
||
22nd
July 13
|
40L
|
YES
|
1%
|
||||
Wednesday, June 5, 2013
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