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
Sunday, April 25, 2010
Wednesday, April 14, 2010
capital gain on sale of house
Question: When an assessee transferred one residential house during the year, how the assessee is eligible for saving tax on such capital gain of house?
Profit on transfer of residential house property used for residential section 54:
As per section 54 of Income Tax Act, 1961 an Individual or HUF can save tax on long term capital gain on sale of residential house property.
Assessee using a house property (resident or let out) for more than 3 year from date of purchased, and such house is sold, long term capital gain arise on such transfer is exempted if assessee has invested into purchase or construction of new house within specified period from date of sale of such house.
Purchase of house:
Assessee must be Purchase another house within one year prior or 2 year after the transfer date of residential hose property.
Construction of House:
Assessee must be Construction another house within 3 year after the transfer date.
(assessee can start Construction of new house before the transfer of old house.)
Cost of Building includes price of land.
Quantum of deduction:
Capital Gain is more than Cost of Acquisition of new house:
As per section 54 of Income Tax Act, 1961, assessee is required to invest minimum amount equivalent to capital gain arisen on sale of house to nullify income tax on capital gain.
Capital gain old house = Long term capital gain of old house – Cost of acquisition of new house.
If the new assets is transfer within 3 year from date of acquisition or completion of construction, COA of new assets = NIL
Capital Gain is less than Cost of Acquisition of new house:
When assessee has invested more than long term capital gain amount in purchase or construction of new house, there will be no tax liabilities on such capital gain.
Capital gain old house = NIL (L.T.C.G - COA of new house).
Lock In period:
Assessee can not sale or transfer new house from date of purchase of the house, otherwise above exempted capital gain will be withdrawn.
Deposit in capital gain scheme 1988:
An assessee is not able to invest in new house before filling of due date of return, he can still get exemption from income tax, if such gain is deposited into capital gain deposit scheme 1988. Assessee has to deposit such capital gain amount into bank before due date of return and file deposit slip with return.
Such accounts can be opened as saving accounts or fixed deposit.
The deposit amount should be used within 3 year from date of transfer otherwise unutilized money of that account will be taxed in previous year when 3 year of transfer of assets is lapse.
Assessee can have purchase more than one house to claim exemption of this section.
Exemption of capital gain
Sold Capital gain Investment amount Nature of investment Section
House Long Term Long Term capital gain House 54
Specified securities 54EC
Land Long Term Capital gain amount Land 54B
Short Term Specified securities 54EC
Any other assets Long Term Sale consideration House 54F
Specified securities 54EC
Profit on transfer of residential house property used for residential section 54:
As per section 54 of Income Tax Act, 1961 an Individual or HUF can save tax on long term capital gain on sale of residential house property.
Assessee using a house property (resident or let out) for more than 3 year from date of purchased, and such house is sold, long term capital gain arise on such transfer is exempted if assessee has invested into purchase or construction of new house within specified period from date of sale of such house.
Purchase of house:
Assessee must be Purchase another house within one year prior or 2 year after the transfer date of residential hose property.
Construction of House:
Assessee must be Construction another house within 3 year after the transfer date.
(assessee can start Construction of new house before the transfer of old house.)
Cost of Building includes price of land.
Quantum of deduction:
Capital Gain is more than Cost of Acquisition of new house:
As per section 54 of Income Tax Act, 1961, assessee is required to invest minimum amount equivalent to capital gain arisen on sale of house to nullify income tax on capital gain.
Capital gain old house = Long term capital gain of old house – Cost of acquisition of new house.
If the new assets is transfer within 3 year from date of acquisition or completion of construction, COA of new assets = NIL
Capital Gain is less than Cost of Acquisition of new house:
When assessee has invested more than long term capital gain amount in purchase or construction of new house, there will be no tax liabilities on such capital gain.
Capital gain old house = NIL (L.T.C.G - COA of new house).
Lock In period:
Assessee can not sale or transfer new house from date of purchase of the house, otherwise above exempted capital gain will be withdrawn.
Deposit in capital gain scheme 1988:
An assessee is not able to invest in new house before filling of due date of return, he can still get exemption from income tax, if such gain is deposited into capital gain deposit scheme 1988. Assessee has to deposit such capital gain amount into bank before due date of return and file deposit slip with return.
Such accounts can be opened as saving accounts or fixed deposit.
The deposit amount should be used within 3 year from date of transfer otherwise unutilized money of that account will be taxed in previous year when 3 year of transfer of assets is lapse.
Assessee can have purchase more than one house to claim exemption of this section.
Exemption of capital gain
Sold Capital gain Investment amount Nature of investment Section
House Long Term Long Term capital gain House 54
Specified securities 54EC
Land Long Term Capital gain amount Land 54B
Short Term Specified securities 54EC
Any other assets Long Term Sale consideration House 54F
Specified securities 54EC
Subscribe to:
Posts (Atom)
