1% TDS deduction on payment to developer for property above 50L

POSTED BY Ashish Garg ON July 20, 2013 11:53 am ONE COMMENT

I have purchased an under-construction property worth Rs. 98L in December 2012. I have taken the home loan from HDFC. Now the recent notification from tax department is that 1% TDS is to be deducted from payments being made to the developer on or after June 1, 2013. I would like to seek clarification from experts here:

1. The notification say 1% TDS to be deducted for the property costing above 50L. So in my case it is applicable. Should I deduct the TDS from every payment I make from hereon or should I start deducting TDS once the payment to developer exceeds 50L, which means effectively I shall be deducting 1% from 48L (amount above 50L) or irrespective of the exceeding amount?

2. Since the payment is made by bank, should the bank deduct 1% and issue TDS certificate to developer or I have to ask bank that whatever payment is asked by the developer, bank should only pay 99% of the demand raised and I shall submit 1% to tax department on my won and directly issue the TDS certificate to the developer?

3. What if bank pays the developer in full without deducting the TDS, can I still deduct TDS in one go while making the final payment to developer, so the whole applicable TDS will be deducted at the end rather than deducting every time.

Ashish Garg

One reply on this article “1% TDS deduction on payment to developer for property above 50L”

  1. Dear Ashish, to keep the matter simple, let the bank pay full amount or 99% for it’s loan disbursal & you only should make TDS entried on full 98L Rs.



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