Question on selling and buying property and how to handle TDS ?

POSTED BY msbhole5 ON December 19, 2013 8:15 am COMMENTS (6)

Hi,

I am holding 1BHK property in Mumbai and In Sep 2013 I have booked 2BHK property in Pune, on condition that i am going to sell my mumbai 1BHK flat. Basically its parallel deal. I got the buyer in last week for my mumbai property and deal amount is 51L.

My Pune property Agreement cost is 81L and including Stamp Duty, Registration, VAT and Service Tax it goes to 89L.

2 days before i came to know that as per the Section 194-IA if property deal amount is >= 50L then i have to pay TDS. But this amount is not mentioned by Pune builder. As per my understanding buyer will pay the TDS and he will generate the TDS certificate and provide it to the Seller.

My question are ==>

1) If buyer is going to pay TDS then what the seller will do with that TDS certificated which buyer has provided. Is seller also needs to pay something in this case? This question is related to my Mumbai property, As i am seller in that deal.

2) For my Pune property builder has not added TDS component in his rate sheet. Do i need to pay TDS here because i am buyer here and deal is more than 50L?

3) As i am doing this parallel deal it mean i am selling one flat and buying new one at the same time. still this TDS is applicable for me.

4) I checked other builder rate sheet in Pune and NO builder has mentioned this component. If buyer has to pay this and why they are hidding this component? They should mention this in rate sheet same as Service tax, VAT.. etc

5) Can you please tell me what all the taxes that i have to pay while selling property in Mumbai and Buying property in Pune.

6 replies on this article “Question on selling and buying property and how to handle TDS ?”

  1. ashalanshu says:

    Dear Msbhole, to avoid any future shock from Income Tax, it’s advisable to do first contract after 28th march 2014 itself.

    Thanks

    Ashal

    1. msbhole5 says:

      Thanks 🙂

  2. ashalanshu says:

    Dear Msbhole, please sell the flat on or after 29th March 2014 to be eligible for LTCG tax exemption.

    Thanks

    Ashal

    1. msbhole5 says:

      Thanks for your quick reply.

      Just for my clarification, i can do the first sell agreement in this month or first week of feb but final (Second) Sell agreement should be on and after the 29th March.

      Is my understanding is correct?

  3. ashalanshu says:

    Dear Msbhole, you are referring to 1% TDS on property transactions for properties costing more than 50L Rs. Earlier people were not reporting the high value property transactions in their Income Tax Return. so this TDS thing ‘ll make it compulsory that seller as well as buyer are declaring their respective deal.

    In your case, the buyer of Mumbai flat ‘ll deduct the 1% TDS from 51L Rs. amount (51000 Rs.) and ‘ll issue you a TDS certificate. You w’d have to report this TDs in your ITR and subject to your tax calculation either you w’d have to pay more Tax or can claim refund.

    For Pune property, you need to deduct TDS on the price of property (excluding stamp duty, registration and VAT). So it ‘ll be 1% of 81L Rs. – Stamp duty, Registration and VAT charges for your Pune property.

    you need to calculate your LTCG for Mumbai property but as you are purchasing another property in Pune, you can set off your Tax liability against Mumbai sell out.

    thanks

    Ashal

    1. msbhole5 says:

      Thanks for the Reply.
      I am eligible for the Short Team Capital Gain Tax because my Mumbai flat Purchase dates are as follows
      1) First Agreement Date – 22-Feb-2011 ==> Bank Disburse amount after this agreement and Bank keep the original copy of this agreement.
      2) Second and Final Agreement Date – 28-Mar-2011 ==> This is final Agreement which says that all the settlement is completed. Bank will not keep the original copy of this agreement. – In this agreement we will get Index-II copy.

      As i said i am selling this flat, from above which date is considered as my purchase date?
      As per my knowledge Second agreement date will consider as Purchase date because from that date onwards Govt. transfer the flat from previous Seller/Builder to Purchaser name.

      Can you please clarify this? I want to know this so that i can sell this flat after 28-Mar-2014 so that i can get the Long Term Capital Tax benefit. Or i will do my second agreement of sell after this date.

      Please let me know if you need any other info from my side.

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