Hi, Party A has bought apartment from builder B at price 1Crore in pre-launch. Now I am (Party B) buying from Party A at 1.2crore but will get the property registered from Builder directly. Party A has already given amount to builder for the TDS amount to be deposited on their name. Now Builder is ready to give acknowledgement for 1Lakh TDS with my PAN as source. and are asking 20000 to be paid separately to Party A Pan number. (While i am paying the entire amount to party A) Can you please suggest if this is fine? Thanks Lakshmi Kanth
How will the builder issue you an acknowledgement?
In such a situation there will be a tri party agreement where you will deduct TDS of Party A on full 1.2 crore and he will take credit of same and builder would take credit of TDS on 1 crore.
You as a purchaser must deduct TDS of the person to whom you are making payment as per section 194 IA.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Hi
You need to deduct TDS of the Party A only. TDS amount shall be 1% on 1.2 CR.
TDS under section 194IA is on payment basis. No credit can be transferred to the party A by builder B.
The transaction party A and builder B is different than transaction between party A and party B.
Dear Sir/Ma'am,
Hope you are doing well !!
Both the transactions are different.
You should deduct TDS@1% on Rs 1.2 CR for purchase of property from Party A.
You can refer section 194IA -TDS on Immovable Property for complete understanding.
Hi Naman Maloo, Builder is ready to give acknowledgement as the amount is still not payed to the Government. he wants to pay it with my name(party B) as the source PAN for 1Cr. Builder is saying it would be a duplicate TDS payment to the property as it is an assignment of ownership. Hi Lakshia Bhandari Is TDS not once on a Property for one registration? Since Party A never went for registration. Thanks Lakshmi Kanth
If TDS has not been deducted by Party A when making payment to builder its his fault as TDS needs to be deducted as soon as payment is made and not at the time of registration.
Now what you can do is ask the builder that you would pay the amount to builder 1.2 crore and deduct TDS on same and builder will repay 1.2 crore to Party A and this way your transaction would be clear.
If you need any further clarification you can call.
Even if there was no registration done earlier, party A shall be liable to pay capital gain taxes. Hence TDS has to be deducted for party A's PAN.
TDS under section 194IA is applicable on transfer of immoveable property. Transfer does not mean only registration; transfer could be done without registration.
Hi,
Even if party A never went for registration, TDS has to be deducted for party A's PAN.
Hi,
- Transaction between Party A and the builder is relinquishment of the asset. It will be treated as transfer and liable for capital gain under the Income tax Act even though property is not registered in the name of Party A. TDS u/s 194 -IA is applicable on such transaction @1% of 1cr i.e. 1,00,000. As the party A has made payment of the full amount, now the Party A should deposit it alongwith interest @1.5% per month.
- Transaction between Party A, Party B and the builder is a complete sale transaction as the registry will be done in the name of the Party B from the builder. You need to draft a tripartite agreement in which you need to disclose the trail of the all transactions. Party B will deduct TDS of Party A and deposit it with the govt.
Thanks
Hello,
You will be required to deduct TDS at the rate of 1% under Sec. 194IA from the payment (Rs. 1.2 Cr) made to Party A for purchase of the immovable property.
Party A was also liable to deduct TDS u/s. 194IA of the Builder while purchasing from him from Rs. 1 Cr, which he will have to deposit now with interest @1.5% per month. Since deduction under Sec. 194IA is made at the time of payment of such sum to the account of the transferor.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
Badlani & Associates
