Hi
If entire funds have been contributed by you and the purchaser is transferring total sales consideration to your individual account, TDS can be deducted 100% in your PAN and entire capital gains shall be taxable in your hands.
TDS deduction in case of joint ownership for a resale flat
Please advise me on the following. The resale flat in mumbai is held by joint owners one son first holder and his mother second holder. They purchased the flat from a builder in 2007 and there is no mention as regards to the percentage ownership in the sale agreement signed then. The seller (son) wants the purchaser to deduct TDS u/s 194IA to the tune of 100 % since he has paid for the flat purchase and his mother s name was added then, because he was not married. Please advise whether the TDS of 1% can only be deducted in first holders name in this case. Is it true that as per IT rule both owners have 50 50 % share when nothing is mentioned in their sale agreement? And hence deduction of TDS has to be done 50 50 % for both owners equally while purchasing of said flat ? Please advise.
Asked 5 years ago in Income Tax
Madam. I am the sole purchaser in this case giving the entire sale consideration. The sellers are 2 now. Son and his mother. If I make TDS deduction in name of the son to tune of 100% is this ok as per IT Rules. Or it has to be 50 50 percent deduction of TDS as the flat being sold is in joint names. Hope my question is clear.
Asked 5 years ago
Oh.. sorry for misunderstanding..
If you're making entire payments to son's account, you need to deduct complete TDS in his PAN only.
- TDS should be deducted in the hands of both son and mother as both are legal owners of the property. If no percentage of ownership is prescribed, 50-50 % will be deemed as ownership. Sale and cost will be divided equally.Adding name of mother entitles her ownership in the property and also has all rights attached to the property.
In case where nothing is mentioned the ownership is assumed to be 50-50% and you must also deduct TDS @50% each because legally your responsibility is to give 50% payment to both or else take a no objection certificate from his mother that you can give 100% payment to son and deduct his TDS then you won't have any liability.
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It is better to deduct tds in 50-50 percent ratio as you have to make payment in 2 parties account.
Thank you,
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Hello sir. I am the purchaser. Flat is held jointly by son is I st holder and mother is II nd holder. Mother is ready to give consent letter / no objection letter in my name about transferring the whole sale consideration 100%. In the same letter if she declares that the entire consideration while purchase of flat was from the sons account and his loan then will it suffice for income tax purposes. ? I am giving 100 % consideration to the sons account after the receipt of letter from his mother and after the agreement to sale is done. Kindly reply from IT deptt view on the subject. Will I face any liability in this case. Can I put forth the argument that since I was requested to make entire sale consideration to the sons account for 100% I have deducted the TDS of 1% in his name only.
Asked 5 years ago
As per section 194IA of the income tax act purchaser needs to deduct 1% TDS on payment made to transferor and since you are making proper deduction of TDS on payment made you won't be at any fault.
From income tax perspective, that would be fine and no penalties would be levied. You can deduct TDS of the person to whom you are making the payments.
The section 194IA reads as
Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.
TDS is always deducted on payment basis. If you're making entire payment to 1 of the co-owner, 100% TDS should be deducted in his PAN.
The view has been supported by many case laws.
Dear Sir,
Hope you are doing well !!
As per the rules, the % ownership is equal if it is not recorded/mentioned in the agreement.
Ideally,TDS should be deducted in the hands of both owners.
However, there would be no penalty if you have deducted the TDS in the hands of son only.
Hello,
The deduction should be deducted in the names of both the legal owners of the property. By default, the % ownership is equal if it is not recorded.
There won't be any problem for you if you make the entire payment in the name of the son and deduct TDS of 100% in the name of the son only.
Regards,
CA Hunny Badlani
No problem as you have deducted the required TDS from the seller account.
Dear Sir,
As you are the sole purchaser in this case giving the entire sale consideration. If you make TDS deduction in name of the son to tune of 100% it is absolutely ok as per IT Rules.
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