TDS on purchase of immovable property (apartment)

1. TDS wont be charged on GST component that is correct and same is available as per circular 23/2017 in Income tax. However even if he is asking you to deduct TDS there is no harm to you as you have to pay that much less amount to him.

2. As far as remaining amount is concerned you need to deduct TDS on same as consideration as per section 194IA means ""consideration for transfer of any immovable property" shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property"

As far as GST is concerned he can charge same as same is not collected by RWA but builder and hence all the above amount are advance for providing service and under GST, the supplier of service has to pay GST on advance but why is he only charging 5% on remaining activities if they are segregated?

If the same was collected by builder association no GST would be charged on water charges and other such maintenance charges if it was below 7500 per month and corpus fund.

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Thank you.

1) Your liability is limited to deduction of TDS. If you deduct excess TDS, it is not violation of law. Violation of law arises either TDS is not deducted or short deducted or deducted but not deposited. Excess TDS deduction will only result into less payment to the builder. 

2) In value of deduction, GST should not be included. All other charges can be a part of the value. 

3) Brief the builder that the value of deduction i.e. H will become his sale consideration on which he will be required to pay capital gain. If he will reduce the figure in the return then he has to rectify the return bcz of matching concept i.e. figure in ITR with figure in 26AS. 

Hello,

- GST Part won't be included in the amount on which the TDS deduction is to be made.

- TDS Deduction would be made on the remaining part including all charges of the nature of membership fee, parking fee, utility facility fee, maintenance fee, advance fee, or any other charges of similar nature, which are incidental to the transfer of the immovable property.

I hope this answer satisfies your requirements.

Regards,

CA Hunny Badlani

TDS cannot be charged on GST component.

GST cannot be charged on corpus fund and Electricity and water connection charges.

Maintenance charges taken in advance has to be grossed up and GST to be calculated. GST cannot be charged seperately.

- Electricity and water connection charges may be included in the Gross value. There is no GST on electricity consumption as it is an exempt supply. You can argue for GST on the above.

- Collection on account of corpus fund and 12 months advance maintenance charges at the initial stage is also debatable.

Sir GST is not applicable on corpus if collected by building association and not builders. A ruling for same is as under: https://taxguru.in/goods-and-service-tax/gst-amount-collected-rwa-members-setting-up-corpus-fund.html

You can also read this: https://www.cbic.gov.in/resources//htdocs-cbec/gst/GST_ON_Co-operative_housing_Societies0509.pdf

Sir as far as GST on advance is considered there is a concept of time of supply and therefore in case of services GST needs to be charged at the time of receipt of advance.

Clause (31) of section 2 of the CGST Act, 2017 defines the term “consideration” which is as under:

“(31) “consideration” in relation to the supply of goods or services or both includes –

(a) any payment made or to be made, whether in money or otherwise, in respect of in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;

(b) the monetary value of any act or forbearance, in respect of in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:

Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;”

The proviso to the above clause states that the deposit given in respect of a future supply shall not be considered as payment made for such supply until the supplier applies such deposit as consideration. In the instant case the corpus / sinking fund so collected is the amount collected towards the future supply of service and accordingly gets applied as consideration towards supply of services only at the time of actual supply of services. Therefore the amounts collected towards Corpus / Sinking Fund do not form part of consideration towards supply of services at the time of collection and hence is not liable to GST, at the time of collection. However the amounts so utilized for provision of service are liable to tax at the time of actual supply of service and the time of supply has to be determined in terms of Section 13 of the CGST Act 2017.

GST on maintenance charges has to be paid in advance.

Dear Sir,

Hope you are doing well !!

-For purpose of deduction of TDS, the value of supply is to be taken as the amount excluding the tax indicated on the invoice. This means TDS shall not be deducted on the CGST, SGST or IGST component of invoice.

-Yes, TDS is required to be deducted on remaining charges. 

You can refer below case for GST clarification:

https://taxguru.in/goods-and-service-tax/gst-amount-collected-rwa-members-setting-up-corpus-fund.html

Why is he considering all this amount in sale deed.

There should be a separate agreement for all this. However GST would be mentioned in sale deed but stamp duty should be charged only on sale consideration and GST is not sale consideration.

I don't think sub registrar would charge stamp duty on same.

Just consult a local lawyer/ sub registrar about the circle rate may be he is including all this in sale consideration.

- Corpus fund, maintenance charges and legal charges and GST on the same can be excluded. Purchase value should consist of cost of land, construction and expenditure on the amenities to make the house habitable. Also tell him, he is also increasing his capital gain by including the above charges (excl. GST).