I’m buying a property from NRI, worth 1.08 CR, we are entering into an Agreement to sell (NOT a Sale deed) on 25th September 2023, I agreed to pay him 18 Lakhs as part payment during this Agreement and the same is mentioned in the agreement. Today morning i.e., 24th September 2023 the seller said he will be applying for Low Tax/NIL TDS, once the TDS certificate is available then I can deduct TDS and deposit the same to the government(Getting this certificate might take 2 - 3 weeks). But the problem is the Agreement states that on signing it, the seller agrees he has received the part payment(18 Lakhs minus whatever the TDS). As the property is 9 years old and considered a Long-term capital gain, his CA’s computation gave the tax number as 3.8 Lakhs(20% tax based on capital gains). Due to the statement in the Agreement and lack of clarity on the exact Tax figure considering the future Low tax TDS number, we mutually agreed that I would provide him a cheque for 14.2 Lakhs(after deducting TDS @ 20%) dated 14th of October 2023(giving him a time of 20 days to get the TDS certificate), but however the same deducted TDS of 3.8 Lakhs will not be deposited to government because in reality, the seller will not cash it until 14th October 2023 because we do not know the exact tax number if there any exemption after the Low tax/NIL TDS. Once the Seller gets the TDS certificate(let’s say hypothetically on 10th October 2023) he will return the Cheque back to me and I will properly deduct the TDS and make an NEFT transfer of the remaining Part part payment. Now the confusion I have: 1)Since I will provide him the cheque on 25th September 2023(Agreement date), dated 14th October for withdrawal, from which date does the TDS deposit time count down starts? is it 25th or 14th (Note seller will encash it on 14th only) 2)Within what period of time should I deposit the TDS to the government(1 week, 15 days? or 30 days?), what is the deadline? 3)Is the TDS deducted on 1.08 CR or the capital gains(Just want to be sure because the computation was provided by Seller's CA, not mine). Note: These TDS payment receipts should be furnished at SRO while registering the Proper/Sale deed on 19th October 2023
Whether the agreement gives you any right on property ? Does it mention anything which gives you right in property or shows you have made payment?
If yes then 25th otherwise 14th.
Since seller is non-resident deposit tax till 7th of next month.
It should be on capital gain but unfortunately it is on sale consideration for now.
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Thank you.
- TDS should be deducted @23.92% on Rs.18 lacs. On subsequent installments, TDS will be deducted according to the lower TDS deduction certificate (assuming certificate would be issued before payment of subsequent installment) otherwise at 23.92% on the value of installment
1) 14th October 2023
2) till 7th Nov. 2023
3) Before issue of certificate, on amount of payment otherwise as per certificate
For detailed discussion you may opt for phone consultation
Hi,
Please make a note of the following:
Also be careful, In case of the seller being an NRI the rate of TDS shall be @23.92% on Rs.18 lacs. and further on subsequent installments, it should be deducted according to the lower rate as per the lower TDS deduction certificate otherwise at 23.92% on the value of installment or final payment as the case may be.
Hope you find the information helpful.
Thanks
Hey,
TDS Deposit Start Date: The start date for counting down the time to deposit TDS usually begins on the date of payment. In your case, since you are providing the cheque dated 14th October 2023, the countdown would typically start from that date. This means you should deposit the TDS within the prescribed time frame from 14th October 2023.
TDS Deposit Deadline: TDS deducted on property transactions is usually required to be deposited within a specific time frame, typically within seven days from the end of the month in which the deduction is made.
TDS Amount: TDS is generally deducted on the total transaction amount, which in your case is the property's sale value of 1.08 crore.
Hope you find this answer useful . Please give your valuable feedback. And for any further discussion you can opt for phone consultation.
The seller’s CA has provided the below computation based on 20% tax + cess + surcharge, I’m not sure about the validity of this computation and I do not want to deposit an incorrect TDS amount to the government and take the burden of fines later, so please do check the below computation let me know if it is correct. A little bit of background: - Seller is NRI - Seller owns 100% of the property - I’m not NRI - Seller bought the House in 2011 for 42 lakhs - I’m buying it from him in the coming month for 108 Lakhs CA’s Tax computation: Financial year - 2011/2012: Purchase price - 42,00,000 Index cost - 79,43,478.26 Improvement 1 - 2012/2013: cost - 3,00,000 Index cost - 5,22,000.00 Improvement 2 - 2017/2018: cost - 3,00,000 Index cost - 3,83,823.53 Improvement 3 - 2022/2023: cost - 4,00,000 Index cost - 4,20,543.81 Total Index Cost - 92,69,845.6 Long term capital gain(u/s 288A) - 15,30,154.4 Tax - 3,06,030.88 Cess - 12,241.24 Total TDS to be deducted - 3,18,272.12(which is what I’m supposed to deposit to IT) is this 3,18,272.12 the right amount? Thanks
TDS has to be deducted on either amount paid to the seller or on the basis of AO certificate. Deductor/Buyer is not concerned with the amount of capital gain in the hands of seller.
For detailed discussion you may opt for phone consultation
Solution 1
Hello,
TDS Rate for First Installment: For the initial installment of 18 lakhs on October 14, 2023, the applicable TDS rate is 23.92%.
TDS Deposit Deadline: The TDS amount for this payment must be deposited by November 7, 2023, to comply with tax regulations.
TDS for Subsequent Installments: For any subsequent installments, the TDS rate should align with the rate specified in the lower TDS deduction certificate, provided it is issued before the payment of subsequent installments. If no certificate is available, the TDS rate remains at 23.92%, and the deduction should be based on the value of each installment.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
Solution 2
TDS (Tax Deducted at Source) should be deducted based on the amount paid to the seller or as per the certificate issued by the Assessing Officer (AO). The buyer's responsibility is to ensure that TDS is deducted in accordance with the prescribed rates on the actual transaction value or as directed by the AO. This obligation is not contingent upon the seller's capital gain calculation. By adhering to this practice, the buyer ensures compliance with tax regulations and mitigates the risk of discrepancies or issues related to TDS deductions.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
Solution 2
TDS (Tax Deducted at Source) should be deducted based on the amount paid to the seller or as per the certificate issued by the Assessing Officer (AO). The buyer's responsibility is to ensure that TDS is deducted in accordance with the prescribed rates on the actual transaction value or as directed by the AO. This obligation is not contingent upon the seller's capital gain calculation. By adhering to this practice, the buyer ensures compliance with tax regulations and mitigates the risk of discrepancies or issues related to TDS deductions.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal