TDS ON PURCHASE OF RESIDENTIAL FLAT

[SUDHAKAR SIVARAMAN]

My client purchased residential flat for Rs.5 crore and got registered in March 2015. He has paid Rs.4.25 crores prior to implementation of this provision i.e prior to 01.06.2013.(Sec 194IA introduced with effect from 01.06.2013). Balance amount of Rs.75 lakhs paid after 01.06.2013 after deducting Rs.75000/- towards tds and paid balance to seller.

Now the question is ITO is telling TDS applicable for Rs.5crore since you have registered only in March 2015. i.e after implementation of this section. Whether ITO is right?

But we are saying that section uses the word payment or credit whichever is earlier. Rs.4.25 crores payments made prior to 01.06.2013, so no tds applicable for this portion. Is it correct ? Pls advice

[SIVARAMA KUMAR]

Sir,

As you have rightly pointed out the act uses the words consideration for transfer of Immovable property credited or paid whichever is earlier to the transferor is the pivot for deduction of TDS, and consideration includes all charges and advances incidental for transfer of Immovable property. No where the section uses the words acquired/owned/registered /purchased etc to complicate the situation further. Hence by all means your views seems to be clear on this issue. Good luck.

[Padmanathan KV]

You view is correct sir. The Section uses the expression "at the time of credit of such sum to the account of the transferor or at the time of payment of such sum". Therefore, where the payment has been made before 1st June, 2013 then provisions of section 194-IA shall not apply.

[SUDHAKAR SIVARAMAN]

Any Supreme Court case law related to this

AI Summary

TDS on immovable property arises on payment or credit; pre-effective-date payments are not subject to withholding under the provision. Withholding tax on an immovable property transfer is triggered by the time the transferor is paid or credited with consideration, including advances and incidental charges; amounts paid or credited before the provision's effective date are not subject to withholding even if registration occurred later.