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

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.