Property Purchase Query for Joint Owners

[Shrey Shah]

Hi,

So I purchased an under construction flat on mine and my father’s name as the co-owner.

My Grandfather paid the first instalment to the builder from his bank account on our behalf and we paid 1% TDS (50-50) on the 1st instalment from mine and my father’s income tax portal as we are the owners on the Registered Agreement of Sale.

As for the instalments going forward, I’ll be paying it completely from my bank account.

Questions:

1) My father has no income so he received an email from ITD stating ‘Mismatch between the income reported and property purchase transaction’ and they asked for providing AIS feedback. So, is it safe to simply select ‘Information is correct’?

Other available options are ‘Information belongs to other PAN’, ‘Source is a gift receipt which is non taxable’, ‘Information is not correct’..

2) Is it fine to deduct TDS from his and mine PAN for each instalment regardless of who is paying for the flat?

3) If ever questioned or asked about the source of fund for 1st instalment paid from my grandfather's account, what all documents would be required?

Please help out here. Thank you so much.

[Ryan Vaz]

A. AIS feedback for your father (no income)

• Go to Income-tax Portal ? AIS ? Provide Feedback for the property transaction.

• Recommended option:

  • Select “Source is a gift receipt which is non-taxable”OR “Information is correct” with remarks clearly stating:

    • Property is co-owned (50%).

    • First instalment funded by grandfather as a gift (exempt u/s 56(2)(x)).

    • Subsequent instalments funded by co-owner (you).

• Attach/keep gift deed and bank proof (portal may not ask for upload now, but keep ready).

Why not “Information belongs to other PAN”?

Because the transaction rightly belongs to your father as a co-owner; only the source of funds differs.

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B. TDS deduction for each instalment (mechanics)

• Rate: 1% of consideration at the time of credit or payment, whichever is earlier.

• Co-owners: File separate Form 26QB for each buyer-seller combination.

  • Example per instalment of ?10,00,000:

    • Buyer-1 (You): ?5,00,000 × 1% = ?5,000 (Form 26QB from your PAN)

    • Buyer-2 (Father): ?5,00,000 × 1% = ?5,000 (Form 26QB from father’s PAN)

• Payment source (bank account) is irrelevant for TDS allocation; ownership share governs.

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C. Source of funds – first instalment (grandfather)

• Tax position: Gift from grandfather ? son/grandson is not taxableu/s 56(2)(x).

• No income accrues to your father merely because funds came from a relative.

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[Shrey Shah]

Hi. thank you so much for the reply sir.

If I may ask, as for the gift deed, what all details are to be mentioned in it and is it to be notarised or something? Or is it fine on a normal piece of paper?

[Ryan Vaz]

To answer your question: No, a "normal piece of paper" is generally not sufficient if you want the Gift Deed to hold up in legal or tax scrutiny. It should ideally be on Stamp Paper (the value depends on your state).

Since the specific clauses (like "natural love and affection" and acceptance) need to be drafted carefully based on your relationship and the asset type, please DM me. I can discuss the specifics with you and help you draft the correct document.

[Taxsrassociate]

In case of joint purchase of property, each purchaser is treated as a co-owner as per the share mentioned in the sale deed.

Income, capital gains and related tax benefits shall be computed separately in the hands of each co-owner in proportion to their ownership.

Each co-owner is eligible to claim exemptions independently, subject to fulfilment of conditions under the Act.

Accordingly, tax compliance is required to be done individually and not jointly.

For any query, Connect at taxsrassociate at [email protected]

AI Summary

Property co-ownership: TDS at 1% applies per owner on their share; familial payments can be tax exempt gifts with deed and bank proof. For a jointly owned under construction property, each registered co owner is liable for tax reporting and TDS on their ownership share. TDS at 1% applies on payment or credit and separate Form 26QB filings are required per buyer seller pairing. Funds contributed by a grandfather may be treated as a tax exempt gift; retain a stamped gift deed and bank evidence to substantiate the source. Ownership share, not payment account, governs TDS allocation and independent tax computation by each co owner.