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From June 1, the sale of any immovable property where the value exceeds Rs 50 lakh will require a 1% TDS on the transaction
A TAX deduction at source (TDS) provision brought into force will cover property transactions. People will have to take this into account while undertaking property deals. Non-compliance could land them in trouble, which is why it is important to look at the details of the provision and how they apply.
Application:
From June 1, the sale of any immovable property where the value exceeds Rs 50 lakh will require a 1 per cent TDS on the transaction.
Importantly, when there is a transaction wherein the value set as threshold is crossed then the entire provision has to be implemented. Making it difficult for the individual, real estate prices are so high nowadays that it is easy to hit the limit. This brings a lot of transactions under the tax net and requires additional efforts to ensure that these conditions are met.
Buyer to deduct:
It is important to understand the manner of operation of the transaction. When there is an agreement for transfer of an immovable property then the buyer would pay the seller the price of the property and the seller would transfer the asset's ownership to the buyer. Under the tax rules, in a situation like this, it is the transferor's duty to ensure that the tax deduction is undertaken and the amount is deposited with the government. This means that next time you purchase a property, this is the additional condition that you will need to fulfil. Some preparation needs to be made beforehand for this purpose.
No TAN required:
There is a relief proposed in the transaction for the party who is going to deduct the tax. Usually the person who deducts the tax needs to have a special number, TAN, just like his PAN, which tracks the deductions and his payments to the government.
In this case, the individual buyer might not have a TAN because he does not need to undertake such transactions as a regular activity. This is a relief for the individual because he does not need a TAN for this deduction.
The process for the filing too is available online, making it easy for the individual to complete the details.
Some questions still remain.
How, for instance, will the transaction work in the real world? There has to be a system at the sub registrar level when the sale transaction is registered to get this process into action. The other thing is that credit for the tax deducted should be available to the seller. It should not be that the transaction is completed but when the other party goes to take the credit, he finds that there is a mismatch and hence, the entire process comes to a halt.
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