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  • Category: Tax Planning

    Can flat owner claim TDS of tax deducted at source?


    Do you have query about tax deducted at source? Want to know if a flat owner can apply for refund if TDS is already complete? Check out this Ask Expert page for responses to your query.

    In form 26AS , it is clearly visible under "Part E - Details of SFT Transaction" that tax deducted at source which is usually 1% amount if flat price is more than 50 lacs. Question is a common salaried person can submit 1% TDS paid in tax return under Sch TCS "Details of Tax collected at source"?
    Basically will that help to get some refund for flat owner?
  • Answers

    2 Answers found.
  • The tax is to be deducted by the purchaser and to be deposited in the government account. The buyer can claim the return when he submits his ITR and if the tax paid is more than what he has to pay. He can claim the return in his ITR. Note that the seller only can claim but not the purchaser. The details are as mentioned below.

    1, The buyer has to deduct TDS at 1% of the total sale consideration. The rate is 0.75% for the transactions carried out between 14 May 2020 and 31 March 2021.

    2.TDS is required to be deducted only if the sale consideration is more than Rs 50 lakhs.

    3. Whenever you pay the instalment, the TDS for that payment is to be deducted. You have to do that on each instalment paid.

    4. The cost of the sale will include all the costs including club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature. This is applicable for immovable property purchased on or after 1 September 2019.

    5, TDS is to be paid on the entire sale amount.

    6. No need to obtain a TAN (Tax Deduction Account Number) for making payment of the TDS on immovable property. It can be done by using your PAN number and also the PAN number of the seller. PAN of the buyer is also mandatory.

    7. The TDS is to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.

    8. TDS certificate in form 16B to the seller is to be provided by the buyer. This can be obtained from the IT website after 10 or 15 days after paying the tax.

    9. The buyer is required to obtain Form 16B and issue it to the seller.

    10. The seller has to show this amount as tax paid by him in this ITR and he can claim if any excess tax is paid.

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  • Some basic details about the terms need to be explained before coming to your question. The terminology under Income Tax Act, 1961 are not to be inferred loosely or else mistakes can creep in your Tax Returns thereby inviting notice from Taxmen. For the same reason professional help is sought for filing tax returns or advising about tax matters and tax calculations.

    Now TDS and TCS are different concepts and are not to be replaced with each other when deducting and collecting the same. TDS or tax deducted at source is a tax which is deducted and deposited by person making any taxable payment to any person. Example an employee is paid salary by employer after deduction of tax. The liability to deduct and deposit tax to Government exchequer is of the employer and not the employee. The employee can see the tax deposited against its PAN in Form 26AS and file his/her return accordingly and claim refund if, excess deduction made. TDS is a detailed provision with various provisions and sections & sub sections viz. 192B-Salary, 194C - Contractor, 194I-Rent, 194J-Professional Fee, etc.

    TCS or tax collection at source is a totally different concept and introduced with an intent to tap revenue leakage and under reporting of Income by various section of persons. TCS is applicable to specific cases and few of the cases are summarized below:
    1. TCS collection in case of sale of Tendu leaves.
    2. TCS in case of parking lot contracts.
    3. TCS in case of sale of vehicle over Rs. 10 lakhs.

    There are few more cases in addition to above but the provision of TCS is limited to these only and none other cases. Herein the tax instead of being deducted from the person is actually collected. Lets give you an example.

    You are making payment of Rs. 10,000 to a person and you need to deduct TDS @2% from the same. The final payment after TDS will be Rs. 9,800 (10000 - 200) as tax is deducted.

    Now, suppose you are going to purchase a vehicle which cost Rs.12,00,000 and you have to make payment to the dealer. The dealer here will collect not only Rs.12,00,000 but and additional amount @1% of sale value, i.e. Rs. 12,000 as TCS. So, you will have to pay Rs. 12,12,000 to the car dealer and not just Rs. 12,00,000. Here, the tax was collected by the dealer and not deducted.

    Now, as you have seen some 1% value of tax in Form 26AS under SFT Transactions (SFT is specified transactions). No this sum is not at all TCS amd you cannot claim the same from the Income TAx department by filing a return and filling the same under TCS column.

    The 1% tax on purchase of flat/house valued over Rs. 50 lakhs is actually TDS and not TCS. You have to deduct 1% tax and make reduced payment to the builder and then issue Form 16B to the builder by filing Form 26QB.

    The TDS @1% deducted under section 194IA, here is to be claimed by the builder in his return and not by the person who deducted and deposited the same/flat owner.
    The provision here is also with an intent to compel the builders to disclose proper income and not under report them. Since TDS is deducted and deposited @1% on his PAN the value comes to the notice of the Tax department and they can easily cross check his tax returns with the TDS deducted and deposited against his PAN.

    Avoid claiming the Tax shown in Form 26AS as it for information purpose of your and not for claiming refund.

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