Income Tax: 10% TDS on joint development agreement for property purchase

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Published: June 26, 2018 7:47:39 AM

If one have entered into a joint development agreement with seller, then there is a liability to deduct TDS @10% for the monetary consideration (i.e., other than kind) while making payment.

10% TDS on joint development agreement for property purchase.

I booked a flat with agreement to sale of Rs 25 lakh and construction agreement of Rs 30 lakh. Do I need to pay TDS?
– Rohit Waghmare

The buyer of the property is required to deduct TDS at the rate of 1% of the entire sale consideration, under Section 194IA while making payment to the seller. However, no tax is deductible where the consideration is less than Rs 50 lakh. In your case, if the total sale consideration of flat is less than Rs 50 lakh, you shall not be required to deduct TDS. However, if you have entered into a joint development agreement with seller, then there is a liability to deduct TDS @10% for the monetary consideration (i.e., other than kind) while making payment.

Is TDS applicable on service tax portion of rent paid to non-resident consultant?
—S Kumud

Circular No. 1/2014 dated January 13, 2014 provides clarification in case of deduction of TDS while making payment of rent only to resident individual without laying any guidance in case payment is to a non-resident. As per Section 195, TDS is to be deducted only on payments which are chargeable to tax. The service tax (now GST) paid on the rent is not a sum chargeable to income tax, therefore, no TDS shall be deducted on it.

Is pension income eligible for standard deduction?
—T Rajagopal

The Finance Act, 2018 had amended Section 16 to provide that a taxpayer having income chargeable under the head ‘salaries’ shall be allowed deduction of Rs 40,000 or the amount of salary, whichev-er is less, for computing his taxable income. As pension income forms part of the salary income, the taxpayer shall be entitled to claim a deduction of Rs 40,000.

I am 51 and for past one year am jobless. I sold my flat and deposited the sum in FD. Is FD income taxable?
—T Rajagopal

Income from FD is taxable under head “other sources” and not under “salaries”. If you have received interest on FD, then the same shall be taxable if it exceeds the basic exemption limit applicable to resident individuals, who are of age 60 years or less, i.e., Rs 2.5 lakh. Since your income from interest is more than Rs 2.5 lakh, you shall be liable to pay tax. No standard deduction shall be allowed. Further, owning a car has no bearing on the income tax.

The writer is partner, Nangia Advisors LLP. Send your queries to
fepersonalfinance@expressindia.com

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