1 % TDS on purchase of under construction Flat - reg.

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    ARUNATGR New Member


    Greetings !

    I have a query as below:

    1) I have signed an agreement to purchase an under construction flat costing around Rs. 76 lacs.

    2) Expected possession by August 2017

    2) After signing agreement, I paid the demanded amount of Approx. 66 lacs in the month of May 2016 through bank loan.

    3) Now the company is asking me to pay the 1 % TDS of around Rs. 66,000/- (through Form 26QB) which they will deduct from the balance amount payable by me to them at the time of possession.


    (i) I am a salaried employee and every month some amount is being deducted from my salary (2016-17) towards Income Tax. If I pay this 66,000/- as 1% TDS now, can I claim Income Tax rebate for this Rs. 66,000/- for the year 2016-17?

    (ii) I am paying Home loan (pre-) EMI of around 65,000 per month since June 2016 for the loan disbursed by the bank. Can I claim rebate on this EMIs under Section(s) 80c or 24 ...etc., for 2016-17 ?

    Thanks & regards,
  2. ZED

    ZED Well-Known Member

    No, do not transact like that.
    As per the S.194-IA of the Income tax Act, you are liable to deduct tax.
    On payment of 66 Lakhs, you should deduct 66K and pay only the balance to the buyer.

    Under law, you are required to pay TDS amount to the C.G and you are to issue TDS certificate.

    It means that the co. is asking you to pay 66,000 as TDS. The CO. WILL GET THE CREDIT OF 66,000, NOT YOU.
    This credit belongs to Co. only and you can not claim it.

    U/s 80C , only the principal amount can be claimed as deduction
    U/s 24(b) Interest amount can be claimed as deduction.
    The pre construction period interest is to be accumulated and to be claimed from the year when possession will be granted in 5 equal annual installments.
    The interest due in the F.Y after receiving the possession can be claimed in a single go (in the same F.Y)

    There are certain limits and conditions. You may ask the query again at the time when you would be eligible to claim the deduction

    ARUNATGR New Member

    Thanks for the clarification zed.
    ZED likes this.
  4. Arif Ali

    Arif Ali New Member

    U have to deduct the TDs while making the payment to seller of property. Here nothing burden on you . Meaning thereby u will pay the less payment by RS 66000 (76000) to seller and this deducted payment u have to pay to govt.
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