TDS on purchase of property above 50 lakhs- where EMIs are involved

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  1. PreetiBhullar

    PreetiBhullar New Member

    While the deduction of TDS by buyer is quite clear with regards to payment made to seller in installments, I am not very clear on how this works where a bank loan in involved.
    At what point does the TDS deduction take place? The bank pays the seller immediately while the buyer repays the home loan in installments. Does the buyer deduct the TDS at the time of taking the loan and the bank pays only the net amount to the seller? Or the TDS is completely deducted from the part of the consideration that is not funded?
    For eg on a 50L property, I get a 90% loan for 45L. Now when i pay the seller 5L for the unfunded amount, i pay him 4.5L (5L less 1% TDS on 50L). Is that a fair understanding? this would mean that my relationship and the EMI with the bank is not changing at all.
     
  2. Prasad10

    Prasad10 New Member

    The onus of paying the TDS is on the seller. You pay him the agreed consideration minus the funded amount. I think a typo in you calculation - amount should be 50K (1% of 50L)
     
  3. Prasad10

    Prasad10 New Member

    This thread should help you - 1%TDS deducted on purchase of immovable property (Forum Income Tax)
     
  4. Prasad10

    Prasad10 New Member

    Secondly a typo, the calculation should be 50K (1% of 50L). I feel its better you do the deduction and deposit to the government account. Since, ultimately you are the owner of the property now and you do not ant issues later.
     
  5. PreetiBhullar

    PreetiBhullar New Member

    No typo. The 5 Lakh amount mentioned that i have to pay to the seller is the part of the consideration that is not funded by the bank (10% of 50 Lakh as per the assumption taken in this case). Of the 50L, 45L is paid by bank and 5L by the buyer.
     
  6. PreetiBhullar

    PreetiBhullar New Member

    Thanks. Will check that thread as well
     
  7. Prasad10

    Prasad10 New Member

    oh right. gotcha.
     
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