A Comprehensive Guide Of TDS On Buying Of Immovable Property
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WEEKEND MCQ SELF CHALLENGE 14 - TDS ON BUYING OF IMMOVABLE PROPERTY
Special Focus on TDS on Buying of Immovable Property
Dear Professional Seniors & Friends,
Welcome to this wonderful weekend MCQ self-challenge!
This weekend's challenge is on TDS on buying of immovable property having 5 MCQs to be self-answered by participants to take self-challenge. As the best tax consultant in Gurgaon, we have the detailed answers to these MCQs shall be posted on Monday for the self-assessment of the participants. This post shall be of immense use to the participant.
Weekend MCQ 14.1: Mr. X resident of India, purchases a property worth Rs 50 Lakhs situated in London from a person who is a resident of India. Which among the following is correct?
(A) TDS u/s 1941A shall be deducted since the seller is a resident.
(B) TDS u/s 195 shall be deducted since the property is located outside India.
(C) No TDS is required to be deducted.
(D) None of the above.
Weekend MCQ 14.2: What if in the above question, the property is situated in India but the person selling the property is a non-resident?
(A) TDS u/s 194LA shall be deducted since the property is located outside India.
(B) TDS u/s 195 shall be deducted since the seller is a non-resident.
(C) No TDS is required to be deducted.
(D) None of the above.
Weekend MCQ 14.3: What if in the above question, there are two sellers & payment of Rs 30 lakhs is required to be made to each seller?
(A) TDS u/s 1941A shall not be deducted since payment is less than Rs 50 lakhs to each seller.
(B) TDS u/s 194IA shall be deducted since payment is more than Rs 50 lakhs in totality.
(C) No TDS is required to be deducted.
(D) None of the above.
Weekend MCQ 14.4: Mr. X avails a home loan of Rs 40 lakhs for buying property on 01.04.2013. The value of the property was Rs 60 lakhs. On 01.05.2013, the bank directly paid the loan amount to the builder to the tune of Rs 40 lakhs, the remaining Rs 20 lakhs was paid by Mr. X to the builder on 01.03.2018.
A) Both Bank and Mr. Xare liable to deduct TDS.
B) The bank is only required to deduct TDS on Rs 40 lakhs.
C) Mr. X is only required to deduct TDS on Rs 20 lakhs.
D) No TDS is required to be deducted.
Weekend MCQ 14.5: What if in the above question, the bank has paid the amount to the builder on 01.08.20137
A) Liability is on Mr. X to deduct TDS on the full amount of Rs 60 lakhs.
B) The bank is only required to deduct TDS on Rs 40 lakhs,
C) Mr. X is only required to deduct TDS on Rs 20 lakhs.
D) No TDS is required to be deducted.
Answer Weekend MCQ Self Challenge # 14
This post of MCQ is on the provisions relating to TDS on the sale of immovable property as per Section 1941A of the Income Tax Act.
Answer to MCQ 14.1: A)
Answer to MCQ 14.2: B)
Answer to MCQ 14.3: B)
Answer to MCQ 144:C)
Answer to MCQ 14.5: A)
Practical Analysis for MCQ 14.1 to 14.5
The provisions of Sec 194IA are as under
- Effective Date - 1st June 2013
- Deductor - Any purchaser
- Deductee - Any seller being a resident
- Time of deduction - At the time of credit or payment whichever is earlier
- Rate of TDS-1% of the total consideration for transfer of immovable property
Important Points to note are as under- - A limit of Rs 50 Lakhs is on the total sales consideration of the property and will not apply to different sellers individually.
- If the immovable property is located in India but the seller is non-resident, then no TDS is required to be deducted under this section rather TDS will be deducted u/s 195.
- No TDS is required to be deducted if the transfer is of rural agricultural land(which is not a capital asset)
Based on the above analysis, the correct answer to MCQ 14.1: A) TDS u/s 1941A shall be deducted since the seller is a resident notwithstanding the property is located outside India.
The correct answer to MCQ 14.2: B) TDS u/s 195 shall be deducted since the seller is nonresident notwithstanding the property is located in India.
The correct answer to MCQ 14.3: 8) TDS u/s 1941A shall be deducted since payment is more than Rs 50 lakhs in totality.
The correct answer to MCQ 14.4: C) Mr. X is only required to deduct TDS on Rs 20 lakhs as the total agreement value exceeds Rs 50 Lakh and the bank is not required to deduct TDS as the bank has paid the amount on 01.05.2013 Le. before the date of applicability of the said section.
The correct answer to MCQ 14.5: A) Liability is on Mr. X to deduct TDS on the full amount of Rs 60 lakhs as the whole payment is done after the date of applicability of the said section. Moreover, the liability to deduct TDS is on the transferee only i.e. X, and not on the bank as the bank is only remitting the amount to the builder on behalf of the transferee.
(Disclaimer: The objective of the MCQ post is just to discuss the concept. It may happen, by change of facts, the answer may be different. Please do not treat this as a professional opinion: you can definitely have your own opinion.)
Sincere Regards
CA Sanjay Kumar Agrawal
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