The Budget 2019-20 amended the TDS on property, which will come into effect from 1 September 2019. But before we explain what the situation is, let us tell you what it was before the Budget.
Until 1 September 2019, 1% TDS was applicable on properties priced over ₹50 Lakh. But this cost of property excluded the additional charges levied on amenities.
According to the new law, from 1 September 2019, homebuyers will have to pay TDS on the total cost of the property, which includes charges for club membership, car parking, electricity or water facility, and maintenance among others. So, the minimum cost of a property to be eligible for TDS has fallen to around ₹46 Lakh. So, if you buy a property worth 47 lakh, approximately ₹3-₹4 Lakh is added to the base price as cost of amenities. In this case, the total cost of the property will turn out to be ₹50-₹51 Lakh, thus making it eligible for 1% TDS levy.
We hope that this explanation answers your major question concerning the new law. And we know you must have more questions. So, we have tried to answer them in the easiest way possible below.
TDS FAQs
What is Tax Deduction at Source (TDS)?
According to the Income Tax Act, it is mandatory for any person to pay TDS while making a purchase, if the amount exceeds a fixed limit.
Who, among the buyer and the seller, pays TDS while buying a property?
According to the rule under Section 194-IA of the Income Tax Act, only the buyer has to pay TDS.
What is the maximum amount up to which TDS is not applicable?
Until 1 September 2019, a property was not eligible for TDS if its price was less than ₹50 Lakh (excluding the cost of amenities). After 1 September 2019, even properties priced below the limit of ₹50 Lakh are eligible for TDS, if the total price of the property after including the additional charges for amenities is more than ₹50 Lakh.
What all additional charges have been included in the total property cost from 1 September 2019?
The Section 194-IA of the Income Tax Act has been amended to include the following additional amenities charges to the overall property cost:
- Club membership
- Car parking
- Electricity facility
- Water facility
- Maintenance
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