Case AQ - TDS on property purchase by NRI Query on Email Posted by - Anonymous (to prevent confidentiality ) Hi Amlan, I saw your videos on you tube and must say a great initiative on your part to educate the public. Me and my wife are NRIs and have bought a property as joint owners in Pune for 76 lakhs and have done 2 initial installments of 5 lakhs and 55 lakhs to builder as per following first 5 lakhs installment as booking amount ( paid from our joint NRE account)TDS submitted by filling separate 26QB 2nd installment of 55 lakhs split as per following due to RTGS transfer restriction of 10 lakhs maximum/day 10 lakhs RTGS transfer ( paid from joint NRE account) 10 lakhs RTGS transfer ( paid from joint NRE account) 5 lakhs RTGS transfer ( PAID FROM MY SOLO NRE ACCOUNT to meet the builder deadline) remaining 30 lakhs paid by Bank as a joint loan. we have filled form 26 QB for each transfer as all transfers are done on separate days my query is 1. in the 2nd installment 5 lakh amount was paid from my solo account. in that case as joint owners do we split the TDS as per 2.5 lakhs each on that or only I pay the TDS on full 5 lakhs. 2. in case if I pay the TDS on the 5 lakh amount paid from my solo account. to maintain the 50-50 TDS status can we adjust that from the bank loan payment and show 2.5 lakh less payment from me and adjust/show that in my wifes name ? 3. what is the rule in such case- can we maintain the 50-50 TDS by adjusting the payments for example I pay one installment and deduct TDS and my wife pays a similar installment next time and deducts the TDS or on each installment we need to deduct/show TDS in 50-50 irrespective of from whose account the payment is made? 4. I have made one mistake while filling form 26QB- in the amount paid/creditted section instead of mentioning the total installment amount I mentioned the amount actually paid to the builder after deducting the 1% TDS so finally when it reflects in his form 26 AS it will be 1 % short but TDS paid will be correct. so the total amount will show as 7524000 instaed of full 7600000 but the TDS is will reflect eaxt 1% which is 76000. will this create any issues for the builder while filing the returns or for me or is it fine as far as the TDS deducted is correct. as I checked and there is no way to correct this online or any other way. Thanks a lot for all your advice. Solution - By Amlan Dutta Dear XYZ , I will directly answer your queries , You write , my query is 1. in the 2nd installment 5 lakh amount was paid from my solo account. in that case as joint owners do we split the TDS as per 2.5 lakhs each on that or only I pay the TDS on full 5 lakhs. Answer - You do one payment of 5 lakhs and deduct TDS @ 1 %i.e 50000 Rs In the buyer you will see option to select Multiple entry , Select for you and your wife and mention PANs accordingly So , you deduct TDS on whole 5 lakhs but make the distribution clear in Form 26 QB 2. in case if I pay the TDS on the 5 lakh amount paid from my solo account. to maintain the 50-50 TDS status can we adjust that from the bank loan payment and show 2.5 lakh less payment from me and adjust/show that in my wifes name ? Answer 2 - Lets understand this breaking it up ...you will deduct from 5 lacs TDS at 1% i.e 50000 Rs for the payment of 5 lacs Your question is whether you and your wife can each claim benefit of the loan and taxes paid for each person i.e 2.5 lacs for each you and your wife Yes , you will do it and each will take benefit of the loan component via section 24 (b) (assumed that property possession is already with you because loan benefit is only for property whose income is chargeable to tax ) 3. What is the rule in such case- can we maintain the 50-50 TDS by adjusting the payments for example I pay one installment and deduct TDS and my wife pays a similar installment next time and deducts the TDS or on each installment we need to deduct/show TDS in 50-50 irrespective of from whose account the payment is made? Answer 3 - What you say is acceptable and the correct way to do the things. But ensure that when you fill form 26 QB , you mention clearly that there are 2 buyers (since property is jointly purchased ) There is no definite rule of who should make the payment . As long as it can be sufficiently proved that the funds for the account utilised and spend have been earnt by each member. There is a small critical concept of Co ownership here .If say the flat is 100 Rs in cost and your wife and you have invested 50 Rs each , then the flat co ownership is 50 :50 So when you guys take loan , the benefit is also extended in 50 :50 proportion 4. I have made one mistake while filling form 26QB- in the amount paid/credited section instead of mentioning the total installment amount I mentioned the amount actually paid to the builder after deducting the 1% TDS so finally when it reflects in his form 26 AS it will be 1 % short but TDS paid will be correct. so the total amount will show as 7524000 instead of full 7600000 but the TDS is will reflect each at 1% which is 76000. will this create any issues for the builder while filing the returns or for me or is it fine as far as the TDS deducted is correct. as I checked and there is no way to correct this online or any other way You need to understand what happens to whom .The buyer doesnt get anything when he deducts TDS at source .It is the seller who gets the tax credit for the amount credited . Now in his 26 AS , the section will reflect 194 1A where the percent is 1 % Now say you credit 100 Rs and deduct 1 Rs , things look okay to the assessing officer However , if you credit 99 Rs and deduct 1 Rs , things look inaccurate and is actually wrong . He may get a tax credit mismatch because the tax deducted as per section 194 IA is not matching the credit. For this case ,let it pass but in future installments , make sure that you jot down credit and TDS very properly so that he doesnt suffer , ********* Extra - For Knowledge ***** Understanding tax credit part - Whatever TDS you deduct i.e in this case 50000 Rs is available to the seller as tax credit You will get a acknowledgement when you fill in the form 26 QB and later when you register the same at TDS trace website , you will get a TDS certificate 16 B which you are supposed to give to the seller He can claim tax credit and the same shall appear in his 26 AS tax credit statement provided you have filled form 26 QB properly Hope that helps , Amlan Dutta
Posted on: Sat, 01 Nov 2014 11:34:34 +0000
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