1117(Tax Credit) Can propery buyer take tax credit for deducted TDS? Project - Make Knowledge Free Video Link - https://youtube/watch?v=WWiTHX0wu_U Case Methodology - Harvard Case methodology This case happened recently in my office . My senior colleague came rushing to me stating that he has observed that the amount hat he has deducted as TDS on property purchase is reflecting in his tax credit statement . He asked me with eager eyes as to whether this implies that he is entitled to claim this TDS deposit as tax credit ! I gave him a simple example and i will present it to the interested reader as well ! When the employer gives salary to employee , it deducts TDS and gives salary . So what has been deducted as TDS by the employer , does the company while filing income tax return ITR 6 claim this as tax credit i.e credit of income taxes paid or does the employee claim tax credit of the deducted TDS ..... If this part is clear , then why is it so difficult understanding it here Here as a buyer , you are not paying salary but the property consideration . There the expense head was salary so the TDS was governed by section 192 which prescribed deduction as per slabs .Here the TDS deduction is precribed by 194 IA which mentions that the TDS should be at 1% of consideration value (exceeding 50 lakhs ) Onbiously when you as a buyer do this , you are collecting amount from the seller as tax at source and depositing it to the revenue . So , clealrly this is sellers money which he would have otherwise received which you have now as buyer deducted at source and deposited it to the revenue in the xact same manner as the company does and deposits salary TDS to the government ! So , like you claim credit for salary TDS , isnt it therefore logical that in case of property sale also , the deductee(seller i.e whose TDS is deducted ) will claim tax credit ! I asked my office colleague to look closely at what the tax credit statement stated and then he saw that it clearly mentioned the seller as deductee and therefore it is clear that only the seller is entitled to avail tax credit in such a case ! Hope this makes sense , Cheers, Amlan Dutta
Posted on: Mon, 29 Dec 2014 17:17:11 +0000
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