1% TDS on sale of flats priced 50 lakhs and above from June 2013

Come June 2013,buying and selling a flat will become all the more cumbersome for the parties concerned (Buyers and sellers).
The Union Budget Finance Bill 2013, makes it mandatory that the buyer of a flat priced Rs 50 lakh and above will have to deduct 1% of the amount and pay it to the govt’s kitty.For this the buyer will have to open a TDS account with the tax authorities,register himself and obtain a TAN number,which he will have to quote on every deduction he makes from his payment to the builder or owner.This rule does not make a distinction between under construction or ready to move flats.It does not apply to agricultural land.Almost 5 lakh homes are set to be delivered in 2013.Even if people have made part payment before june 2013,they will be forced to deduct 1% of the total amount from the remaining installments.There is no clarity on whether the deduction will have to be made by the buyer or his bank (if the buyer is taking a loan).
This is another classic example of the total mess created by such measures in the past too.We had the service tax and vat issue in which the govt just passed a rule without giving any indication of how the vat would be calculated.Then came the property tax issue where the BMC was sending provisional property tax bills on the basis of a property’s rateable value.Earlier the tax was calculated on the basis of rent paid by tenants.Rateable value is calculated on the basis of age,area and the nature of construction of the building,ready reckoner rates etc.This was liable with retrospective effect from 2010.The last date for payment of this property tax was fixed at 31st march but was extended by 3 months after protest from the citizens who were suddenly faced with paying property tax arrears of the past 3 years at one go.
All these issues really makes the people wonder whether the govt really applies any thought before altering policy.

 Important update:

TDS payment has been simplified and can be paid online at the link below…
Pay TDS on this site

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Mayur Panghaal

With more than 20 years experience at every level of the Real Estate market in Navi Mumbai, Mayur is equipped and trained to handle every task when it comes to buying or selling a property in Navi Mumbai. From knowledge of local development regulations to handling matters at the registration office or CIDCO, he is more than capable of helping you achieve your ends. You can get in touch with him on 9987452642

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