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Buying a property? Now you have to pay TDS on parking expenses, preservation charges

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Buying a property? Now you have to pay TDS on parking expenses, preservation charges

by Nick Massey
July 14, 2019
in Buying A Property
0

A customer is required to deduct TDS on the fee of one percent on the amount of consideration paid for the transfer of positive immovable belongings aside from agricultural land (where the consideration worried is more than Rs 50 lakh).
From September 1, 2019, onwards, consideration of immovable belongings shall consist of all prices of the character of membership price, vehicle parking rate, energy and water facility costs, preservation fee, enhance price or every other cost of similar nature, which are incidental to the switch of the immovable property.

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Budget 2019 has proposed that automobile parking prices, membership charges, protection expenses, and water costs be clubbed with the price of the property while figuring out the quantity of tax that the homebuyer is anticipated to pay at the time of belongings buy.

This is what the Budget memorandum says:

“Section 194-IA of the Act relates to payment on a switch of sure immovable property apart from agricultural land and presents for levy of TDS at the rate of one percent on the quantity of consideration paid or credited for the switch of such belongings. The period‘ consideration for immovable assets’ is currently not defined for this phase. It is stated that in the transaction concerning the acquisition of immovable assets, there are other forms of bills made except the sales consideration and the customer is contractually bound to make such payments to the builder/supplier, either beneath the equal settlement or below a unique settlement.

Some of such bills are those for rights to amenities like a club fee, automobile parking charge, strength, and water facility expenses, renovation rate, strengthen fee, and so forth. Accordingly, it’s far proposed to amend the Explanation to stated segment and provide that the term “consideration for immovable belongings” shall include all costs of the character of membership fee, vehicle parking fee, power and water facility prices, protection rate, advance charge or any other charges of comparable nature, which are incidental to switch off the immovable belongings.”

What this indicates

This pertains to belongings transactions wherein the fee is Rs 50 lakh or extra. This amendment will take effect from September 1, 2019.

A buyer is needed to deduct TDS at the fee of one percent on the amount of attention paid for the switch of positive immovable property other than agricultural land (in which the consideration worried is greater than Rs 50 lakh).

The term ‘attention for immovable property’ became no longer defined earlier than the period in-between finances.

However, from September 1, 2019, onwards, consideration of immovable belongings shall include all prices of the character of membership membership price, automobile parking charge, energy and water facility expenses, protection fee, strengthen fee or any other fees of similar nature, which might be incidental to the transfer of the immovable assets.

To cite an instance, if the overall feel of belonging is Rs 1 crore, the amount could be paid in five identical installments of Rs 20 lakh every. The call for a letter issued by the builder for Rs 20 lakh incorporates categories together with BSP, EDC, IDC, parking price, and many others. While the BSP is marked at Rs 18 lakh, Rs 2 lakh is for different costs.

The confusion earlier turned into whether TDS was to be deducted on Rs 18 lakh or Rs 20 lakh that still consists of miscellaneous costs. Now with the explanation introduced, it’s been clarified in Budget 2019 that TDS is to be deducted on Rs 20 lakh.

“The rationalization could, without a doubt, help glade the anomaly and eliminate divergent practices that had been being followed. Homebuyers can now absolutely deduct TDS at the value within the demand letter consisting of prices inclusive of club charge, automobile parking fee, preservation fee, etc.,” says Harpreet Singh, Partner in KPMG.

 

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