New Tax Rule Closes Loophole on Property Sales: How it Affects You
India's real estate market just got a bit more transparent for tax authorities, but this increased scrutiny can change the dynamics of property transactions.
TdsProperty SalesReal Estate MarketTax CollectionEvasionReal Estate NewsAug 02, 2024
For example, a ₹60 lakh property could be sold to a couple with each paying ₹30 lakh, or a couple could sell a property showing each received ₹30 lakh, effectively splitting the total transaction value. This scheme is about to end, as provisions of Budget 2024 will plug this loophole by considering the total sale consideration, not just individual payments.
As per the new rules, where there is more than one transferor or transferee in respect of an immovable property, then such consideration shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for the transfer of such immovable property. This means that the combined payments of all buyers will determine the TDS liability.
The move is expected to bolster tax collection and deter evasion in the real estate sector. However, there are nuances. NRIs and agricultural properties are exempt from the 1% TDS rule. Residents selling agricultural land are not subject to TDS. The 1% TDS is calculated on either the property sale value or the stamp duty value, whichever is higher.
PAN-Aadhar linkage is also important, as the IT department demands a 20% TDS if the seller's PAN is not linked to their Aadhar. Failure to pay TDS on property sales within 30 days from the end of the month in which the transaction occurred can result in a penalty of ₹200 per day until paid.
Additionally, the income tax department may impose the TDS amount as a penalty.
Frequently Asked Questions
What is the new tax rule on property sales?
The new tax rule requires the buyer to deduct 1% as tax deducted at source (TDS) on property sales exceeding ₹50 lakh, considering the total sale consideration, not just individual payments.
Who is exempt from the 1% TDS rule?
NRIs and residents selling agricultural land are exempt from the 1% TDS rule.
How is the 1% TDS calculated?
The 1% TDS is calculated on either the property sale value or the stamp duty value, whichever is higher.
What is the penalty for non-compliance?
Failure to pay TDS on property sales within 30 days from the end of the month in which the transaction occurred can result in a penalty of ₹200 per day until paid.
Why is PAN-Aadhar linkage important?
PAN-Aadhar linkage is important, as the IT department demands a 20% TDS if the seller's PAN is not linked to their Aadhar.
Related News Articles
Sustainable Future of Commercial Real Estate: Green Buildings on the Rise
Ashish Sharma, AVP Operations, Brahma Group, shares his insights on the growing trend of green commercial real estate in India.
Credai and IIMA Launch Exclusive Leadership Programme for Real Estate Developers
The Confederation of Real Estate Developers' Associations of India (Credai) has partnered with the Indian Institute of Management Ahmedabad (IIMA) to launch the Real Estate Development Leadership (RED-L) programme, designed to enhance leadership and indus
Ministry of Mines Launches Roadshow for Offshore Mineral Block Auction in Kochi
The Ministry of Mines is set to organise a significant roadshow on 11th January 2025 in Kochi, Kerala, to showcase India’s first e-auction of offshore mineral blocks. This event aims to unlock new opportunities in the mining, cement, and infrastructure se
Why Wealthy Indians Prefer Investing in Dubai Property Over Delhi NCR
Wealthy Indians are increasingly turning to Dubai for property investments, thanks to the city's tax-free environment, higher rental yields, and a range of other benefits that are hard to match in India.
Ultra-luxury Home Sales Surge 483%, Affordable Segment Declines: Knight Frank
The ultra-luxury real estate market in India has seen a remarkable surge of 483%, while the affordable segment has experienced a decline, according to a report by Knight Frank. This trend highlights the growing demand for high-end properties, especially in major cities like Mumbai.
Marathwada Grappling with Severe Water Crisis; Divisional Commissioner Mandates Priority Tanker Supply
Marathwada, a region in Maharashtra, is currently facing a severe water crisis, leading the divisional commissioner to order priority water tanker supply to the most affected areas. This article delves into the ongoing crisis, the measures being taken, and the challenges faced by the local population.