Sale by joint owners

I bought a property jointly with my son. My son is nri and I am resident Indian. There is a bank loan on this property in the name of my son. I could not qualify for loan being senior and housewife. The initial payment, taxes and instalment is all paid by me. 
How much tds should be deducted on whose name. To add we shall be selling at the same price we bought or at loss if we add stamp duty , vat and other charges. Will there be any capital gain on this.
Kindly advise.
Jyoti Wij
Asked 12 days ago in Capital Gains Tax from Mumbai, Maharashtra
Hi,
From June 1st 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than Rs 50lakhs, he has to deduct TDS when he pays the seller. This has been laid out in Section 194-IA of the Income Tax Act.

The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.
No TDS is deducted if sale consideration is less than Rs 50lakhs. If installments are being paid TDS has to be deducted on each installment.
Tax is to be paid on the entire sale amount. For example, if you have bought a house at Rs 55lakh, you have to pay tax on Rs 55lakh and not on Rs 5lakh (i.e. Rs 55lakh – Rs 50lakh). This is applicable even when there is more than 1 buyer or seller.
If you are the buyer, you do not need to obtain a TAN (Tax Deduction Account Number) number.
If you are the seller, you have to provide your PAN or else TDS is deducted at 20%. PAN of the buyer is also mandatory. TDS is deducted at the time of payment or at the time of giving credit to the seller, whichever is earlier.
This TDS has to be deposited along with Form 26QB within 30 days from the end of the month in which TDS was deducted.
After depositing TDS to the government, the buyer is required to furnish the TDS certificate to the seller.

However in the case of NRI the tax deductuble is 20%. So the buyer will deduct 1% on your share of sale proceeds and 20% from your sons share of sale proceeds.
Nikhil Khanna
CA, Mumbai
122 Answers
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To answer your second question, there will be no tds relief for you or for your son in this case. 

Also there is no capital gains tax in your case as the sale price is equal to or below the purchase price. So the tds deducted under your name can be claimed as a refund by you assuming you do not have any other source of income.

Hope this clarifies your query. You can also call me for any further clarifications.
Nikhil Khanna
CA, Mumbai
122 Answers
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Dear Madam,

In your case property is in the joint name of you and you son. TDS liabilty will be on the person who will purchase and make payment to you in case consideration for transfer of property is Rs.50 lacs or more @ 1% on the total consideration. TDS will be deducted in your name only as your son is NRI and section is applicable to resident transferor only. Capital gain or loss on property will depend upon the sale amount, purchase amount ,date of acquisition. You can add all charges i.e. VAT,stamp duty, interest paid on loan and other charges in the cost of acquisition of the property. 

Further, if there is a loss at the time of sale of property and assuming there is no other income of yours as you are housewife, entire TDS deducted by purchaser will be refunded. If there is any profit, tax liability  depends upon the amount of gain. In sale of property tax rate is flat @ 20% if there is long term capital gain otherwise at slab rate. Still you would get exemption of Rs. 3 lacs from the amount of capital gain and the balance will be taxable.

In case of your son as he is NRI, amount of capital gain would be taxable depending upon the percentage of ownership. If there is no percentage mentioned in the registry documents it will be deemed as 50% each.

Thanks
CA Vivek Arora
7060029944
Vivek Kumar Arora
CA, Delhi
157 Answers
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Hi Jyoti

TDS has to be deducted in accordance with the shares in property.

Since there is no capital gain tax liability, you can approach your Assessing Officer and get a No deduction certificate. This will avoid block of funds. Otherwise you will have to claim refund of TDS deducted at the time of return filing.
Lakshita Bhandari
CA, Mumbai
894 Answers
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Buyer shall deduct the TDS in the name of both the owners. In your share the TDS @1% shall be deducted but in the case of son since he is an NRI the tds shall be deducted at the higher rate i.e. 20.6%
If you sell the property at a lesser rate than the purchase rate in that case there shall be no capital gains and the tds deducted can be claimed as refund by filing ITR. 
Bharat Poplani
CA, ZIRAKPUR
18 Answers
Not rated
  Talk to Bharat Poplani
Hi,

Firstly, TDS will be deducted by the buyer only if the sale consideration is more than 50 lacs.

Secondly, since majority of the amount is paid by your son for buying this property, TDS can be deducted in his name. 

It's advisable to take no TDS deduction certificate from the assessing officer.

Please feel free to call/ revert in case you need more clarity.


Abhishek Dugar
CA, Mumbai
2349 Answers
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Hello,

If the property was bought by you 24 months prior to the date of sale, then it shall be a Long term capital gain and on the basis of the information provided by you, it appears that you are not making any profits out of this transaction.

In such a case, you can very well apply for a lower deduction certificate in the name of your son. Tax @ 1% shall be deducted in your name though.

Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
Keerthiga Padmanabhan
CA, Greater Mumbai
764 Answers
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In case of purchase only, the purchaser have to deduct TDS @1% in case the value of Purachse consideration for him/her exceeds 50Lacs.

In your case also, it’s the purchaser who has to deduct and deposit the TDS against your PAN.

Further, if you are selling the same at loss, thenyou can simply carry forward the same and adjust it to your future Gains.
This will not affect the TDS provisions if property value exceeds 50L.

Thanks
CA Sourabh Pahuja
Sourabh Pahuja
CA, Delhi
30 Answers
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Further, TDS will be deducted based on the ownership of you and your son.

TDS rate will be 1% for both, provided you both must carry PAN. Otherwise it can be 20%.

Thanks
CA Sourabh Pahuja
Sourabh Pahuja
CA, Delhi
30 Answers
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Hi,

For the purposes of source of payment for the acquisition of property, you will have to justify from whose income the same was paid. Mere payment from someone's bank account does not qualify that person to be the asses able owner under income tax laws. In case the payment was made from the income of your son, TDS and other tax liabilities shall accrue to your son who is an NRI.

However, if you can justify that the payment you are talking about have been made from your own independent source of income, then you will qualify as proportional owner for the purposes of income tax.

In the first case, assuming all the cost has been paid from the income of your son, TDS shall be deducted as per Section 195 (applicable for NRIs @20%). In the second case (means proportional source of income) TDS shall be partly applicable for NRI as well as Resident.

As such, to be able to calculate the exact amount of TDS, Cost of property, source of income utilized shall be required to be known.

In addition to this, if you sell the house (whether at gain or loss), same rules shall apply as to what was the source of money for the payment of cost of the property. However, Stamp Duty and other taxes shall be considered as part of cost of acquisition of the property.

As per the Income Tax Laws, source of income your acquisition of any capital asset is very important. Further, with the amendments in the Benami Property Act, the same has now become much more critical.

I hope the same is clear to you.

Regards,
Sunny Thakral
CA, Delhi
106 Answers
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Hi,

For the Sale Consideration pertaining to your share of Property, TDS is applicable at 1% of your share u/s 194IA (Only if the Sale Consideration for whole property is above Rs. 50 Lakhs)

However, for your Son's share, the buyer has to Deduct at 20.6% of his share of sale consideration u/s 195 irrespective of the amount involved. To save TDS, your son can apply for NIL Deduction Certificate u/s 197
Pradeep Bhat
CA, Bengaluru
404 Answers
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Hello,

The purchase will deduct TDS @ 1% for your share of property and 20% on your son's share.

In case you are not making any profits or may be incurring a loss, you may apply for a lower deduction certificate for your Son, in order to save up on TDS.

Rohit R Sharma
CA, Mumbai
1982 Answers
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