I recently purchased a property in Bangalore where a Mother and 3 children( all are majors) are sellers. As per the request from all the 3 children, an entire sale consideration amount was paid in favour of the mother in form of DD from bank and later the mother has paid the respective children share as part of their family settlement. And also the TDS of 1% was paid in the favour of the mother. The same has been mentioned in sale deed that all the 3 children have expressed their consent over payment of entire sale consideration in favour of the mother and they have no objection over the same. Q1. Will there be any issues for me from the income tax dept. over such transaction.? because there are 4 sellers but entire sale consideration amount and TDS was paid in favour of one person with the consent of other 3 sellers. If so what could be the complications.? Q2. The transaction from mother to all 3 children have already been made immediately after the registration and how can the children show this transaction for income tax?
1. Obtain a copy of release deed from the three sons in favour of the mother. Assuming it is a case of inheritance and the property was in the name of her husband.
2. Ideally TDS should be deducted in the hands of all 4 persons if there was no release deed before sale of inherited property. There is no problem if entire TDS was deducted in the hands of mother.
Hello Sir,
Below are the replies to your query:
1. As per the provisions of Income Tax Act, at the time of purchase of property, buyer has to deduct the TDS when the he pays to the seller. So, as per the law you have to deduct the TDS for all 4 sellers.
But as you have already deducted and deposited the same in the name of 1 seller then now in that case, you can revise the return to comply with the requirements of law.
*In case you would not prefer to revise the return in that case, interest and penalty can be provided by the Assessing Officer.
2. Children will show the transaction as income from capital gain. And the payment in regard to the same has been received in their mother's account.
Hope you have got answers to all you queries.
Thanks and Regards
Divya Chugh
Thank you for the answer sir. The release deed has not been made hence all the 4 sellers (mother and 3 children) have become the absolute owner of the property. This point was discussed with the lawyer and got a go ahead. Legally it is fine. My concern is, the entire sale consideration amount and TDS is paid only in favour of one seller i.e. mother with the consent of other sellers i.e. children. We also got NOC from other seller regarding the same. Will I have any issues from income tax .? Should I pay any penalty? Please let me know sir
Dear Sir,
Hope you are doing well !!
There will be no issue from Income Tax.
No, there is no need to pay any penalty.
Hello Sir,
Here are my replies to your questions:
1. There is no issue in transferring the entire sale consideration in the account of a single seller.
2. But, the TDS has to be credited to the account of all the sellers individually as per the provisions of the Income Tax Act. Hence, it is advisable that the you should get your TDS returns revised accordingly otherwise this may trouble you anytime in future in form of interest/penalties.
Thanks!
No issues. Mother will pass on the TDS and Income to other three sons in the ITR.
Hello,
There won't be any issue/penalty.
The mother can transfer the due TDS to the children.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Hi
1. That would be fine. TDS is applicable on payment basis and since you have made entire payment to the mother, deduction of TDS only in mother's name would not create any issue.
2. All four sellers shall individually show their share of capital gains in their respective ITRs. TDS amount shall be claimed fully by the mother.
There's no need to worry. You have discharged your TDS liability hence no issues.
Yes, there is no need to worry as you have already discharged your liability.
Hello Sir,
As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits.
In your case, the entire sale consideration amount was paid in favour of the mother in form of DD from bank and later the mother has paid the respective children share as part of their family settlement.
And also the TDS of 1% was paid in the favour of the mother.
There is no need to worry as Mother will transfer the TDS credit to respective owners.
-There will be no issue from income tax perspective.
-There will be no penalty on the same.
Thank you Sir.
Since there was PAN of all 4 seller is available with you, you should deduct TDS on all seller, because all seller need to show it as their income even though it is being received by single person.
However you won't get into any trouble because you have deducted 1% TDS on entire consideration.
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Thank you
