• Form 26QB joint ownership property

I am an NRI and I am buying a property in India which is worth more than 50Lac. I intend to register this as a joint property under mine and my Mother's name in India. Dut to personal reasons, I don't want to register this as a single ownership property under my name. The full payment for the property has been made by me to the buyer directly from my NRE account in India. I need to now make the TDS payment. Questions as below: 
1. when I do the registration of the property, can I still do a joint registration even if my mother has not filled in form 26QB. As the physical legal registration of the property and filing of TDS are separate, Is there a verification of who has made the TDS payment and under whose name is the property registered? 
2. Should I be putting 1 buyer or 2 buyers when I am filling in the form 26QB when I make the payment
3. Though my mother has not made any payment towards this property, should I still file a Form 26QB under her name - If yes, should I do a nominal payment of Rs. 100 or something so that I don't put a Zero value payment
Asked 10 days ago in Property Tax

Hi

 

1. The property can be registered in joint ownership with your mother. You will be the deemed owner of the property under section 27 since you have contributed entire funds.

 

2. 1 buyer.

 

3. No 26QB for your mother.

Lakshita Bhandari
CA, Mumbai
5275 Answers
364 Consultations

5.0 on 5.0

There is a difference between registered owner and beneficial owner. Income tax considers beneficial ownership.

 

1. Yes you can add your mother as co-owner in the property irrespective of filing of Form 26QB. 

 

2. Two Buyer

 

3. Not required

 

Take assistance of experienced CA for filing of Form 26QB. In case of an error in Form 26QB, it takes long time for correction.

 

Rent and capital gain from the property will be taxable in your hands.

 

For detailed discussion, please take phone consultation.

Vivek Kumar Arora
CA, Delhi
3839 Answers
250 Consultations

5.0 on 5.0

- Fact is that there will be two registered buyers. Putting two buyer will not attract any liability in the hands of your mother. It only asks no.of buyers and sellers which does not mean that you need to file additional Form 26QB. Also when you will pay entire TDS there will be no non-compliance.

 

Alternatively you can transfer 50% of consideration to your mother saving account and she will pay from her account. It will be treated as gift and in such manner you and your mother will become equal co-owner in the property.

Vivek Kumar Arora
CA, Delhi
3839 Answers
250 Consultations

5.0 on 5.0

Legally person making the payment has to deduct TDS so if you are making 100% payment you can deduct TDS.

If you are also showing mothers name she also needs to deduct TDS.

It's always advisable to invest and make payment and deduct TDS in both name.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement. You can even book phone consultation for further personal assistance.

Thank you.

Naman Maloo
CA, Jaipur
3703 Answers
40 Consultations

5.0 on 5.0

The buyer of an immovable property shall deduct tax u/s 194IA of the Income Tax Act if the value of property is Rs 50 Lakhs or more. This provision was introduced with an aim to bring the seller of an immovable property under the tax purview. Hence, literal interpretation of the section implies the following:

1) The section applies to every person, buying the property. 

2) The obligation to deduct tax arises only if the property value is Rs 50 Lakhs or more. 

3) The buyer is responsible to make the payment. 

Thus in the case of joint owners, whose share is less than Rs 50 Lakhs each, the tax deduction can be avoided if the literal interpretation is taken. This is how an Income Tax Appellate Tribunal took the value. However, as a buyer you are tax neutral. Hence, there is no need to take literal interpretation and invite unnecessary litigation.  Further, in your case, the payment is made by you on behalf of your mother and should you really take the trouble of transferring money to your mother and then make payment to the vendor just to avoid the obligation to deduct tax? 

Now my views on your queries:

1) Form 26QB requires a disclosure whether the buyer is single or joint . Hence, 26QB has to be filed by all the joint owners and deduct tax in proportion to their share. 

2) You need to disclose 2 buyers and file separate 26QB for both the buyers. 

3) I suggest you put a value in proportion to the share of your mother. Remember, once you register the property in the name of your mother, your siblings may have stake in the inheritance of the property.  So its a financial planning decision, considering your family situation and not just a tax planning decision. 

4) You can register the property in your mother's name and put a clause in the sale deed itself that the property cannot be disposed off without your consent. 

Please do take professional help of an advocate and tax consultant while drafting of the sale deed. 

You may also refer to an interesting discussion on this issue at the following link: http://www.in.kpmg.com/taxflashnews/KPMG-Flash-News-Vinod-Soni-and-others.pdf 

You may also refer to another interesting article at https://www.nitinbhatia.in/real-estate/how-to-deduct-tds-on-property-sale-us-194ia/

 

B Vijaya Kumar
CA, Hyderabad
913 Answers
79 Consultations

5.0 on 5.0

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