Clarification on TDS on Sale of Immovable Property
I bought an Under Construction property from a builder in April,2012 under Construction Linked payment plan.Since then we are paying instalments through Home Loan disbursed through Bank.Since June,2013 new law became applicable for deducting 1% tds on every instalment being paid to the builder if property cost is more than 50 lakhs.We paid the instalment of August 2013 due to the builder after deducting 1 % tds.In Jan,2014, a new notification was communicated by our builder vide Circular No. 01/2014 under Chapter XVII-B of Income Tax Act, 1961 clarified and decided that where in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, the tax shall be deducted at source under the provision of the act on the amount paid/payable without including such service tax component.
Hence it is advised to all the concerned customers not to deduct TDS on service tax component shown separately in Demand Letters.
Therefore, if your Agreement value (excluding Service Tax) is less than Rs.50 Lacs you need not deduct any TDS henceforth.
But if your Agreement Value (excluding Service Tax) is equal to or more than Rs.50 Lacs then you need to deduct TDS but excluding Service Tax component.
Our property value was Rs.49,50,000/- without Service Tax, so TDS law was not applicable in our case.Therefore, since then our Bank is disbursing the Instalments as per the demands by the builder as per agreement without deducting any TDS.Now our Builder has raised final demand and had also increased the super area of the flat.Therefore now the total cost of Flat has increased from Rs.49,50,000/- previuosly as per agreement to Rs.51,00,000/- excluding Service Tax but has also included various other charges like Interest Free Maintenance Security,Gas Pipeline, Dual meter Charges, Substation Charges,Club membership subscription etc.Now do we have to deduct 1% TDS on this final demand.If yes then on what component.