TDS on Purchase of Property From Builder

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TDS on Purchase of Property From Builder

In order to check the rampant use of black money in immovable property transactions, the government of India has introduced a law, wherein, the purchaser of a property has to deduct tax at source, while paying the seller for his property.

Properties that are covered

Section 194I A of Income Tax Act, requires a buyer to deduct tax at the rate of 1% of the sale consideration, if the value of the transaction is Rs 50 lakhs or more. This section covers residential property, commercial property, as well as land. However, transactions pertaining to the purchase of agricultural land, are not covered under this provision.

When to deduct the TDS and how to pay it

The purchaser of the property has to deduct the TDS, either at the time of executing the conveyance deed, or at the time of payment of advance in case any advance is being paid before the execution of the conveyance deed. The buyer has to deposit the TDS amount to the credit of the central government, within 30 days from end of  the next month in which the tax is so deducted. For payment of the TDS and furnishing other particulars, you have to fill in Form-cum-challan No 26QB. If a property has more than one buyer and/or seller, you need to fill in separate Form 26QB for each set of buyer and seller. The details of all buyers and sellers, have to be submitted in each Form 26QB.

See also: 

Details required for payment of the TDS

It is the buyer who has to comply with the requirement of deducting TDS and paying the amount to the central government. Detailed instructions for filling up the form and payment of tax can be found at the following link: http://www.incometaxindia.gov.in/Pages/tds-sale-of-immovable-property.aspx

Generally, every person who is responsible for deducting TDS has to obtain a TAN (tax deduction account number). However, in case of TDS on immovable property, the buyer does not have to obtain the TAN. You need to provide details like name, address, PAN, mobile number and email id of the seller as well as buyer, in Form 26QB. You also need to provide the complete address of the property, along with the date of agreement, total value of consideration, date of payment, etc.

The buyer should ensure that the PAN of the seller is correct. Otherwise, the seller will not be able to get the credit for tax deducted by the buyer, as the credit shall flow on the basis of PAN card details furnished in Form 26QB.

The TDS can be paid online or deposited offline, by tendering the physical challan to an authorised bank. The bank will then update the details on the income tax department’s website. Once the TDS has been deposited, the buyer has to download the TDS certificate in Form No 16B, from the website of the Income Tax Department and furnish it to the seller within 15 days.

Lower deduction or nil deduction of TDS

Some TDS provisions provide for the payee to either approach the income tax officer for issue of a certificate, so that the payer shall deduct tax at a lower rate or nil rate, or in some cases the payee can just furnish a declaration for nil TDS. However, there is no such provision for TDS on immovable property. The buyer has to mandatorily deduct tax at source, where the consideration exceeds Rs 50 lakhs, in respect of each set of buyer and seller.

Examining A Muslim Woman’s Right To Property

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muslim-women

Article 14 of the Indian Constitution mandates equality among all its citizens. With the interesting interplay of socio-legal forces, Hindus, Muslims and Christians in India are governed by their respective personal laws – which includes property rights as well. As Muslims in the country do not have codified property rights, broadly speaking, there are governed by either of the two schools under the Muslim law – the Hanafi and the Shia. In India, a large number of Muslims are Hanafis or Sunnis. While the Hanafi school recognises only those relatives as heirs whose relation to the deceased is through a male. This includes son’s daughter, son’s son and father’s mother. The Shia school, on the other hand, favours no such discrimination. This means that heirs, who are related to the deceased through a female are also accepted.

A few general rules of inheritance for women are:

The daughter

Under the Muslim law, the laws of inheritance are rather strict. In keeping with its ideology that a woman is half the worth of a man, a son takes double the share of a daughter. But the daughter is the absolute owner of whatever property she inherits. If there is no brother, she gets half a share. It is legally hers to manage, control, and to dispose off according to her wishes.

She is eligible to receive gifts from even from those she would inherit from. This is contradictory because she can inherit only one-third of the man’s share but can get gifts without any hassle.

Till a daughter is not married, she enjoys the right to stay in her parents’ house and seek maintenance. In case of a divorce, charge for maintenance reverts to her parental family after the iddat period (approximately three months) is over. But, if her children are in a position to support her, the responsibility falls on them.

The wife

In the famous Shah Bano case, the Supreme Court had held that in case of a divorce, it is the responsibility of the husband to make reasonable and fair provision to maintain his former wife even after separation under Section 3 (1Ha) of the Muslim Women (Protection of Rights on Divorce) Act, 1986. This period extends beyond iddat as the woman retains control over her goods and properties.

In the event of the death of her husband, a widow gets the one-eighth share (when there are children) but will get one-fourth share (if there are no children). If there is more than one wife, the share may diminish to one-sixteenth.

The mother

A Muslim mother is entitled to inheritance from her children, if they are independent. She is eligible to inherit one-sixth of her dead child’s property if her son is a father as well. In the absence of grandchildren, she would get the one-third share.

What more?

There are other provisions, too, in the law which ensure financial security of a Muslim woman.

 The maher (entitlement)

This is the total money or property that a wife is entitled to get from her husband at the time of marriage. There are two types of maher: prompt and deferred. In the former case, the amount is given to the wife immediately after marriage; in the later, the amount is given to the wife when her marriage has ended, either upon the death of her husband or by divorce.

The wasiyat (will)

A Muslim cannot give away more than one third of his/her total property through a will. In circumstances where there are no heirs in the estate as prescribed by law, the wife may inherit a greater amount by will.

The hiba (gift)

Under the Muslim law, any type of property may be given as a gift. For a gift to be valid, a declaration of the wish to make the gift must be made which should be accepted by the receiver.

Punjab abolishes 2% Stamp Duty Tax

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CHANDIGARH: With a view to boost the real estate sector, the Punjab Cabinet decided to abolish the stamp duty of two per cent levied on immovable property while awarding the power of attorney.

A decision to this effect was taken by the Cabinet in a meeting held under the chairmanship of chief minister Parkash Singh Badal here.

Speaking on the matter, a spokesperson of the chief minister’s Office said the decision would be a major relief for people aspiring to buy their own houses.

The stamp duty would now be a nominal Rs 1000 on the General Power of Attorney and Rs 500 on Special Power of Attorney, irrespective of the market value.

In another major decision, Cabinet decided in principle to offer the proprietary rights under concessional terms and conditions to the small and marginal agricultural farmers cultivating up to five acres of provincial government agricultural land.

These tillers who have been cultivating government land for at least 20 years would be entitled to allotment at significant discount from the collector rates.

The Cabinet also gave nod for appointing Senior Vice President in the various boards and corporations from among the non-official members.

Following this decision, the Cabinet approved the creation of post of Senior Vice Chairman in Punjab State Board of Technical Education and Industrial Training and Punjab Khadi & Village Industries Board.

It was also decided in the meeting to constitute a Cabinet sub committee comprising Food and Civil Supplies Minister and Finance Minister to negotiate with banks for a lower rate of interest on previous loan accounts.

The Cabinet also approved the proposal mooted by the local government department to make suitable amendment in the Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976 for the disposal of Municipal properties under possession of occupiers for a period of twenty years or more.

In the meeting, the Cabinet also decided to make amendments in the rates of property tax of hotels in the urban areas from the year 2015-16 by including this type in the category of commercial property.

Benefits of Registering Property in Wife’s Name

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Benefits of Registering Property in Wifes Name

There are several benefits to buying a property in a woman’s name, either as the sole owner or as a joint owner, with governments and banks offering several sops.

“Aspiring home buyers can seek certain benefits including tax exemptions, if a home is bought in a woman’s name. Such offers can also attract more women buyers to the realty sector,” points out Ashok Mohanani, CMD, Ekta World. Encouraging women to register assets in their name, also boosts women’s empowerment, he adds.

Tax benefits

Experts explain that some of the obvious tax benefits of buying a home in the wife’s name, include an extra deduction of interest up to Rs 1.5 lakh every financial year, if the house is self-occupied. If a husband and wife are the joint owners of a property and if the wife has a separate source of income, then they can both claim tax deductions individually. The tax benefit will depend on the ownership share of each co-owner.

Discount on stamp duty charges

Several state governments in north India are now offering a partial waiver on stamp duty, for buyers registering properties in a woman’s name – either as a sole owner or as a joint owner.

“You can save 1%-2% on stamp duty, if the property is in a lady’s name. In Delhi and Haryana, the stamp duty rate is 4% for women, compared to 6% for men. Moreover, if you are undergoing some financial setback and have some debts to repay, the property held in your wife’s name, does not come under the cover for your loss,” points out Sushil Raheja, CEO of Raheja Homes Builders & Developers.

 

Stamp duty charges for Women Vs Men

State/UT For Women For Men
Delhi 4% 6%
Haryana 3% to 6% up to 7%
Rajasthan 4%* 5%

* As 1% rebate over normal rate

Discount on home loan interest rates

Many banks like SBI, ICICI and HDFC Bank, offer discounted rates on home loans for women borrowers. The prevailing interest rates for women borrowers are as mentioned below:

Interest rate for woman borrower Vs others

Bank Interest for Women borrower Interest Rate for others
SBI 9.35% 9.40%
ICICI 9.40% 9.45%
HDFC Bank 9.40% 9.45%-10.45%

Note: For amount < Rs 1 Cr

Things to keep in mind when buying a home in the wife’s name

Experts maintain that it is a good idea to buy a home in the name of one’s wife or in co-ownership. However, the wife can enjoy the tax benefit, only if she has a separate and genuine source of income. Moreover, if there is any legal dispute on the property, then both, the husband and wife, will be involved in the case. Therefore, home buyers should evaluate all possibilities, before making a final decision.

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