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According to the Central Board of Direct Taxes (CBDT), the new set-up of ‘Tax Deducted at Source’ (TDS),this was implemented on 1st June of 2013 on immovable property that levies the purchaser of an immovable property (other than agricultural land) of cost Rs.50 lakhs or more with a with holding tax at the rate of 1 per cent. As certain misunderstandings rose while paying the TDS, the Central Board of Direct Taxes examined the TDS once again and simplified that TDS need not to be paid, if service tax is shown separately.
To explain in detail about the new judgment in TDS, while buying an immovable property, after negotiating with the seller, if the buyer pays the service tax amount separately and is not included with other costs charged on a resident like the professional services or technical services, then TDS is not necessary to be paid on the service tax part.
For an instance, if a buyer buys an immovable property from a real estate developer or builder that costs around Rs.60 lakhs, then the buyer has pay TDS of 1% on the purchased amount, in case if the buyer gets a separate acknowledgement from the seller for service tax on the property and that costs around 2 lakhs, then the buyer has to pay TDS for only 58 lakhs and not on the total purchased amount.
The imperative point or terms that a buyer should keep in mind is that in order to get exception of TDS for the service tax on immovable property, the buyer should keep a separate document for the service tax on property and should not be included in the total cost of the property, but should ensure that it is mentioned the agreement or contract between the buyer and seller.
To explain in detail about the new judgment in TDS, while buying an immovable property, after negotiating with the seller, if the buyer pays the service tax amount separately and is not included with other costs charged on a resident like the professional services or technical services, then TDS is not necessary to be paid on the service tax part.
For an instance, if a buyer buys an immovable property from a real estate developer or builder that costs around Rs.60 lakhs, then the buyer has pay TDS of 1% on the purchased amount, in case if the buyer gets a separate acknowledgement from the seller for service tax on the property and that costs around 2 lakhs, then the buyer has to pay TDS for only 58 lakhs and not on the total purchased amount.
The imperative point or terms that a buyer should keep in mind is that in order to get exception of TDS for the service tax on immovable property, the buyer should keep a separate document for the service tax on property and should not be included in the total cost of the property, but should ensure that it is mentioned the agreement or contract between the buyer and seller.
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