Buyers Alert! Pay Hefty Taxes on Homes Over 50 Lakh

Property purchaser required to take a tax deduction and account number with the tax authorities to file a return and need to issue a TDS certificate to the seller, according to rules regarding tax deducted at source. After the deduction on taxes, developers can claim credit for such TDS against its tax liability. But the home buyers have to be careful because the tax burden can fall on their shoulders if cash-strapped developers decline to take any liabilities.

"An individual buyer will be obligated to comply with the withholding tax registration or TAN, tax payment, e-TDS returns, issue of TDS certificate to seller for claiming tax credit unless a simplified mechanism is provided in this direction," said Sunil Jain, partner, J Sagar Associates.

"It looks at the provision of property of 50 lakh or more, assuming it is a transaction that happens at one goes. A large number of transactions are installment based and extend over 3-5 years where installments are disbursed directly by banks," said Rahul Garg, leader, direct tax, PwC India.

The provision means that the home buyer will be solely responsible for the TDS deduction every time the bank pays out installment unless the bank takes over the responsibility.

Moreover, developers believe that the deduction on TDS will be a burden on home buyers and so they have moved the issue to the finance minister.