Buying New House in piecemeal Payments?

I am writing this Article after coming across a common misconception among property buyers of complying with TDS obligation on the Final and last installment payment to the Builder on delivery of the Property. Even though the House is purchased under a Loan and the Bank does disburse the payments to the Builder, the onus of complying with TDS u/s 194IA of the Income Tax Act remains with the ultimate buyer of the property.

The above applicability comes in place if the higher of the Total sale price or stamp duty value of the Property is equal to or more than Rs. 50 Lakh. If you're covered under the above criteria, then remember to deduct TDS of 1% from the payment amount each time you make it to the builder irrespective of the payment mode. After deduction never forget to deposit the same through Form 26QB within 30 days of the following month of such deduction.

Non-compliance as per the above timeline attracts an interest of 1%/1.5% of the TDS amount as the per case per month up to a maximum amount under default with an additional liability towards penalty under section 234E of Rs. 200 per day till the 26QB Form is submitted. On the contrary, there are multiple reports available to the department to identify the default even the TDS compliance done on the Final Payment to the builder. The same will become dearer and make the compliances very complicated.

Your Advisor, CA J K Parida