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ARTICLE AD BOX
A ruling by the Mumbai seat of the Income Tax Appellate Tribunal (ITAT) has underscored the value of knowing taxation deduction astatine root (TDS) obligations erstwhile purchasing property.The lawsuit progressive a Mumbai resident, who had jointly purchased a residential level successful the tony country of Haji Ali, worthy Rs 1.9 crore with her husband. She held a 15% stock successful the spot (Rs. 28.50 lakh) and deducted TDS of Rs 28,500 nether Section 194-IA connected her stock of the acquisition price.However, the taxation section aboriginal raised a request exceeding Rs 5.8 lakh, alleging abbreviated deduction of taxation connected the crushed that the seller's PAN was inoperative and truthful higher TDS provisions nether Section 206AA should person applied.The ITAT deleted the demand, noting that the seller had subsequently linked Aadhaar with PAN and regularised the PAN wrong the timeline prescribed by a circular issued by the Central Board of Direct Taxes (CBDT) successful July 2025. The ITAT besides observed that the seller had disclosed the superior gains successful his taxation instrumentality and paid the applicable taxes, making it inappropriate to dainty the purchaser arsenic an ‘assessee successful default’.Tax experts authorities that non-linking of PAN with Aadhar is conscionable 1 lawsuit wherever buyers person to carnivore the brunt of taxation demands for abbreviated deduction of TDS.
They caution that spot buyers indispensable beryllium alert of their TDS obligations, which go much analyzable successful cases the seller is simply a non-resident oregon a spot held successful associated names is being purchased.Ketan Vajani, chartered accountant, said buyers indispensable workout caution erstwhile purchasing spot from residents arsenic good arsenic non-residents. In the lawsuit of nonmigratory sellers, TDS nether Section 194-IA is mostly deducted astatine 1% and determination is nary proviso for little deduction.
He pointed retired that buyers should guarantee TDS is computed connected the higher of the transaction worth oregon stamp work value. The purchaser indispensable guarantee that the deduction is made connected the full magnitude including each charges specified arsenic parking fees, nine rank etc and not simply connected the worth of the property, helium added.For purchases from non-resident sellers, the compliance load is importantly higher. According to Vajani, buyers volition request to compute the seller's taxable superior gains and deduct taxation nether Section 195 astatine applicable rates alternatively than the modular 1% complaint applicable to nonmigratory sellers.Ameet Patel, chartered accountant, said TDS provisions connected spot transactions often drawback mean buyers unaware. “While the taxation section views TDS arsenic a instrumentality for tracking transactions and ensuring taxation compliance by sellers, the compliance load connected homebuyers tin beryllium onerous”.Patel added that disputes tin go much analyzable successful transactions wherever the spot is held jointly. For example, the hubby whitethorn person funded the spot entirely, but has added his wife’s sanction to supply her a information cushion. When specified a spot is sold, it tin beryllium challenging for the purchaser to find the close allocation of the merchantability terms and the TDS components.Tax experts constituent retired that galore buyers are unaware of their TDS obligations and often necessitate nonrecreational assistance to navigate procedures specified arsenic obtaining a TAN, filing forms, depositing taxation and obtaining TDS certificates.
