Budget 2021 Expectations: Currently, the limit of Rs 50 lakh is general irrespective of locations and type of property. However, the property market of metro cities are completely different from nonmetro cities.
Budget 2021 expectations: The main purpose of bringing the requirement of 1 per cent TDS was to capture all major property transactions.
India Budget 2021: One per cent TDS on purchase of immovable property under Section 194IA of the Income Tax Act 1961 should be removed, the Federation Of Indian Chambers of Commerce and Industry (FICCI) has said in its pre-budget recommendations to the Government.
Under Section 194IA, a buyer has to deduct tax at the rate of 1 percent of the sale consideration on transactions worth Rs 50 lakhs or more.
“It is recommended that since the Govt. can obtain the data from various other sources like AIR, Stamp duty authorities, etc, there is no need to put the burden of compliances on consumers for 1% TDS,” FICCI said.
Alternative recommendations
Alternatively, the commerce and industry body suggested that the 1% TDS may be exempted for B2C (Business to Consumer) transaction. Or, the limit on the value of transaction could be increased to Rs 1 crore in case of metro cities.
Or, FICCI said, “In the cases of B2C transactions, the exemption for TDS deduction is provided on the condition that (i) the Seller deposits 1% of the collections on a monthly basis; and (ii) it furnishes a statement containing all the details of Form 26QB on a monthly basis.”
Why 1% TDS should go
Explaining the rationale behind the recommendation to remove 1% TDS, FICCI noted that the main purpose of bringing the requirement of 1 per cent TDS was to capture all major property transactions. However, now the same information is available to Government from various other sources like stamp duty authorities, Annual information Returns (AIR), Property registrar’s office.
“…hence there seems to be justifiable case for removal of this same compliance burden,” the Budget recommendations said.
Also, currently, the limit of Rs 50 lakh is general irrespective of locations and type of property. However, the property market of metro cities are completely different from nonmetro cities. Hence, there should be higher threshold limits for the metro cities, FICCI said.
Budget 2021 expectations: The main purpose of bringing the requirement of 1 per cent TDS was to capture all major property transactions.
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