Tax implications on sale of property through GPA
6 months ago
Mr. A owned a plot and he gave GPA to Mr B in June 2022 and got it registered it. Mr. B sold it to Mr. C and did the registered conveyance deed in Aug 2023 and got the title of ownership transferred from A to C.
- Mr. C paid only 75 lakh to Mr. B (in his bank account) while the collector rate was Rs. 1.57 crore, though Mr. C paid right stamp duty on collector rate.
- Mr. B transferred the whole consideration (75 lakh) to Mr. A's bank account
Question -
- For whom should C deduct TDS - A or C?
- Who will be taxed for registering deed below circle rate?
A.Dear Client,
1) In India, the buyer (Mr. C) is generally responsible for deducting TDS at the time of making the payment to the seller (Mr. B) in a property transaction. In this case, since Mr. C paid the consideration of 75 lakhs to Mr. B, he is responsible for deducting TDS as per the provisions of the Income Tax Act. Mr. C should deduct TDS on the entire consideration amount at the applicable TDS rate and deposit it with the government.
2) If the property is registered at a value lower than the circle rate, it may attract the attention of the tax authorities. They may consider this as income in the hands of the seller (Mr. B) and tax it accordingly. The onus for payment of any additional tax or penalties due to undervaluation typically falls on the seller (Mr. B) unless there are specific provisions under state laws that specify otherwise.
1) In India, the buyer (Mr. C) is generally responsible for deducting TDS at the time of making the payment to the seller (Mr. B) in a property transaction. In this case, since Mr. C paid the consideration of 75 lakhs to Mr. B, he is responsible for deducting TDS as per the provisions of the Income Tax Act. Mr. C should deduct TDS on the entire consideration amount at the applicable TDS rate and deposit it with the government.
2) If the property is registered at a value lower than the circle rate, it may attract the attention of the tax authorities. They may consider this as income in the hands of the seller (Mr. B) and tax it accordingly. The onus for payment of any additional tax or penalties due to undervaluation typically falls on the seller (Mr. B) unless there are specific provisions under state laws that specify otherwise.
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