Proposed TDS on Immovable Property Transfers
The government has put forth a proposal for a 1% Tax Deducted at Source (TDS) on the transfer of immovable property if the sale value surpasses ₹50 lakh in urban centers and ₹20 lakh in other regions. This new regulation, excluding agricultural land, encompasses immovable properties.
Finance Minister's Statement
During his Budget speech, Finance Minister Pranab Mukherjee stated that this measure, proposed in the Budget, is intended to "deter the generation and use of unaccounted money."
Implementation Timeline and Registration Process
The TDS application will come into effect starting October 1 of this year. The government has stipulated that property transfers will not be registered unless the buyer provides evidence of TDS deduction and payment.
Current TDS Regulations
Currently, the transferee is obligated to deduct tax at source on the transfer of immovable property by a non-resident. However, there is no such mandate for property transfers by a resident, except in a limited number of circumstances.
CREDAI's Reaction
In response to the proposal, the leading real estate organization, CREDAI, expressed concerns that this measure could lead to an escalation in property prices.
“It looks like that the proposal of TDS would apply on transactions in the secondary market and not on sale of builder’s flat,”
Confederation of Real Estate Developers’ Association of India (CREDAI) Chairman Pradeep Jain remarked.
Objective of the New Proposal
The new proposal seeks to collect tax as early as possible and establish a system for tracking transactions within the real estate sector. It will implement the provision if the transaction value exceeds ₹50 lakh for properties located in "specified urban agglomeration" and ₹20 lakh for properties situated in any other area.