To have a clear understanding of the tax deduction norms, the central government has recently proposed to add extra charges during property purchase while calculating Tax Deduction at Source (TDS). This will be calculated at the time of making the payment of the property. The new rule will be implemented from the month of September.
The announcement has been made after a recent meeting of the Government officials. As per the revised norms, these extra charges include club membership fees, electricity and water supply fee, maintenance fee, parking fee, and any advance fee.
At present, these charges are not incorporated in the calculation of TDS during property payment. But from coming September, all the above charges will be included during the payment.
The current law also states that presently the buyers who are paying money during a property purchase is just the surcharge on the tax-deductible amount.
As per Finance Bill of 2013, TDS of 1 % is applicable on sale of all the immovable property wherein the sale consideration of the property exceeds or is equal to Rs 50 Lakhs.
So, if you have to purchase a home before September 2019, the additional charges will not be included in the 50 lakh limit. But, after September, the limit of Rs 50 lakh would include all these extra charges such as parking fee, society fee and club membership fee paid by the buyer.
According to the Income Tax Act, payment of TDS is an important responsibility of both homebuyers as well as sellers. Failure to do so will lead to rigorous imprisonment and penalty up to seven years to the property buyers.