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Question ID : 41074

tds u/s 195 on sale of long term property

what is the consequence on buyer for non deduction of tds u/s 195 for 1cr? seller being a nri has sold a property of rs 5 cr on a agreement to sell dated 26.04.21 and taken adv of rs 1 cr dated 26 april 21 and applied for lower deduction of tds in form 13 on 30 april 21. now lower ded cert comes of amt 4 cr only instead of 5 cr. now buyer has ded tds on whole 5 cr amt at a lower ded as mentioned in lower ded cert. will buyer be liable to deduct tds at normal rate as per sec 195 on 1 cr or at lower rate itself. if on 1 cr tds at lower rate ded instead of whole rate as mentioned in 195 then what consequences buyer wl bear?

Posted by jyotika on Jun 15, 2021

Filed Under DIRECT TAXES

Answer ID : 81165

Hello, I am of the opinion that the TDS on advance payment of INR 1 cr should have been deducted at normal rates and the lower deduction rate would be applicable only on remaining INR 4 cr amount. In case of non deduction, the buyer will be deemed an assessee in default against whom the department can initiate proceedings to recover due taxes along with interest & penalties for this non compliance. Therefore the best approach would be to pay the requisite taxes and adjust the same from remaining payment. Best regards,

Posted by VIKRAM MAHIPAL on Jun 22, 2021
Answer ID : 81166

Hello, I am of the opinion that the TDS on advance payment of INR 1 cr should have been deducted at normal rates and the lower deduction rate would be applicable only on remaining INR 4 cr amount. In case of non deduction, the buyer will be deemed an assessee in default against whom the department can initiate proceedings to recover due taxes along with interest & penalties for this non compliance. Therefore the best approach would be to pay the requisite taxes and adjust the same from remaining payment. Best regards,

Posted by VIKRAM MAHIPAL on Jun 22, 2021
Answer ID : 81168

Buyer is liable to deduct tax at full rate on one crore. Since the buyer failed to do so , the buyer is liable to pay penalty under section 271C. So the buyer may make good the default at the earliest and reply to the penalty , if initiated by the department, on mercy grounds.

Posted by B.CHACKRAPANI WARRIER on Jun 23, 2021
Answer ID : 81169

Buyer is liable to deduct tax at full rate on one crore. Since the buyer failed to do so , the buyer is liable to pay penalty under section 271C. So the buyer may make good the default at the earliest and reply to the penalty , if initiated by the department, on mercy grounds.

Posted by B.CHACKRAPANI WARRIER on Jun 23, 2021