No TDS under section 194IA if value excluding GST is less Rs 50 Lakhs !
Section194IA of Income Tax Act 1961
Under section 194IA of Income Tax Act 1961 tax is required to be deducted at 1% of value of immovable property by the buyer if the sale consideration of immovable property exceeds Rs 50 Lakhs.
Section 194IA is not applicable to rural agricultural land.
Further if no PAN is provided than TDS is required to be deducted at the rate of 20%.
Suppose value of property including GST exceeds Rs 50 lakhs than whether TDS under section 194IA of Income Tax Act 1961 will come into play? Whether TDS will arise on GST portion?
Further one more doubt arises is whether the sale consideration should be taken after including GST or before?
Another issue is that whether TDS will be calculated on complete sale value mentioned in agreement or the carpet area and car parking only?
Answer to the above issue is that no tax is required to be deducted on the portion of GST, i.e. sale consideration for deducting TDS under section 194IA should be taken before including GST.
This is as per circular issued by CBDT dated July 19, 2017 Circular No. 23/2017 in which it was clarified that no TDS is required to be deducted on GST. That is GST is outside the purview of TDS.In the circular it is clearly mentioned that TDS is required to be deducted on the amount paid or payable without including GST.
If the value excluding GST is less than Rs 50 lakhs than no TDS will arise on the value of property under section194IA of Income Tax Act 1961.
Further TDS will be calculated on complete sale value mentioned in agreement and not just on the carpet area and car parking.
Thus it is concluded from circular issued by CBDT that in all other sections in which tax is required to be deducted as per income tax, no tax will be deducted on the portion of GST.