What is the solution for not deducting 1% TDS?- Property Hotline

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Expert: Pannkaj Ghadiali, Managing Partner at PC Ghadiali And Co LLP.

Question: I bought a resale property but did not deduct 1% TDS. The IT dept. has sent me a reminder for it. However, my seller has already shown this amount in his income and has paid tax on it. What can I do?

Answer: As per Section 194 (1)A, you are required to deduct 1% tax at source from the consideration payable to the seller. Since you have not done so, you have got the notice. Now that your seller has already paid tax on it, the Income Tax department cannot recover the amount once again. For this you will have to provide evidence that the seller has:

1)Filed his return of income for the said year

2)Included the capital gains in the return.

3)Paid the tax in terms of Provision to Section 201.

This could be done by way of a certificate from a Chartered Accountant who is satisfied that the tax has actually been paid or no tax is payable because of reinvestment in another property.