In the budget proposed for the current fiscal year 2012-13, the government has proposed one percent TDS (Tax deduction at source) on the sale of immovable property.
According to the new provision, sale of all the immovable properties other than agricultural lands attract 1% TDS, if the sale value exceeds Rs. 50 lakh in urban centres and Rs 20 lakh in other areas. Finance Minister, while proposing this, explained that the provision was taken to deter the generation and use of unaccounted money in realty market.
This application of TDS would come into effect from 1 October 2012 and it was also mentioned that the transfer of property would not be registered unless the buyer furnishes proof of deduction and payment of TDS.
However, this provision would not be applicable when the sale value is below Rs 50 lakh, for a property situated in specified urban agglomeration and Rs 20 lakh if property is situated in any other area.
Reacting to this proposal, Chairman of CREDAI said that the provision might lead to increase in the property prices and he also added saying that the TDS would most likely apply on transactions in the secondary market and not on sale of builder’s flat.
Source: The Times of India