Key Provisions of Finance Bill (No.2), 2019 w.r.t Real Estate Transactions

Tax relief for affordable housing - Section 80EEA

Individual buyers (not owning any other property at the time of sanction of loan) can claim deduction for interest on home loan up to INR 150,000 provided that loan is sanctioned by financial institution during the period 1 April 2019 to 31 March 2020 and stamp duty value of the property does not exceed INR 45 Lakhs.

TDS on purchase of immovable property – Section 194-IA

Presently, buyer is required to deduct tax at source at 1 percent on the amount of consideration paid on purchase of immovable property. The term ‘consideration for immovable property’ is currently not defined. Therefore, it is proposed to include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee, or other charges of similar nature, which are incidental to the transfer of immovable property within the ambit of consideration for immovable property. This amendment shall come into effect from 1 September 2019.

Compliance of TDS by Individuals/ HUF not covered u/s. 194C or 194J - Section 194M

At present, an individual or HUF not subject to tax audit are not liable to comply with TDS provisions under section 194C or 194J. In order to fix this loophole, new section proposes to provide for levy of TDS on sum paid account of contractual work or professional fees at the rate of 5 percent where such payment exceeds INR 50 Lakhs in a year. For ease of compliance, individuals or HUFs shall be able to deposit the tax deducted using their PAN. It may be noted that proposed amendment will also be applicable where payment is made for personal purposes. This amendment shall come into effect from 1 September 2019.

TDS on withdrawal of cash - Section 194N

This section casts responsibility on Banking company, Cooperative society, Post office to deduct TDS at the rate of 2 percent upon payment of any sum or aggregate of sums in cash in excess of INR 1 crore. However, Bill does not clarify if such limit of 1 crore applies to each bank or bank accounts or aggregate of payments from all banks. Also, it has to be clarified that though cash withdrawals are not income, credit of TDS will be allowed.

Source: ICAI Journal