In a joint venture development of land and property where the builder gives a major portion of owner’s share in the form super built up flat area (i.e. in the form of flats) and a small portion as payment by bank cheque (as per joint venture agreement entered between the builder and the owner of the property). In such a scenario, what is the TDS deductible by the builder for the payment portion in this case. Understand that U/S 26QB a TDS in this case is 1% for the payment portion. Is there a separate section for TDS in the case of joint venture agreement. Please clarify.

P.S. Kalyanaraman

TDS on account of transfer of immovable property is provided under Section 194-IA of the Income Tax Act, 1961. It is to be noted that all transfers of immovable properties (other than agricultural land) including those as a consequence of joint venture/development agreement is covered by this section if the value of the immovable property exceeds ₹50 lakh. The prevailing rate of TDS is 1% of the value of transfer of immovable property.

As an income-tax assessee every year I invest ₹1.5 lakh in ELSS scheme under Sec 80C. In the financial years 2023-24 and 2024-25 invested in lump sum ₹1.5 lakh each. However, in June this year, my tax advisor switched over to new tax regime to my advantage. Now, the new tax regime has rendered ELSS investments for both the years redundant. Please advice income tax and capital gains implications if the said ELSS funds is withdrawn prematurely before lock in period.

ELSS schemes come with a mandatory lock-in period of 3 years from the date of investment as a result of which premature withdrawal cannot be done. It is to be noted that upon redemption post the lock-in period, tax at the rate of 12.5% on the long term capital gains (LTCG) will be applicable on the positive difference of redemption value and the cost of acquisition. Further, tax on LTCG is exempt up to an amount of ₹1.25 lakh of LTCG in the case of listed equity and equity-oriented funds.

As per the new amendment in I-T Act, LTCG on sale of a residential property is either 12.5% (without indexation) or 20% (with indexation benefit) for properties purchased before July 23, 2024.

However, please clarify whether the earlier provision in the I-T Act 1961 (Sec 54) is also applicable now that —“if you are selling a residential property in possession for more than 2 years, LTCG arising thereon shall be exempt from Tax, if the entire long term capital amount is in invested in another residential property within three years, etc.”

Anantharaman

It is to be noted that there are no amendments carried out in the Union Budget (No 2) of Section 54. Thus the exemption under Section 54 continues to be available even now.

Related Topics