I am a software professional filing ITR1. On 03-06-2017, I sold agricultural land which was gifted to me by my mother on 07-09-2009 for ₹28.4 lakh. I purchased a residential house near my work place for ₹39 lakh on 02-08-2017. I am presuming that there are no capital gains on agricultural land sale. Please clarify.
Ravindranath Tagore
I assume that the land as referred by you fulfils the criteria to qualify as agricultural land as mentioned under the provisions of the Income-tax Act. As such, agricultural land is not considered as a capital asset as per the provisions of the Act, any gain arising from the sale of such land is not subject to capital gain tax. Please note that the agricultural land for the purpose of the Act means land which satisfies the conditions stated below:
- Not situated within the jurisdiction of a municipality (being Municipal Corporation, notified area committee, town area committee, town committee or known by any other name) or cantonment board and having population of 10,000 or more (according to the last preceding census).
- Not situated in any area within the specified aerial distance of local limits from any municipality or cantonment board having specified population (according to the last preceding census).
My daughter is purchasing a flat at Chennai (outright purchase) for ₹73 lakh. Does she have to deduct TDS before paying the seller? What is the procedure for remitting this tax to the Central government. Is GST applicable on this transaction?
PNG Pillai
For the purpose of my response, I presume that the seller of the property is resident as per provisions of the Income-tax Act. As per the Act, any person responsible for making payment to any resident for purchase of any immovable property shall, at the time of making such payment, deduct tax at the rate of 1 per cent, if the consideration for purchase of immovable property is ₹50 lakh or more.
Accordingly, your daughter is required to deduct tax at 1 per cent of the purchase consideration while making the payment. The TDS amount needs to be deposited in Form 26QB (challan-cum-return form), which is required to be filled by the buyer of the property.
The form has to be filled online at the link: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and the payment has to be made using e-payment methods like internet bank or debit card or credit card.
The application of GST would depend whether your daughter is buying a ready- to-move-in apartment or an under-construction property.
I understand that your daughter is buying the apartment in an outright purchase transaction, thus I can presume that this purchase transaction is of ready-to-move apartment, thus no GST is applicable on the same. In case of an under-construction property, the developer would be required to pay GST on sale of under-construction units.
The writer is a practising Chartered Accountant. Send your queries to taxtalk@thehindu.co.in