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Introduction: Homebuyers across India are grappling with income tax notices, particularly related to Tax Deducted at Source (TDS) shortfalls. As per income tax rules, homebuyers are required to deduct 1 percent TDS on property transactions exceeding Rs 50 lakh. The absence of a PAN or an inoperative PAN elevates the TDS rate to 20 percent.

Key Points:

TDS Rules for Homebuyers:

Homebuyers mandated to deduct 1 percent TDS on property sale consideration exceeding Rs 50 lakh.

TDS rate escalates to 20 percent in the absence of a PAN or if the PAN is deemed inoperative.

Notice Surge and Social Media Complaints:

Many taxpayers, especially homebuyers, inundated with TDS shortfall notices from the income tax department.

Social media platforms witness a surge in complaints as homebuyers express concerns and seek resolution.

Penalties and Interest Charges:

Homebuyers served notices are asked to remit a shortfall, approximately 20 percent of the property value.

Penal interest accompanies the remittance, adding financial strain to affected homebuyers.

Buyers’ Timing Concerns:

Homebuyers raise concerns about notices issued after deducting 1 percent TDS and completing the payment to the seller.

Claiming unawareness of TDS rules and PAN status, buyers argue against being held responsible.

Responsibility of Homebuyers:

Homebuyers deemed responsible for verifying the seller’s PAN and withholding tax accordingly.

Non-compliance with TDS rules can result in penalties, interest charges, and correction in TDS returns.

Appealing to Income Tax Tribunal:

Homebuyers receiving income tax notices for TDS discrepancies can appeal to the income tax tribunal.

Proving lack of awareness about the requirement to deduct TDS at a higher rate may serve as a valid defense.

Verification of Seller’s PAN:

Homebuyers advised to verify the seller’s PAN online by entering specific details.

The verification process aims to ensure the active status of the PAN and match details provided by the seller.

Buyer’s Burden of Verification:

Legal interpretation considers whether the buyer could reasonably verify PAN details at the time of payment.

Buyers may be pardoned if they can prove the seller did not share the correct PAN or if the online verification process fails to flag an invalid PAN.

Conclusion: The complex landscape of TDS regulations on property transactions has left homebuyers navigating unforeseen challenges. As notices loom, the onus is on both buyers and sellers to ensure compliance with tax rules, highlighting the need for greater awareness and transparency in real estate transactions.

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