Buying
property is no cakewalk as it involves huge money transactions. In our country,
we need to pay a number of taxes along with the amount paid to the seller which
include taxes paid to the government authority of your city. Besides the common
taxes like property tax and service tax, there are many other taxations which
we don’t know much about. We at Imperia Structures Ltd believe in a transparent system
and so here’s an insight into the taxes which you as buyers have to pay:
Registration costs: This is the final documentation stage
between the buyer and the seller and involves a registration of documents with
the registering officer or land Cadastre. This stage names the buyer as the
owner and provides protection against fraud. According to the section 17 of
Indian Registration Act, 1908, this registration of documents is compulsory.
The registration fees vary in each state.
Stamp Duty: This is the tax payable on legal instrument/document specified by edict or
liability in full and on time under the Stamp Act of the state where the
property is situated. Without this, the property purchase does not get a legal
status. It is usually paid before or on registration and any delay in payment
attains penalty. The rate varies with each state and each property.
Service Tax: Service tax is charged by the Central
Government and is only applicable to under-construction property. If you are
purchasing a property which is ready to move in, service tax is no more
payable. A 12.36 percent service tax is charged on 25 percent of the total cost
of the under construction property. Service tax is applicable to all states as
it is charged by the Central Government.
Value Added Tax (VAT): VAT is an indirect tax which is liable to be
paid only on under construction property. It is payable at the time of
registration and is applicable only in a few states. When a property is bought
from another person, transfer duty is payable while when a property is bought
from a builder, VAT is payable.
Tax Deduction at Source (TDS): This provision is similar to “pay as you
earn”. It is mentioned in a new section 194 (A) which has been included in the Income Tax Act, 1961 by the
Finance Act, 2013. Under this act, it has been stated that anyone buying a
property is responsible to pay the seller by way of consideration for transfer
of an immovable property, excluding agricultural land, shall at the time of
credit of such sum to the account of the transferor or at the time of payment
of such sum in cash or by issue of cheque or draft or any other mode, whichever
is earlier, required to deduct an amount equal to 1 percent of such sum as
income-tax thereon specially when the value of the immovable property surpasses
or equivalent to Rs 50 Lakh. The TDS must be submitted in the name of seller of
the property.
