The persons responsible to deduct TDS are mainly:
- Principal Officer of a company for TDS purpose including the employer in case of private employment or an employee making payment on behalf of the employer.
- DDO (Drawing & Disbursing Officer), In case of Govt. Office any officer designated as such.
- In the case of “interest on securities” other than payments made by or on behalf of the Central govt. or the State Government, it is the local authority, corporation or company, including the Principal Officer thereof.
Such person is called Deductor while the person from whom the tax is deducted is called Deductee.
Tax must be deducted at the time of payment in cash or cheque or credit to the payee’s account whichever is earlier. Credit to payable account or suspense account is also considered to be credit to payee’s account and TDS must be made at the time of such credit.
Responsibilities of the Deductor:
- A Deductor is required to a obtain TAN in order to deduct taxes.
- He should obtain PAN of the deductee and deduct tax at the correct rate
- The taxes do deducted has to be deposited to the designated banks within specified time limit in the following manner:
- By or on behalf of the Govt.-on the same day.
- By or on behalf of any other person-before 7th of the following month.
However, if the amount is credited in the books on 31st March then the tax should be remitted by 30th April and the TDS return needs to be filed by 15th May.
Dear Sir, We entered into an agreement with a builder to purchase a row house in Nov 2014 for total amount of 1 crore. 20% of down payment made at the time of agreement and subsequently instalments paid till date disbursed by my bank as part of home loan till date to the extent of 90 lakhs. I was not aware of TDS to be deducted at 1% on each payment and in addition no reference of this was mentioned either in the agreement or periodical demand notes from the builder. Recently one of the other property owners brought this up for discussion after which the builder sent a note to all property owners asking them to Pay the TDS and to adjust this in the final instalment. On asking on the penalty applicable the builder’s CA said that it’s not the responsibility of the builder to request in any form to deduct TDS. I disagree to this and wanted to ask you if we have to bear the penalty completely in this case not knowing that TDS had to be deducted right from the first payment. I have seen demand notes from a few builders clearly mentioning buyers to deduct TDS before remitting the instalments. In my case we were completely unaware till recently that such thing had to be done. Please advise if builder is in no way responsible to make buyers aware of any such obligation to deduct TDS and an I completely eligible to bear the huge penalty for back dating the TDS payments
Thanks in advance
Lakshmi
It is a good governance practice by some builders to inform buyers that they are liable to deduct TDS. Builder is in no way responsible for informing the TDS provisions.
You should always consult your CA and lawyer at the time of buying property for the legal and tax issues. Your CA is at fault if he has filed the returns for you and not informed you that TDS needed to be deducted.
These TDS provisions to be deudcted on purchase of flat had been given wide publicity and all assessee’s are expected to know the provisions. I understand it is too harsh for the assessees but that is the law as on date and you will have to bear the penalty.
Department of Income-tax may be concerned towards its demands,whether valid or invalid but definitely not sensitive towards the difficulties it creates for taxpayers
An amount of over 50000 was deducted by builder out of my commission and deposited same in another dealer account with whom we were working as channel partners. Now it is more than one year neither the company issued me tds certificate nor the dealer. My query is is it not the responsibility of the builder who deducted tds out of my payment while making payment on behalf of the dealer to deposit the tds in my account and issue tds thereof. What action can I take against the builder as well as the dealer in this regard. Can anyone advice..