FM (Finance minister) Mr. Pranab Mukherjee on recently announced withdrawal of proposed 1% TDS (Tax
Deduction at Source) on transfer of immovable property.
The real estate industry said the move would be helpful, as
TDS on property transactions would have discouraged buyers due to price
escalation.
Earlier, the Finance Bill had proposed that every
transferee of immovable property (other than agricultural land) at the time of
making payment for transfer of the property, shall deduct tax at 1% of the
transaction value. The application of TDS was to be effective from October 1,
2012.
Initiating the debate on finance bill for 2012-13 in
Lok Sabha, finance minister Mr. Pranab Mukherjee said, “I have received a
number of representations pointing out the additional compliance burden this
measure would impose. I, therefore, propose to withdraw this provision for levy
of TDS on transfer of immovable property.”
The earlier move had been aimed at tightening screws
on black money in the Indian real estate market. Tax was to be deducted at
source on transfer of immovable property if the sale value exceeded Rs. 50 lakh
in urban areas and Rs. 20 lakh in other areas.
Various industry bodies like CREDAI (Confederation of Real Estate Developers' Associations of India) and CII (Confederation of Indian Industry)
had been lobbying with centre to do away with this TDS as according to them
this move would have led to increase in property prices.
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