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Ref. No. KLI/22-23/E-BB/492
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Owning a jointly owned property comes with its own set of TDS rules and exemption limits. And each co-owner of the property needs to keep themselves informed about all the deductions and tax rules related to the joint property.
Some of the major key points about taxation rules are as follows
Most people usually purchase immovable properties in joint names that include the name of more than one person for multiple reasons, such as the smooth succession of property funding. However, while purchasing these properties, one should also keep in mind that they must comply with the TDS rules. Let us learn all about it.
To collect tax from the source of income itself, the concept of TDS was introduced. According to this idea, a person (the deductor) who must pay another person (the deductee) a specified payment type must withhold tax at source and remit it to the Central Government.
TDS can be collected from certain payments like house rents, educational and professional fees, commissions, interests etc.
One benefit of TDS payments is that they receive credits which can be claimed against their tax liability once they fill out the annual Income Tax Return (ITR). The primary purpose of taxation is to reduce the chance of tax evasion, but it also comes with some significant benefits for an honest taxpayer. Some people are offered tax exemption limits, and to know about the same, one should always keep up with revised and new TDS rules.
Jointly owned property can be any property held under the name of two or more parties. The two parties can be related in any way. For instance, they can be business partners, blood-related partners, or any other combination that justifies the reason to own a joint property. When a husband and a wife own a property together, the ownership of assets comes under marital status.
The joint-owned property undergoes several legalities such as joint tenancy, community property, or in trust. In joint ownership, both or all the property holders have equal obligations and rights to the property until death. In this case, all the parties related to the property ownership complied follow the TDS rules and are also advised to keep an eye on TDS deduction rules.
The Delhi bench of the income tax department in 2018 passed a rule that said the joint buyers would not be liable to pay TDS under section 194 1A if the individual share is less than ₹50 lakhs.
While passing the order, the tribunal paid attention to the fact that each transferee was considered a separate individual, and the determining factor for applicability of section 194 1A would depend on purchase consideration paid by each party.
Taxation being a crucial concept, needs to be followed with utmost seriousness. Before paying taxes, everyone must focus on all TDS rules and gradual revision.
Below mentioned are a few of the TDS rules focusing on TDS deduction rules, TDS amount and TDS exemption limit:
Considering the importance of the rules and regulations related to TDS when going for jointly owned property, one should constantly check and understand the dynamics of the taxation process before making a decision.
Ref. No. KLI/22-23/E-BB/999
Ref. No. KLI/22-23/E-BB/490
