I want to purchase a property in the joint names of the husband and his wife. The property’s value is above 50 lakhs. The husband insists that the TDS on the sale proceeds of the property be deducted in his name and his name be mentioned in form 26QB. But the net sale amount chequesshould be issued in his wife’s name. Is it justified that tax is deducted in the husband’s name while a cheque for sale proceeds is issued in his wife’s name?
As per the provisions of Section 194IA, every buyer of land or building must deduct tax at the source of 1% of the amount payable to the resident seller, where the aggregate value of the property exceeds fifty lakhs. Regarding property held in joint names, it has to be deducted from the payments being made to the respective joint owners in the ratio in which each joint owner has contributed towards the cost of the property, provided the joint owners furnish such details to the prospective buyer/s. If no such details are furnished, the buyer is justified in presuming that the property is equally owned by the respective joint owners, deducting tax and making payments accordingly.
Can TDS on property sale be deducted in the husband’s name while payment is made to the wife?
The name in which payment is to be made has to be the same as the name on form no. 26QB is filed with the income tax department. In your case, since the tax has to be deducted from the payments to be made to the seller, it is not logical and possible for you to accept the suggestion made by the seller to deduct the tax in his name and issue the cheque for payment of the house in his wife’s name. I cannot understand the reason behind the strange request made by the husband.
To fully comply with the law’s requirement, you should issue the cheque in the name in which the tax is to be deducted.
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Balwant Jain is a tax and investments expert and can be reached at jainbalwant@gmail.com and @jainbalwant on his X handle.
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