Homebuyers, facing TDS nightmares from July 2023 to January 2024, unite in a Delhi High Court plea, seeking relief from unexpected tax shortfall notices.
Numerous homebuyers across India, those who purchased properties between July 1, 2023, and January 10, 2024, are facing a daunting Tax Deducted at Source (TDS) nightmare. The issue has prompted a diverse group of 60 homebuyers to file a writ petition in the Delhi High Court, seeking relief from the unexpected and substantial TDS shortfall notices sent by the Income Tax Department.
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Vishal Verma, a 38-year-old IT professional from Bengaluru who purchased land for Rs 2 crore on July 31, 2023, Stated that,
“Being a salaried employee, by no imagination I will be able to arrange this much money to pay TDS. It’s been 7 months since I got the notice, and I am yet to have the courage to tell this bad news to my family members, I don’t want them to go into the depression that I am already dealing with.”
Similar to Verma’s situation, a considerable number of homebuyers nationwide are encountering difficulties arising from TDS shortfall notices issued between July 1, 2023, and January 10, 2024. Moneycontrol had previously brought attention to this issue in January, underscoring the disturbing trend of homebuyers unexpectedly receiving tax notices related to TDS shortfalls.
A TDS short notice is issued when the individual responsible for deducting TDS applies a lower rate than stipulated in the income tax regulations. In the case of property purchases, TDS should be levied at a rate of 1 percent of the property value if it exceeds Rs 50 lakh. However, in the absence of a PAN or if the PAN is inoperative, the TDS rate increases significantly to 20 percent.
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On February 8, a writ petition was filed by a group of 60 homebuyers from various parts of India. Their primary objective is to seek relief from the higher TDS rates imposed by the Income-Tax department through the TDS shortfall notices. The Delhi High Court is set to hear the case and determine the validity of their claims.
The main problem causing these TDS shortfall notices is linked to sellers whose PANs were inactive as they weren’t connected to Aadhaar. Homebuyers, including Samuel Joseph David from Tiruchirappalli, shared their frustration, saying,
“Our happiness didn’t last long. Two weeks after our registration, I received a demand notice for Rs 11 Lakh plus 1.5 percent interest per month.”
The total TDS shortfall notice for the mentioned homebuyers exceeds Rs 10 crore. With the majority of purchases occurring between July 1, 2023, and January 10, 2024, the scale and urgency of the issue are significant.
The deadline to link Aadhaar with PAN ended on June 30, 2023. However, the Income Tax portal did not update its rules until January 10, 2024, leading to confusion for homebuyers unaware of sellers’ inactive PANs.
Despite filing complaints with the I-T Department and CPGRAMS, homebuyers received generic responses without concrete solutions. The template cited CBDT Notification No. 15/2023 but failed to address the specific concerns raised by affected homebuyers.
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After multiple complaints, an internal memorandum from the TPL section to The Under Secretary (ITA)-I, CBDT, dated January 1, 2024, recognized the issue. On January 10, 2024, the tax department updated the TDS portal, issuing a warning about higher TDS rates for inoperative seller PANs. The portal now enables buyers to input the correct TDS rate.
Despite the portal update, homebuyers grappling with TDS short notices continue to face uncertainty, as the department has yet to clarify or acknowledge any errors. The recently filed writ petition in the Delhi High Court aims to confront these persistent challenges and offer crucial relief to affected homebuyers.
