Sir, I am planning to purchase an old house at the cost of Rs. seventy lakh. Is it necessary to deduct 1% income tax from above amount and deposit to government in the name of seller ? Also whether I will have to show the purchase of house in my tax return along with the source of fund? Can my wife contribute some amount to purchase above house without any tax burden?
Ans: 1. Yes it is necessary to deduct 1% TDS and deposit to the credit of govt. The prof of tax remittance, ( ie. challan) is required to be mentioned in the sale-deed and copy of the chalan has to be the part of the sale-deed.
2. Purchase of house is NOT a profit & loss items, but this is capital account transaction and a balance-sheet items. In income-tax return, "Income" is required to be calculated as per the provisions of Income-tax Act, 1961 and house property purchased will not figure in the "income" portion. But, Income - Tax Department captures the information about buy-sale of properties and other high value transactions , through TIN ie Tax Information Network and if any information is required, generally the honorable department sends an email to the tax payers , which has to be submitted to the TIN website. The Income, which you may have earned in the particular year which was used to buy the property will form part of the concern head tax return ie. Salary, Business profession, Income from house property ( if you got the funds by way of sell of another house property) & purchase of old house property would be the part of your balance-sheet, under the head, "Fixed Asset"
yes, your wife can contribute some amount to you, without any tax burden by way of gift to spouse. Any amount received from the spouse as gift is non-taxable , since received from the person mentioned in the list of "relatives" under the provisions of Income-tax act, 1961 and spouse falls under this definition.
