• Jun
  • 24
  • 2013

Note on Section 194-IA – TDS on Purchase of Immovable Property

Posted In Income Tax | | 38 Comments » Print Friendly and PDF

CA Rachana Kanoi

1.  Person responsible for tax deduction :-

Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property (other than agricultural land in rural area) is liable to deduct tax at source u/s 194-IA.

2.  Time of deduction :-

At the time of payment or credit, whichever is earlier.

3.   Rate of TDS :-

TDS to be deducted @ 1% of the sum paid. However, TDS needs to be deducted @ 20%, if the deductee does not furnish PAN.

4.   Threshold Limit :-

No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than Rs. 50,00,000/-.

5.   Other points:-

  • Provisions of TAN as prescribed u/s 203A shall not apply in respect of tax deducted u/s 194-IA.
  • Immovable property means any land, building or part of building. Such property may be situated in India or outside India.
  • TDS provisions of section 194-IA shall apply only if the transferor is resident in India.
  • TDS provisions of section 194-IA shall not apply if a person acquires rural agricultural land in India.

6.   Online Payment of TDS through challan cum statement on Form 26QB through NSDL Website:-

Tax so deducted should be deposited to the Government Account through any of the authorized bank branches using the e-Tax payment option available at NSDL E-payment within a period of seven days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

Steps to Pay Tax Online

  • Log on to NSDL-TIN website (www.tin-nsdl.com) or Alternatively person seeking payment of TDS on sale of Property can also use the following link –  https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp
  • Under TDS on sale of property, click on the option “Online form for furnishing TDS on property”.
  • Select Form for Payment of TDS on purchase of Property- Click on the option “TDS on sale of property’.
  • Select Financial Year from the drop down for which payment is to be done.
  • Select Tax applicable for which payment is to be done.
  • Mention PAN of Transferee/Buyer
  • Mention PAN of Transferor/Seller
  • Re-enter PAN of Transferee/Buyer
  • Re-enter PAN of Transferor/Seller
  • Provide Complete address of Transferee/Buyer
  • Provide Complete address of Transferor/Seller
  • Provide Complete address of Property transferred
  • Mention the date of Agreement/Booking of property
  • Mention the Total value of consideration (Property Value)
  • Mention if the above payment is done in Lump sum or in Installments
  • Please select the amount paid/credited (Enter the amount paid to the Transferor/Seller)
  • Please enter the TDS rate (Tax rate at which the TDS was deducted by the purchaser at the time of purchase of the property)
  • Please enter the TDS amount to be paid (amount deducted by the purchaser at the time of purchase of the property)
  • On proceed, confirmation page is displayed to verify the details entered
  • If all the above detail including the name displayed (as per ITD) is correct then, click on “SUBMIT” button
  • In case you have made a mistake in data entry, click on “EDIT” to correct the same.
  •  On confirmation, nine digit alpha numeric Acknowledgment number would be generated
  • To do the required TDS payment, please click on ‘Submit to the Bank’ button
  • On clicking on Submit to the Bank, deductor will have to login to the net-banking site with the user ID/ password provided by the bank for net-banking purpose.
  • On successful login, enter payment details at the bank site.
  • On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.

7.  Important Points to be Noted:-

a)      Threshold limit of Rs. 50 Lacs will be applicable to each & every property separately.

b)     Property can be either of residential or official purpose.

c)      Purchaser can be a dealer, user of the property or a salaried employee.

d)     TDS certificate must be issued to the deductee in Form 16B within 15 days from the due date of deposit of TDS.

e)      The deductee shall be entitled to avail credit for the entire amount of TDS deducted during the financial year in its Return of Income.

f)       TDS u/s 194-IA shall be deducted even if the transaction takes place before 1st June, 2013 and payment is made after 1st June, 2013.

g)     However, if credit to the account of the transferor has been given before 1st June, 2013 then provisions of section 194-IA will not apply, even if payment has been made after 1st June, 2013. (Payment or credit whichever is earlier)

h)     In case of under construction properties, TDS will be required to be deducted on installments paid on or after 1st June, 2013, if the aggregate purchase consideration is more than Rs. 50 Lacs. Thus, no TDS is required to be deducted in respect of installments paid before 1st June, 2013.

i)       In case any installment becomes due before 1st June, 2013 but paid after 1st June, 2013 and the transferee has not credited the same to the account of the transferor before 1st June, 2013, then provisions of section 194-IA shall apply and TDS will be deducted on the amount paid after 1st June, 2013.

j)        In case of installment system of payment, TDS is required to be deducted on all such installments individually which fall due after 1st June, 2013 but only on principal portion and not on the interest or penalty portion.

k)     In case the property is partly financed by bank then TDS will be required to be deducted by the transferee on the entire amount of consideration.

l)       The threshold limit of Rs. 50 Lacs is with reference to each property. If a property transaction involves more than one buyer and share of each buyer in the property is less than Rs. 50 Lacs but the value of the property in aggregate is more than Rs. 50 lacs then provisions of section 194-IA will be applicable. In such case, TDS will be deducted and deposited by each buyer in respect of their respective share in the property.

m)   Similarly, in case of a property transaction involving more than one seller, TDS will be deducted in respect of amount paid to each seller and their respective PAN will be quoted while making payment through Form 26QB.


38 Responses to “Note on Section 194-IA – TDS on Purchase of Immovable Property”

  1. Balu Ramanathan says:

    Property owned by A who is developing it into 4 flats. A retains 25% undivided share pertaining to one flat for himself in complex and sells 50% uds to buyers of flats during FY 2013-14 and 25% uds for one flat in 2014-15. Capital gains tax is computed for the entire uds being sold (75%) in the AY 2014-15 itself, capital investment in cap gains bond to eccentric permissible made and capital gains tax on balance paid in FY 2013-14 itself. For the uds sold in FY 2014-15 does the purchaser have to effect TDS in form 26QB even if A provides proof of tax paid on the sale in previous AY even though the actual sale and conveyance takes place in current year.

  2. mathan says:

    Dear Sir,

    Two purchases ( 1ST Property Rs. 3500000 and 2nd property Rs. 3000000) on different days but the buyer and seller are same. pl explain the applicability of 194IA.

  3. Vishwas Datar says:

    The Flat is booked in 2010 Nov., the payments were being paid by bank as per part of disbursement of loan and from us as our share. two payments were made by bank directly to Builder after 1-06-13 but TDS was not deducted. After those payments there was no demand from the Builder as the work was stalled. Now as work has progressed the builder has put his demand and informed us the procedure of deducting the TDS. Now
    1) Can I make the payment of TDS on the payment made by bank in 2013
    2) Any penalty is attracted and if yes, at what rate and on which amount. whether amount of TDS is assumed to be payment made to builder or it is fine to the purchaser and not the builder informing us late.

  4. Laxmikanta says:

    Two forms need to be filled if the property is in boths name from buyer end (husband and Wife). Question is seller is also having joint name but seller wants for each form only one name need to be mentioned. I mean the primary seller name. Is it correct.

    Two forms from buyer but seller is one.

  5. Rajendra says:

    1% is applicable on sale value mentioned in the sale deed or it includes Stamp duty and VAT and registration?

  6. Prasad says:

    Can TDS on sale of immovable property be claimed/adjusted by seller in his return form ITR2

  7. Harshad says:

    Hi,

    I had eneterd in the deal to purchase the flat. I deducted the TDS of 1% and paid to the buyer PAN. However due to some reasons the deal was cancelled. How do i now claim the refund of the TDS paid.

  8. Varun says:

    Dear Sir/Madam,
    What is the breakup of “total consideration”? Is ST and IFMS (Interest free maintenance security) included in the ” total consideration “?
    I booked a flat whose cost is 48.80 Lakhs ( with out IFMS and ST ).
    With IFMS and ST cost = 52 Lakhs .
    Will this 1% TDS is applicable in my case ?
    I am confused ..Please help?

  9. V.K.Singh says:

    i want know the following
    1.i am going to purchase a residential flat of Rs.70 lakhs
    2. Original owner is just going to get the possession in this month after paying the total consideration amount of Rs-50 laks and all taxes,service tax(TDS) including.
    3.Now in case of my purchase who will pay the TDS and how much

  10. John S says:

    Sir,

    What is the breakup of “total consideration”? Is VAT and ST included in the ” total consideration “?
    I booked a flat whose cost is 48 Lakhs ( with out VAT and ST ).
    With VAT and ST cost = 52 Lakhs .
    Will this 1% TDS is applicable in my case ?
    I am confused ..Please help

  11. Dilip Ranad says:

    We(husband and wife) have purchased a flat under construction for Rs. 80 Lakhs. Agreement is registered in Dec. 2011. We have paid Rs. 25Lakhs at the time of agreement. Next installment of Rs.4 Lakhs is paid in Dec.2013 without deducting TDS. Another demand letter will be coming soon. My questions are:
    1) Regarding installment paid in Dec. 2013, I have to pay 1% interest and 1.5% penalty, is both are on monthly basis for time lapsed or penalty is one time 1.5%? Also do we have to deduct TDS @ 20% as builder has not provided pan card copy to us till now?

    2) As agreement is joint purchase so we have to fill separate 26QB forms, in this case:

    1) Filling section “ Property details” total consideration has to divide in two and enter value in each form? (40 Lakhs + 40 Lakhs)

    2) Filling section “Amount paid/credited to seller” Is it a installment of which we are deducting TDS or the amount we paid till now? Also is to be divided by two? (2Lakhs + 2 Lakhs)

    3) Filling section “ Tax deposit details” question is same as above every details divide by two?

    4) Can I deposit one cheque for total amount for both of us?

    It is going to be first time paying taxes online for me, please reply in details. Thanking you in advance.

  12. Thanika says:

    Hi…I have bought a house above Rs 50 lacs and paid TDS withiin 15 days and have already issued form 16B to seller…Now while filling income tax returns this amount is appearing in my TDS list in 26as and on calculation on payable tax it shows a net refund of same amount…

    is this how it is supposed to be? Am I supposed to get a refund of this TDS?

  13. RATNESH YADAV says:

    sir plese
    what is rate for chargeinig tds rate for proffessional tax

  14. Ashish says:

    Dear Madam,

    I had booked a property and paid the first installment including 1% TDS amount. However, I subsequently cancelled my booking and received the refund of money from the builder, but my form 26AS reflects 1% amount of instalment as income tax deduction at source under section 1941A. How can I claim the refund of this amount from IT dept as i have cancelled my booking.

    Ashish
    9492004507

  15. ketan kamdar says:

    Dear sir,

    I had bought property worth Rs.63lac. and i paid 13 lac as down payment from the period of Aug 13 To Oct 13. and i paid Rs.50lac through home loan. in this transaction i have not deducted TDS oF Rs.63k because my down payment is only Rs.13lac so seller is said you deduct TDS From final amount. i request bank home loan people to deduct TDS Rs.63k and pay balance amount out of 50lac. But bank said they disbursed full amount only. after that i request seller to returned me 63k so i will pay TDS And provide you form 16B. But till date seller is not returned that amount and i have not paid TDS. I am keep chasing him but he is not paying. please advice me what should i do in this case. what is interest and penalty attract me in this case. and what is procedure to fight with seller in legal terms. please advice.

  16. Indudhar says:

    Thanks for sharing valuable information and explanation in easy and simple ways

  17. kunal kapoor says:

    Purchases of property from resident person being Power of attorney of Non resident. is tds applicable ?Payment made to Power of attorney.If not , kindly provide basis of it.

  18. vivek jain says:

    sir
    i have done agreement to purchases a property in last financial year. i have paid two installement in last financial year. I have to pay another installment in current financial year. pls tell me what financial year i have to put in the tds challan and is there any interest will apply whether i have credited the amount today.

  19. NAVEEN KUMAR GOYAL says:

    DEAR SIR,
    I THINK, THIS PROVISION IS APPLICABLE ON OTHER THAN AGRICULTURE LAND, WHETHER IT MAY BE RURAL OR URBAN.

  20. Ramesh.K. says:

    If the sellers are 8 in number and the 1/8th part of consideration amount is less than Rs.50 lacs TDS of 1% should attract or not. Please let me know

  21. HASMUKH JAIN says:

    MY CLIENT IS BUYING PROPERTY IN HIS say Mr.A & HIS WIFE Say Mrs. A NAME BUT HE IS APPOINTED HIS FATHER IN LAW Say Z AS POWER OF ATTORNEY . IN AGREEMENT IT IS WRITTEN AS MR Z POA of Mr & Mrs. A.
    My query is at the time of dedcuting tds in the coloumn of PAN of Ppayer/buyer whose pan no. to be quoted mr. A, Mrs. A or POA Mr Z?

  22. R.Chandramouliswaran says:

    In a Flat sale purchase transaction by sale of UDS of land (value less then Rs.20 lakhs)and construction for construction cost or Rs. 40 lakhs total agreed value Rs.60 lakhs, Does 1% TDS apply on Rs.20 lakhs or Rs.60 lakhs or Nil? Since on Rs.40 lakhs 194C TDS is applicable it should be excluded from 194 1A. (there is exemption for individuals and HUF from 194C) Now the amount involved is Rs.20 lakhs only, which is less than Rs.50 lakhs. Please explain your ideas.

  23. Alok G says:

    On under construction property, buyer is also required to pay service tax to the builder. Should TDS be deduced on the service tax paid.

  24. y.s.prasad says:

    The entire consideration towards the cost of the land has been paid earlier in 2009 through some agreement and owners acknowledges full payment receipt and on that land construction had taken place and now the construction is getting completed.
    The entire consideration is payable to the flats promoters including the cost of the land and on whose name TDS is to be paid as in the registration papers still land owner is the original land owner only as we have not registered the same but only taken POWER in favour of our partner individually.

    How to remit the TDS by the purchaser whether in favour of original land owner or in our company’s name.
    Y.S.PRASAD

  25. y.s.prasad says:

    We are into flats construction business and we have paid full consideration towards the cost of the land purchased in 2009 itself and obtained a power of Attorney in favour of our partner in his individual capacity. The flats construction is over and are under completion and put on sales and some flats are getting sold. We have to register UDS (undivided share of the land) to the buyer of the flat (UDS registration and construction agreement makes one full flat sales) and cost of the land itself is working out to more than Rs.50 lakhs and alongwith cost of contruction the flat cost comes around Rs 3 crores. If we register the land, the buyer will deduct TDS but as the flats registered under a Power of Attorney (representing the original land owner and our Partner is a power agent of the original land owner though land cost have been accounted fully by both the companies books) the buyer may remit the TDS in favour of the seller as given in the sale deed.
    How can our company can come into the picture as the entire consideration is paid into our company and the original land owner has no stakes now. Please clarify this point please.Thank U
    Y.S.PRASAD, 99400 40567

  26. Murali says:

    Section 194 IA
    pl clarify the meaning of consideration money paid by a purchaser of immovable property,
    1. Is it the amount paid as per agreement made between buyer and seller
    or
    2. value of the property asper stamp duty paid

  27. Bijal says:

    Can you please explain the difference between point F & G with respect to an individual. In case of individuals how is the credit different from actual payment.

  28. Monoj kanungo says:

    Hi pl clarify the meaning of consideration money paid by a purchaser of immovable property, is it the amount paid as per agreement made between buyer and seller or value of the property asper stamp duty paid

    regards,
    monoj

  29. Shilpy says:

    Thanks for the information .but please define the word credit in terms of deduction as asked by ashish

  30. Harihar Krishnan Iyer says:

    Does this TDS deduction provision also apply to purchase of new property from builder or developer.

  31. ashish says:

    How can you define the word CREDIT in terms of deduction date since there is no invoice date and no confirmation date for closing the deal since the deal is totally depend on availability and disbursement of Loan and goes for several months.If the deal is cancelled then what would be the treatment

  32. kamal kochar says:

    THANXXXXXXXXXXXX FOR SHARING USEFULE INFORMATION………..

  33. Prashant Gupta says:

    Dear CA. Rachana Kanoi,
    will you please tell me that what resourses you have used to analysis of applicability of TDS on installment payment.

  34. Ghanshyam Jha says:

    Thanks for sharing above information. But I could not understand about point No. 7 (I) TDS is also applicable where property transaction involves more than one buyer and share of each buyer in the property is less than Rs. 50 Lacs but the value of the property in aggregate is more than Rs. 50 lacs then provisions of section 194-IA will be applicable. I think threshold limit is equal to 50 Lakh or above is consideration for Immovable property, not vlue of Immovable property for each buyer.

  35. B.Chakrapani says:

    Thanks for giving the details and step by step procedure.

  36. prithviraj says:

    Hi , Pls clarify the provisions in the case of a non resident being the purchaser of a property in India.Thanks.

  37. Vinay Joshi says:

    Correction – last sentence read as —

    It is pertinent that these points are not overlooked & may give rise to unwanted AO interpretations.

    Regards,

  38. Vinay Joshi says:

    Ms. Rachana Kanoi, CA,

    1] When will the transferor get  the 1% refund? What about interest lost?

    2] If 1% is short to meet LTCG terms then what? 

    3] 1941A no where states its composite sale/purchase!? It gives rise to single seller – jt buyer, 
    jt seller – single buyer, jt sellers – jt buyers, Who do not exceed individual limits. Then what?

    It is pertinent that these points are overlooked & give rise to unwanted AO interpretations.

    Regards, 

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