• Aug
  • 18
  • 2013

TDS on Immovable Property (Other than agriculture land) From A.Y. 2014-15 U/s 194IA

Article ID 58058 | Posted In Income Tax | | 16 Comments » Print Friendly and PDF

Lakesh Kumar

Lakesh KumarIntroduction:This is a new tax, applicable from 1st June, 2013, deducted at source on the sale of any immovable property (other than agriculture land).

However this section applicable only when sale consideration of the immovable property more than 50 Lacs.

This provision introduced by The Finance Mini5ster to improve the reporting of such transactions and prevents the circulation of black money in Real Estate Market.

Rate of TDS: – TDS on transactions of immovable property is to be deducted at 1%. If the seller has not disclosed his PAN No. , then the rate of TDS would be 20%.

Who will liable to deduct & pay tax :- TDS is required to deduct by the purchaser at the time of payment. Such TDS would be deducted from the consideration being paid to seller and have to be paid separately to the Govt. by the purchaser.

TDS deducted by the buyer at the time of making the payment to the seller has to be deposited with in a period of 7 days from the end of the month in which deduction has been made. Form 26QB has been prescribed for making such payment.

TAN No. is not mandatory :- According the provision of Section- 203A , any person deducting TDS shall also apply for a TAN No. U/s 203A. This TAN No. is mandatory required to be quoted at the time of deducting any TDS, at the time of filling return and at the time deposit of TDS with the Govt. Without holding TAN No. any person not able to deducts TDS.

However Section 194IA (3) remove such hardship. Which state that a person deducting TDS on property is not mandatory required to quote TAN No.

 TDS on amount paid in Installment:-  According to Sec-194IA TDS is to be deducted at the time of payment. The date of transfer is not relevant. It is not required to be deducted at the time of transfer but is required to be deducted at the time of payment.

So even if advance payment is being made TDS would be required to be deducted. In case the payment is being made in installments to the seller, then TDS would be deducted at the time of paying each installment.

More than one Buyer or Seller :-  In case where more than one buyer or seller and individual purchase price of each buyer is less than 50 lacs, but the aggregate value of transaction exceed Rs 50 Lacs, then Sec-194 IA would be applicable and TDS on such property required to be deducted and deposit with the Govt. before Due date.

TDS in case when property is Finance through Bank :-   Provision will also apply even when property is financed through a bank loan. Buyer will have to ensure that he himself or bank deducts tax before disbursing the loan to the seller.

Key Notes :-

1) TDS may be required to be deducted even in the case where the capital gains     exempt U/s 54.

2)  In this provision, provision of Sec-203A will not apply.

3)  TDS on Immovable property deducted only if transaction over 50 Lacs.

4) TDS on Agriculture land is exempt. Which is define Us- 2(14) (iii)

5)   The TDS Certificate shall be issued in Form 16B within 15 days from the due date of deposit.

6)  Provision will also apply in case when part of the total payment made before 1st June, 2013.

7)   If any advance payment made to the seller, in this case also TDS will deduct whole amount.

8)  The provision will also apply even in case where buyer bought an Under Construction Property prior to the provision coming into effect but he has to make the balance payment after 1st June, 2013.

( Author is a CA Student and can be reached at E-Mail-: lakeshkr@gmail.com)

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  • Salim Sayed

    I am planning to start a goat farm in Pune district. Please let me know how much will be TDS % in this business. Also please let me know if its depends on my income slab.

    Thanks in advance.

  • Nishant

    Tell me provision regarding Tds on agriculture land

  • Mr Jain

    What are the consequences if purchaser forgets to make deduction and he receives notice from tds circle cause of ARI

  • Niyati Shah

    Lakesh Kumar.

    I have maid e-payment for TDS on property but the thing is i have selected wrong financial year. The amt has already been credited to my three sellers.So now what should i do to rectify the same.Please do the needful.

  • Arvind

    tds will be deducted on rs. 68 lacks not on 10 lacks.

  • Lakesh Kumar

    Thanks to all of you for compliments.

  • Lakesh Kumar

    Due to some reason I was not able to give repose of your queries.I will try it never happen again.

  • Jay Paurana

    Dear Mr. Lakesh Kumar,

    Many Many Thanks for the guidelines given to us…. I wish you all the Best for a Bright future….

  • Manik Seth

    Please guide us as to how to obtain Form 16B (TDS Certificate) from TRACES,we have e-file TDS through 26QB,party is demanding TDS Certificate.

  • ajit bhamre

    I have booked a flat priced Rs. 68 lacs in May 2011 with a properly registered sale agreement in sub registar’s office and have paid Rs.58 lacs till May 2013. Balance amount Rs.10 lacs is now to paid before taking possession. Please clarify my TDS lialility.( 1% on Rs.68 lacs or 10 lacs?)
    —–ajit bhame

  • ACMA Md.Shakil

    Well Mr.Lakesh,

    Keep it up.It is quit helpful as a synopsis.

  • Dr. P.D.SAINI

    nicely explained. Thanks

  • CA. Subhash Chandra Podder,

    Best of luck , keep it up.
    CA. Subhash Chandra Podder, FCA

  • AMI

    Please guide us as to how to obtain Form 16B (TDS Certificate) from TRACES

  • Ram S

    Though people after people write this there is one wording i read some where that it is applicable when it is published in the official gazette. That is why the conjunction period of starting date of implementation transactions it is a widely confusing as the Registrar of Regn. in Tamil Nadu says they have not received any notification. Please clarify.

  • Pawan Gupta

    well explained