• Jun
  • 12
  • 2013

TDS on Purchase of Immovable Property (Section 194IA)

1. Section has been inserted w.e.f. 01.06.2013.

2. Deductor & Deductee: Any person (being a transferee) responsible for paying (other than person referred to in section 194LA) to a Resident transferor any sum by way of consideration for transfer of any immovable property (other agricultural land in rural area in India), is liable to deduct the TDS under this section.

3. Time of deduction: At the time of payment or credit to the transferor in the books of transferee, whichever is earlier.

4. Rate of TDS:-

a. In case of PAN of Deductee is available-1%

b. In case of NO PAN of Deductee is available-20%

5. Limit: No TDS is to be deducted when consideration is less than Rs 50, 00,000.

6. Provision of TAN not applicable.

7. Immovable property means any land or building or part of building. Such may be situated in India or may be situated out of India.

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PLEASE READ FOLLOWING VIEWS/OPINION ALSO:-

1. Under the registry of property purchased, we have to mention the consideration paid along with required TDS deducted.

2. In case property is financed by the any financial institution or banks :

a. 100% financed by the bank: Although it is not practically possible that any bank can finance the property 100% yet purchaser has to give standing instructions to the financing bank or institution for deducting the TDS out of the total consideration paid or to be paid, as the case may be & depositing the same.

b. In case or promoter contribution case i.e. less than 100% finance by the bank:

In such cases, purchase can deduct the TDS out of the total sum to be financed by the himself & can deposited in to bank & Rest portion will be financed by the bank.

3. In case of instalment system of payment is followed , TDS is required to be deducted on all such instalments individually which fall due after 01.06.2013 & whose cumulative amount is more than 50lacs.but only on principal portion ,not on the interest portion or penalty portion (if any).

4. Threshold limit of Rs 50 lacs will be applicable to each & every property separately.

5. Property can be of residential or official purpose.

6. Transferor can be dealer, user of the property or salaried class employee.

7. TDS under section 194IA is to be deposited on CHALLAN cum Statement on Form 26QB.

8. Online Payment of TDS is mandatory. Online payment CHALLAN is available in TIN NSDL Website.

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

(The author, Parthik Dikshit , is a Chartered Accountant. He can be reached at – parthik.dikshit@gmail.com)


13 Responses to “TDS on Purchase of Immovable Property (Section 194IA)”

  1. Ishan Agarwal says:

    Dear Sir,

    Please explain me the following case:

    Mr. A is buying a Property for Rs. 2,00,00,000/- from Mr. B.
    Since the Land is Leasehold it takes time to get Freehold and until the Land is Freehold it is not allowed to Transfer the Property and execute Sale-Deed.
    Now both Mr. A & Mr. B enter into a Registered Agreement to Sell Without Possession and Mr. A pays Rs. 1,00,00,000/- at the time of Registration of the said Agreement.
    The date of Agreement is 02-06-2014.
    Since Freehold procedures take time it may be possible that the Sale Deed may be executed in the next Financial Year.

    My Question is that is it necessary to deduct TDS @ 1% at the time of Execution of Agreement to Sell Without Possession or it will be deducted at the time of Sale Deed and if it is to be deducted when will it be deducted?

  2. Sham Khanna says:

    I wish to book a flat with a developer in Noida for a total consideration of Rs 60 Lac.
    This includes basic cost,Lease Rent charges,parking space,Interest free security and electric sub station charges.
    As per draft agreement I have to make payments as follows
    10% on booking + Service tax
    10% after 1 month + Service tax
    10% after 2 months + Service tax
    Rest as per construction schedule
    Do I have to deduct TDS on every payment

  3. Rashmi says:

    Sir, Can you please tell me if I have already paid Rs. 35Lacs (out of total property value Rs. 65Lacs) before 1st June 2013 and I am going to pay rest Rs. 30 Lacs during July 2103. Will the TDS applicable on pending payment amount i.e. Rs. 30Lacs or on the whole amount i.e Rs. 65Lacs

  4. Mahesh says:

    What is the amount to be deducted for cases where partial payment is already done? In my case, about 60 Lakh is pending out of 1.2 Cr. Is the TDS to be paid on  60  Lakh or 1.2 Cr?

  5. Geetha says:

    Registration will not be done by the registrar without this TDS challan. Hence question of non deposit of tax will not arise

  6. CA Saurav Gupta says:

    @Nirav
    TDS is required to be deposited by 7th of following month i.e. 7th july and 7th sept as per your example.

    However in case deduction is made in month of march then deposit is required to be made by 30 April of following year.

  7. CA Saurav Gupta says:

    @Harendra
    TDS is required to be deducted on whole amount and not only on land cost

  8. CA Saurav Gupta says:

    @satish
    PAN is required to be quoted in Challan cum statement form 26QB, so there would be no difficulty in claiming refund

  9. Satish Boob says:

    dear friend,
    This is a nice provision to control the immovable property transaction. However, it will be definitely troublesome to the deductee to claim the TDS in his return of income, since no PAN is required. It is because, the TDS issue have been proved as a very Tedious to tackle with the income tax department, even if proper PAN is there.

  10. HARENDRA KUMAR says:

    I need one Clarification regarding TDS ON TRANSFER OF IMMOVABLE PROPERTY. The TDS is to be Deducted @ 1% for Total Consideration or Only for Land Cost which should exceed more than 50 lakhs. Kindly Clarify WITH NOTIFICATION OR CIRCULAR .

  11. CA Anand Khandewale says:

    Facility for offline payment has been made available now. ePayment is not mandatory. Refer NSDL website for more details.

  12. Nirav Shah says:

    Within how much days TDS has to be deposited to Govt A/c., I mean if i have paid Rs. 30 Lacs on 01/06/13 and 30 lacs are payable on/by 01/08/13 (supposingly by bank Finance) in such case TDS should be deposited by which date.
    I mean due dates for tds payaments

  13. Nilesh says:

    How does the section apply in case a unit is purchased by more than one owners? Also,what are the remedies available with the developer if the transferee does not withhold tax or does not deposit the same or does not maintain adequate documentation? And as a measure of potential risk mitigation and administrative easiness, can the developer take the entire amount of tax to be withheld upfront from buyer and undertake withholding compliances on the buyer’s behalf?

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