Section 194IC TDS on Payment Made Under Specified Agreement

1) Who is responsible to deduct tax under section 194IC of Income Tax Act, 1961?

Any person responsible for paying to a resident any sum by way of consideration under the specified agreement under section 45(5A) i.e. under the Joint Development Agreement, shall deduct tax at source.

2) What is meant by the Joint Development Agreement?

Joint Development Agreement is an agreement between two people i.e. the owner of the land or building and another person who is given the permission to build a real estate project and in return, he or she must give a share to the owner or the payment in cash must be done.

3) Rate of TDS under Section 194IC

Given below is the rate of tax that must be deducted under the section 194IC- 10 percent (7.5% w.e.f. 14.05.2020 to 31.03.2021) if the receiver has the PAN 20 percent, if there is no PAN of the receiver.

4) Under what circumstances TDS u/s 194IC is not deductible?

Tax deduction at source shall not be made in respect of that part of consideration which is in kind under the specified agreement.

5) When to Deduct TDS under Section 194IC?

Tax shall be deducted under this section, either at the time of credit to the account of the payee or at the time or payment thereof, whichever is earlier. For this purpose, “payment” can be in cash or by issue of a cheque or draft of by any other mode.

Extract of Section 194IC TDS on Payment Made Under Specified Agreement

194-IC. Notwithstanding anything contained in section 194-IA, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon

(Republished with amendments)

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