Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land)

There is a statutory requirement under section 1 39A of the Income-tax Act read with rule 11 4B of the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to purchase or sale of immovable property for value of Rs.5 lakh or more. However, the information furnished to the department in Annual Information Returns by the Registrar or Sub-Registrar indicate that a majority of the purchasers or sellers of immovable properties, valued at Rs.30 lakh or more, during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to transfer of the property.

Under the existing provisions of the Income-tax Act, tax is required to be deducted at source on certain specified payments made to residents by way of salary, interest, commission, brokerage, professional services, etc. On transfer of immovable property by a non-resident, tax is required to be deducted at source by the transferee. However, there is no such requirement on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties. In order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time, it is proposed to insert a new section 194-IA to provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum.

In order to reduce the compliance burden on the small taxpayers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakh rupees.

This amendment will take effect from 1st June, 2013.

All About TDS On Immovable Property Purchase (194IA)

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Category : Income Tax (28059)
Type : Featured (4021) News (13864)
Tags : Budget (1957) TDS (1102)

0 responses to “Budget -1% TDS on Transfer of Immovable Property Exceeding Rs.50 Lakh”

  1. Silva Anand says:

    I had purchased a property for an amount of Rs. 68 lakhs and the registration was done on 8th April, 2013. I had applied for a housing loan from FI for an amount of Rs. 45 lakhs. As the processing of loan is getting completed by the end of June, FI is now demanding from me a TDS receipt of 1% paid to Govt. for purchase of flat for releasing my housing loan.
    Since the Sale Agreement was already done in April, 2013, do I have to get a 1% TDS receipt and provide it to the FI in order to get my payment released.
    Please comment.

  2. sachin says:

    1% TDS effective from 1st June, 2013 .

  3. sachin says:

    If you have a house or a plot of land, which is valued above Rs.50 lakh at the time of sale, then you will have to pay a TDS of 1% while selling it. Agricultural land is exempt from this.

  4. Himanshu says:

    This would be effective from 1st June 2013 or 1st April 2013. There is lot of confusion going on regarding date.

  5. Lahoo Palande says:

    if I am transferee and I have no TAN number then how can I pay this amount to government treasury.

  6. subramanian says:

    full of complications-normally payments are made in insalments-some advance is made and then agreement for sale is entered and then the final payment-this is the modus operandi in most of the cases
    how would the tax be deducted? from each payment-suppose the deal is cancelled what would be the position?the transfer would take effect only at the end-would that mean that the deduction should be made at the time of last payment
    also-if the transaction spills over to assessment years-for ex-advance is paid in one financial year and the balance is paid in the next financial year-how would the assessee treat the tds-after all the transferor may not have capital gains tax by investing in another unit or in bonds
    this section is full of confusion

  7. jeevan says:

    So if I sell residential flat before 1st june 2013 I will not be charged 1% TDS?
    From what date this 1% TDS will be applicable on sale of property more than 50 Lakh rupees?

  8. ravindra says:


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