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

CA Rachana Kanoi

Article explains Who is responsible for tax deduction under Section 194-IA, When tax has to be deducted under Section 194-IA, Rate of TDS on Purchase of Immovable Property, Threshold Limit for deduction of TDS under Section 194-IA, Online Payments of TDS under Section 194-IA, Form 26QB, Steps to Pay Tax TDS Online and Important Points to be Noted related to deduction of TDS on Purchase of Immovable Property under Section 194-IA.

1. Who is responsible for tax deduction under Section 194-IA

Any person responsible for paying any sum to a resident transferor by way of consideration for transfer of an immovable property (i.e. building or part of building or any land other than agricultural land) is liable to deduct tax at source u/s 194-IA. This provision came in June 2013.

In other words, as per this section the buyer has to pay TDS and not the seller.

2. When tax has to be deducted

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

3. Rate of TDS

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

4. Threshold Limit for deduction of TDS under Section 194-IA

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. Online Payments- Form 26 QB

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. TDS so deducted shall be paid within 30 days from the end of the month in which TDS was deducted.

6. 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.egov-nsdl.com/etaxnew/tdsnontds.jsp

Form 26QB

  • and select 0020 if you are corporate payer and 0021 if you are a non corporate payer. Fill the necessary details.

Form 26QB Form

– 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.
  • There are 2 modes of payment at the bottom of the page  , i.e. e-tax payment immediately (through net banking) or e-tax payment on the subsequent date. Choose the anyone with which you want to proceed.
  • If you choose net banking- login to your bank account and pay online.
  • 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.
  • If you choose payment to be made later on- an online receipt with unique acknowledgement number is generated which is valid for 10 days after generation. For payment through bank, this receipt is to be taken along with the cheque to an authorized bank for payment.

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 1stJune, 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 1stJune, 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.

n) Provisions of TAN as prescribed u/s 203A shall not apply in respect of tax deducted u/s 194-IA.

o) Immovable property means any land, building or part of building. Such property may be situated in India or outside India.

p) TDS provisions of section 194-IA shall apply only if the transferor is resident in India.

q) TDS provisions of section 194-IA shall not apply if a person acquires rural agricultural land in India.

r) A land is not treated as agricultural land if:

  • It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000 or
  • It is situated in any area within below given distance measured aerially:
Population of the Municipality Distance from Municipal limit or Cantonment Board
More than 10,000 but does not exceed 1,00,000 Within 2 kms
More than 1,00,000 but does not exceed 10,00,000 Within 6 kms
Exceeding 10,00,000 Within 8 kms

RELATED POSTS ON THE TOPIC

S. No. POST TITLE
1. CPC(TDS) releases Online Correction Facility for 26QB Statements
2.

Mandatory Filing of Form 26QB by Buyer of Immovable Property

3

CPC-TDS enables online correction in form 26QB

4.

Withholding tax Impact on Property transaction by Non-Residents Indian/Foreign Nationals

5.

TDS on sale of Immovable Property- Beware CPC TDS issuing intimation for late deposit of TDS

6.

TDS on sale of Immovable Property by Non-resident

7.

TDS- Sec.194IA – Payment on transfer of certain immovable property

8.

Transfer of Immovable Property & Income Tax – A Critical Analysis

9.

Procedure for TDS Payment (FORM 26QB) and Generation of Form 16B

10.

Tds On Purchase Of Immovable Property Effective 1st June,2013

Replaced with Amendments

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75 Comments

  1. Aswini Kumar Pattnaik says:

    I have purchased a property worth Rs.54 lac including GST.After GST deduction, the cost will be Rs.48 lax.Do I need to deposit Tax under 26 QB,

  2. MEENA AHUJA says:

    Sir Recently I bought a property worth Rs. 9850000-00 from my capital gain amount, I included my only daughter’s name in sale deed and mentioned that my daughter did not contributed any amount for purchasing the property . now i have to deducted TDS for the property where in the 26QB form I have to mention 2 buyers but my daughter’s share is Nil and my share is 100%. please reply. thank you Sir in advance

  3. MUDIT KUMAR says:

    which section of TDS is applicable if NRI sold agricultural land more than 50 lakhs to multiple buyers, and by what rate TDS is to be deducted.

  4. Rajiv 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 as per stamp duty paid

  5. SHELLY DETARAFDER says:

    i am purchasing a flat in a building which is more than 5o lacs in the name of myself,husband and my son who is pursuing phd outside India.my quiries are:
    1. whether I have to fill up 26QB separately for myself ,husband and son with 03 PAN nos.
    2.Whether more one Transferee:yes/no which option will be applicable for this case
    3.whether ptoperty value will include carparking
    4.Whether myself can pay 1% TDS on property from my account or it will be devided by 3 as it is formy family and I will benifited for tax return or all the 03 will be benifited
    5.As my son is staying abroad , whether he has to show in his return and also husband or else myself alone.
    6.Although it is a joint flat, whether I can pay the tax alone as the other 02 are not able to fill the form and pay through online/other option .
    Please reply at the earliest.

  6. Mayur Karkra says:

    Please ammend point No.7(l) as per recent judgement of ITAT Jodhpur bench in M/s. Oxcia Enterprises
    Private Limited vs. D.C IT Circle Jodhpur whereby they have clarified if there is more than one buyer in equal share or otherwise and if the share of the property purchased is valued less than 50 lacs in that case section 194-IA is not applicable

  7. Dutt says:

    Hi,

    I purchased a flat on my wife’s name in 2015, I made 7lacs down payment for that I paid 1% TDS in 2015, now in 2019 builder has come up with query saying 1% TDS has to be paid on my wife’s name. Is it right I have to pay rs.7000 on my wife’s name?

  8. Sidhartha says:

    Hi,
    My property Basic Sale value is Rs 49,00,000/- and GST @12% is coming Rs 5,88,000/-
    I am making a total payment of Rs 54,88,000/- towards my property purchase including GST Amount.
    in this payment of Rs 54,88,000/- whether i have to deduct Rs 54,880/-(1% on Total Cost) or Rs 49,000/- (On Basic Sale Value – excluding GST) towards TDS (194IA)

    Please provide your valuable suggestion

  9. Ankosh says:

    I bought a under construction flat whose value without GST is below Rs 50 Lacs, but it exceeds Rs 50 Lacs with GST. Should I deduct 1% TDS ?

    There is a CBDT circular ​which clarifies that TDS is to be deducted on amount excluding GST, if GST is indicated separately. While this circular clarifies the ‘quantum’ on which 1% TDS should be applied, but it is not clear whether or not GST should be excluded from consideration value for the purpose of scoping TDS applicability limit of Rs 50 Lacs.

    Please share your valuable opinion with any case law or guidance issued on this matter

  10. S.V. BODELE says:

    we are four partners sold a property but the purchaser paid the advance amount more than the sharing ratio now the purchase says that he will deduct the 1% TDS to whom the amount is been paid i want to know whether tds of 1% under section 194IA can be deducted in the capital sharing ration

  11. Uttam says:

    Hello, I purchased a property in Jan 2011 value 55Lacs. I have paid 35Lacs before 1st June 2013 and the rest 20L thereafter till now. Since the sales agreement was made prior to June 2013, is this 1% TDS rule applicable in my case as the property is still not fully constructed and handed over to me?? If yes, do I have to pay TDS on 25Lacs paid after 1st June 2013 or the entire amount since Jan 2011 i.e. on 55Lacs?? Please explain, I have read many articles here but still confused, some say its applicable and some say not applicable.

  12. P N Rao says:

    If the Bank has given the TDS amount deducted amount to the buyer, then the buyer has to remit the same to the Income Tax department immediately and should not wait till possession as he will be liable to interest and fees to IT depat. P N Rao

  13. Sandesh Mhadgut says:

    Dear Sir,

    We purchase a flat for Rs.55,00,000/- and paid whole amount to the seller without deducting TDS. Now we recd the notice for payment of TDS. We approched to the Seller but he denies to do the same.

    Another angle, seller purchase the property of
    the same amount. Can we get the concession for the payment of TDS on that.

    Please guide.

    Regards,

    Sandesh

  14. Lourdunathan says:

    HI,

    A buyer has purchased an under-construction flat amounting to 73 lacs and possession is due after 2 years. The bank has deducted the TDS on the property value while making the payment installment to the seller and has given the TDS amount to the buyer. Should the buyer pay the TDS on possession of the property or immediately?

    Regards,

  15. N N RAO says:

    Sir, I sold a residential flat(purchased in 2001) in Dec 2014 for 21.6L and purchased a residential site for construction of house for Rs 21.4L+1.2L stamp duty. under what section i get exemption of cap..gain tax and how to reflect the same in return form.i am a salaried single individual and tax deducted by employer on salary asTDS.
    Regards,

  16. Gautam Hazarika says:

    Hi,

    Can anyone help me in regards to my query. I have recently brought a flat in bangalore which basic cost is 45 Lakhs and including all other charges excluding registration it has come to 53 Lakhs. Builder is saying I don’t need to pay TDS since basic cost is 45 Lakhs.

    Can anyone explain me whatever builder is saying is correct or wrong.

    Regards,
    Gautam Hazarika

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