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.
Page Contents
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
- Under TDS on property, click on the option “Form 26 QB
- and select 0020 if you are corporate payer and 0021 if you are a non corporate payer. Fill the necessary details.
– 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
Replaced with Amendments
hello sir,
we are a builders we sell One Flat that is in 90,00,000/- and one buyer ,two sellers in that tds paid 1% of 90,00,000/- buyer has deducted this tds amount 90000/- after tds deductions he is given amount and my boss said form 26qb i filled in that transferee ,Transfrer ackonoledgement number but this tds amount is who will credited and who is the deductee
pls clarify me
What Consideration include? Whether tds is deducted on agreement value or entire consideration received from customer
Hi,
I bought property in Dec 2013, and was unaware of 1% TDS deduction. Although I kept on paying full amount to the Builder/Developer, who never informed me of any such deductions, till recent.
As I will be paying now, do I have to pay only 1%TDS ( as I already paid the 1% TDS amount to builder) or have to pay penalty of 1% each month?
Thanks
VJ
Tds is calculated on amount exclusive of service tax and not inclusive of service tax
Hi
ANY PERSON PURCHASE COMMERCIAL PROPERTY ABOVE 50 LAC,AND PAID AMOUNT TO FOUR PERSON OF THOSE PROPERTY.
A-PURCHASER
X,Y,Z,W OF LEGAL HERE OF PROPERTY SELLER.
A PAID AMOUNT TO RS 1500000/ LAC EACH PERSON(X,Y,Z,& W=600000 LAC)
THEN TDS LIABILITY APLICALBE.
PLEASE ADVISE
MANGAL SINGH
Hi, Please Clarify that whether TDS is applicable when full payments is made prior to 1st June, 2013 and Agreement is made in June, 2013. My query is whether TDS is applicable or not
I WANT CLARIFICATION REGARDING MY FOLLOWING QUERY
I HAVE PURCHASED UNDER CONSTRUCTION PROPERTY FOR WHICH AGREEMENT GOT REGISTERED IN 2011 FOR Rs.75,00,000/-
but some payments are made after June 2013
how will tds provisions will get attract
i am following cash basis system in books of account
I have not booked property in my books as possession for the same have not received
Is there any need for deducting TDS on balance payments made after June 2013 ???
Hi, i like to know tds liability in case both buyer & seller are indian resident. seller is owner of flat & later on made power of attorney in the name of his mother. buyer has made own contribution & registration in the name of holder of POA i.e. mother. Now balance amount will be payable by bank in the name of flat owner i.e. son. in such case buyer should make TDS payment in the name of son OR mother. Or TDS can be deposited in the ratio of payments made to both mother & son. after deposition of TDS whether any liability will arise in future against buyer?.
I have booked a flat jointly with my daughter and wife.
Since the aggregate purchase price of the flat is more than INR 50.0 lakhs, Ihave deducted 1% value of the 1st instalment payment and submitted form 16B for the transaction to the builder along with the instalment. My form 26AS is showing the transaction under the respective head.
My query is do I have show this transaction in my Income Tax Return form ITR – I. If yes, then under which section of the ITR-I form.
I want know the following
1.I am going to purchase a residential flat of Rs.70 lakhs which earlier buyer has bought in 35 Lakhs 4 years ago in a lumpsum one time payment.
2. Original owner is just going to get the possession in this month and also paid 2% transfer amount and late charges of 60,0000. to the builder.
3.Now in case of my purchase who is responsible to pay the 1% TDS as the bank as asked me to show 1% TDS payment evidence for loan requirement?
Hi,
In case the property is co-owned by husband and wife in Mumbai, husband being a NRI and wife being a Resident Indian, what is the TDS deduction liability of the buyer?
Hi,
Is it applicable for new property purchased directly from builder or just in the case of transfer of property?
Property owned by A who is developing it into 4 flats. A retains 25% undivided share pertaining to one flat for himself in complex and sells 50% uds to buyers of flats during FY 2013-14 and 25% uds for one flat in 2014-15. Capital gains tax is computed for the entire uds being sold (75%) in the AY 2014-15 itself, capital investment in cap gains bond to eccentric permissible made and capital gains tax on balance paid in FY 2013-14 itself. For the uds sold in FY 2014-15 does the purchaser have to effect TDS in form 26QB even if A provides proof of tax paid on the sale in previous AY even though the actual sale and conveyance takes place in current year.
Dear Sir,
Two purchases ( 1ST Property Rs. 3500000 and 2nd property Rs. 3000000) on different days but the buyer and seller are same. pl explain the applicability of 194IA.
The Flat is booked in 2010 Nov., the payments were being paid by bank as per part of disbursement of loan and from us as our share. two payments were made by bank directly to Builder after 1-06-13 but TDS was not deducted. After those payments there was no demand from the Builder as the work was stalled. Now as work has progressed the builder has put his demand and informed us the procedure of deducting the TDS. Now
1) Can I make the payment of TDS on the payment made by bank in 2013
2) Any penalty is attracted and if yes, at what rate and on which amount. whether amount of TDS is assumed to be payment made to builder or it is fine to the purchaser and not the builder informing us late.
Two forms need to be filled if the property is in boths name from buyer end (husband and Wife). Question is seller is also having joint name but seller wants for each form only one name need to be mentioned. I mean the primary seller name. Is it correct.
Two forms from buyer but seller is one.
1% is applicable on sale value mentioned in the sale deed or it includes Stamp duty and VAT and registration?
Can TDS on sale of immovable property be claimed/adjusted by seller in his return form ITR2
Hi,
I had eneterd in the deal to purchase the flat. I deducted the TDS of 1% and paid to the buyer PAN. However due to some reasons the deal was cancelled. How do i now claim the refund of the TDS paid.
Dear Sir/Madam,
What is the breakup of “total consideration”? Is ST and IFMS (Interest free maintenance security) included in the ” total consideration “?
I booked a flat whose cost is 48.80 Lakhs ( with out IFMS and ST ).
With IFMS and ST cost = 52 Lakhs .
Will this 1% TDS is applicable in my case ?
I am confused ..Please help?
i want know the following
1.i am going to purchase a residential flat of Rs.70 lakhs
2. Original owner is just going to get the possession in this month after paying the total consideration amount of Rs-50 laks and all taxes,service tax(TDS) including.
3.Now in case of my purchase who will pay the TDS and how much
Sir,
What is the breakup of “total consideration”? Is VAT and ST included in the ” total consideration “?
I booked a flat whose cost is 48 Lakhs ( with out VAT and ST ).
With VAT and ST cost = 52 Lakhs .
Will this 1% TDS is applicable in my case ?
I am confused ..Please help
We(husband and wife) have purchased a flat under construction for Rs. 80 Lakhs. Agreement is registered in Dec. 2011. We have paid Rs. 25Lakhs at the time of agreement. Next installment of Rs.4 Lakhs is paid in Dec.2013 without deducting TDS. Another demand letter will be coming soon. My questions are:
1) Regarding installment paid in Dec. 2013, I have to pay 1% interest and 1.5% penalty, is both are on monthly basis for time lapsed or penalty is one time 1.5%? Also do we have to deduct TDS @ 20% as builder has not provided pan card copy to us till now?
2) As agreement is joint purchase so we have to fill separate 26QB forms, in this case:
1) Filling section “ Property details” total consideration has to divide in two and enter value in each form? (40 Lakhs + 40 Lakhs)
2) Filling section “Amount paid/credited to seller” Is it a installment of which we are deducting TDS or the amount we paid till now? Also is to be divided by two? (2Lakhs + 2 Lakhs)
3) Filling section “ Tax deposit details” question is same as above every details divide by two?
4) Can I deposit one cheque for total amount for both of us?
It is going to be first time paying taxes online for me, please reply in details. Thanking you in advance.
—
Hi…I have bought a house above Rs 50 lacs and paid TDS withiin 15 days and have already issued form 16B to seller…Now while filling income tax returns this amount is appearing in my TDS list in 26as and on calculation on payable tax it shows a net refund of same amount…
is this how it is supposed to be? Am I supposed to get a refund of this TDS?
sir plese
what is rate for chargeinig tds rate for proffessional tax
Dear Madam,
I had booked a property and paid the first installment including 1% TDS amount. However, I subsequently cancelled my booking and received the refund of money from the builder, but my form 26AS reflects 1% amount of instalment as income tax deduction at source under section 1941A. How can I claim the refund of this amount from IT dept as i have cancelled my booking.
Ashish
9492004507
Dear sir,
I had bought property worth Rs.63lac. and i paid 13 lac as down payment from the period of Aug 13 To Oct 13. and i paid Rs.50lac through home loan. in this transaction i have not deducted TDS oF Rs.63k because my down payment is only Rs.13lac so seller is said you deduct TDS From final amount. i request bank home loan people to deduct TDS Rs.63k and pay balance amount out of 50lac. But bank said they disbursed full amount only. after that i request seller to returned me 63k so i will pay TDS And provide you form 16B. But till date seller is not returned that amount and i have not paid TDS. I am keep chasing him but he is not paying. please advice me what should i do in this case. what is interest and penalty attract me in this case. and what is procedure to fight with seller in legal terms. please advice.
Thanks for sharing valuable information and explanation in easy and simple ways
Purchases of property from resident person being Power of attorney of Non resident. is tds applicable ?Payment made to Power of attorney.If not , kindly provide basis of it.
sir
i have done agreement to purchases a property in last financial year. i have paid two installement in last financial year. I have to pay another installment in current financial year. pls tell me what financial year i have to put in the tds challan and is there any interest will apply whether i have credited the amount today.
DEAR SIR,
I THINK, THIS PROVISION IS APPLICABLE ON OTHER THAN AGRICULTURE LAND, WHETHER IT MAY BE RURAL OR URBAN.
If the sellers are 8 in number and the 1/8th part of consideration amount is less than Rs.50 lacs TDS of 1% should attract or not. Please let me know
MY CLIENT IS BUYING PROPERTY IN HIS say Mr.A & HIS WIFE Say Mrs. A NAME BUT HE IS APPOINTED HIS FATHER IN LAW Say Z AS POWER OF ATTORNEY . IN AGREEMENT IT IS WRITTEN AS MR Z POA of Mr & Mrs. A.
My query is at the time of dedcuting tds in the coloumn of PAN of Ppayer/buyer whose pan no. to be quoted mr. A, Mrs. A or POA Mr Z?
In a Flat sale purchase transaction by sale of UDS of land (value less then Rs.20 lakhs)and construction for construction cost or Rs. 40 lakhs total agreed value Rs.60 lakhs, Does 1% TDS apply on Rs.20 lakhs or Rs.60 lakhs or Nil? Since on Rs.40 lakhs 194C TDS is applicable it should be excluded from 194 1A. (there is exemption for individuals and HUF from 194C) Now the amount involved is Rs.20 lakhs only, which is less than Rs.50 lakhs. Please explain your ideas.
On under construction property, buyer is also required to pay service tax to the builder. Should TDS be deduced on the service tax paid.
The entire consideration towards the cost of the land has been paid earlier in 2009 through some agreement and owners acknowledges full payment receipt and on that land construction had taken place and now the construction is getting completed.
The entire consideration is payable to the flats promoters including the cost of the land and on whose name TDS is to be paid as in the registration papers still land owner is the original land owner only as we have not registered the same but only taken POWER in favour of our partner individually.
How to remit the TDS by the purchaser whether in favour of original land owner or in our company’s name.
Y.S.PRASAD
We are into flats construction business and we have paid full consideration towards the cost of the land purchased in 2009 itself and obtained a power of Attorney in favour of our partner in his individual capacity. The flats construction is over and are under completion and put on sales and some flats are getting sold. We have to register UDS (undivided share of the land) to the buyer of the flat (UDS registration and construction agreement makes one full flat sales) and cost of the land itself is working out to more than Rs.50 lakhs and alongwith cost of contruction the flat cost comes around Rs 3 crores. If we register the land, the buyer will deduct TDS but as the flats registered under a Power of Attorney (representing the original land owner and our Partner is a power agent of the original land owner though land cost have been accounted fully by both the companies books) the buyer may remit the TDS in favour of the seller as given in the sale deed.
How can our company can come into the picture as the entire consideration is paid into our company and the original land owner has no stakes now. Please clarify this point please.Thank U
Y.S.PRASAD, 99400 40567
Section 194 IA
pl clarify the meaning of consideration money paid by a purchaser of immovable property,
1. Is it the amount paid as per agreement made between buyer and seller
or
2. value of the property asper stamp duty paid
Can you please explain the difference between point F & G with respect to an individual. In case of individuals how is the credit different from actual payment.
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 asper stamp duty paid
regards,
monoj
Thanks for the information .but please define the word credit in terms of deduction as asked by ashish
Does this TDS deduction provision also apply to purchase of new property from builder or developer.
How can you define the word CREDIT in terms of deduction date since there is no invoice date and no confirmation date for closing the deal since the deal is totally depend on availability and disbursement of Loan and goes for several months.If the deal is cancelled then what would be the treatment
THANXXXXXXXXXXXX FOR SHARING USEFULE INFORMATION………..
Dear CA. Rachana Kanoi,
will you please tell me that what resourses you have used to analysis of applicability of TDS on installment payment.
Thanks for sharing above information. But I could not understand about point No. 7 (I) TDS is also applicable where 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. I think threshold limit is equal to 50 Lakh or above is consideration for Immovable property, not vlue of Immovable property for each buyer.
Thanks for giving the details and step by step procedure.
Hi , Pls clarify the provisions in the case of a non resident being the purchaser of a property in India.Thanks.
Correction – last sentence read as —
It is pertinent that these points are not overlooked & may give rise to unwanted AO interpretations.
Regards,
Ms. Rachana Kanoi, CA,
1] When will the transferor get the 1% refund? What about interest lost?
2] If 1% is short to meet LTCG terms then what?
3] 1941A no where states its composite sale/purchase!? It gives rise to single seller – jt buyer,
jt seller – single buyer, jt sellers – jt buyers, Who do not exceed individual limits. Then what?
It is pertinent that these points are overlooked & give rise to unwanted AO interpretations.
Regards,