Provisions related to TDS on Immovable Properties U/s. 194IA

As we all aware that 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 under section 194IA. This provision came in June 2013. In other words, as per this section the buyer has to pay TDS and not the seller.

Important provisions or points related to section 194IA

• TDS to be deducted @ 1% of the total sale consideration. However, TDS needs to be deducted @ 20%, if the deductee does not furnish PAN.
• No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than Rs. 50,00,000/-.
• 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.
• TDS certificate must be issued to the deductee in Form 16B within 15 days from the due date of deposit of TDS.
• The deductee shall be entitled to avail credit for the entire amount of TDS deducted during the financial year in its Return of Income.
• TDS u/s 194-IA shall be deducted even if the transaction takes place before 1^st June, 2013 and payment is made after 1^st June, 2013.
• However, if credit to the account of the transferor has been given before 1^st June, 2013 then provisions of section 194-IA will not apply, even if payment has been made after 1^st June, 2013. (Payment or credit whichever is earlier)
• Threshold limit of Rs. 50 Lacs will be applicable to each & every property separately. Property can be either of residential or official purpose.
• In case any installment becomes due before 1^st June, 2013 but paid after 1^st June, 2013 and the transferee has not credited the same to the account of the transferor before 1^st June, 2013, then provisions of section 194-IA shall apply and TDS will be deducted on the amount paid after 1^st June, 2013.
• In case of installment system of payment, TDS is required to be deducted on all such installments individually which fall due after 1^st June, 2013 but only on principal portion and not on the interest or penalty portion.
• 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.
• 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.
• TDS provisions of section 194-IA shall apply only if the transferor is resident in India.

Also Read –

TDS on transfer of immovable properties wef 01.06.2013 & How to pay

TDS U/s. 194IA on Immovable Property to be paid by Form 26QB; TDS certificate in Form 16B

Republished with Amendments