Legal Provision, Analysis and  Applicability of Section 194IA of Income Tax Act, 1961

Legal Provision of Section 194IA of Income Tax Act, 1961

♠ Any person, being a transferee, responsible for paying (other than the person referred to insection 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.

♠  No deduction under sub-section (1) of Section 194IA shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees. 

Analysis of Section 194IA of Income Tax Act, 1961

  • Buyer has to deduct tax @1%
  • No need to have TAN
  • File Return by taking Registration based on PAN
  • Sale consideration should exceed Rs.50 lakhs.
  • Once it is exceed Rs.50 lakhs entire sale consideration subject to TDS
  • TDS has to be deducted on each such installment thereafter.
  • Form 26QB Challan cum Statement – should be filed within 30 days from end of the month in which TDS was deducted
  • Buyer has to issue Form 16B to seller.
  • Challan 281 should be used for payment of Tax deducted at source.
  • After payment Register on Traces site using PAN and challan number to get Form 16B.

Also attached herewith Challan 281, Form 26QB and Form 16B format for your ready reference.

Download format of Challan 281, Form 26QB and Form 16B

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January 2021