Section 194LA: Payment of Compensation on acquisition of certain immovable property
With effect from 1st October 2004, new section 194LA was inserted into the Income Tax Act, 1961. Section 194LA relates to the TDS provisions applicable on the payment of compensation at the time of acquisition of certain type of immovable property.
The present article emphasizes the provisions of section 194LA of the Income Tax Act in brief.
Important definitions –
Before understanding the provisions of section 194LA, it is vital to understand the definitions of ‘immovable property’ and ‘agricultural land’ which are explained here under –
The definition of the term ‘immovable property’ has been provided under Explanation (ii) to section 194LA. Accordingly, immovable property means any land (except agricultural land) or any building or part of a building. It should be noted that the TDS provisions prescribed under section 194LA applies to compulsory acquisition of any immovable property except agricultural land.
Now, since agricultural land is exempted under section 194LA understanding the definition of the same is very important. The definition of the term ‘agricultural land’ has been provided under Explanation (i) to section 194LA. Accordingly, agricultural land means agricultural land in India including land situated in areas referred to in section 2 (14) (iii) (a) and section 2 (14) (iii) (b).
Circumstances when provisions of section 194LA of the Income Tax Act, 1961 attracts –
The payer is liable to deduct TDS under section 194LA if the following conditions are satisfied –
If the above-mentioned circumstances are satisfied and the person is liable to deduct TDS under section 194LA, then, the person is required to deduct TDS within earlier of the below mentioned dates –
The Deductor is liable to deduct TDS @ 10% under section 194LA of the Income Tax Act, 1961. No additional Surcharge, Education Cess or SHE Cess is to be added over and above the TDS rate of 10%.
However, in case the Deductee doesn’t furnish PAN, then, the Deductor would be liable to deduct TDS at the Maximum Marginal Rate of 20%.
TDS is not deductible under section 194LA in following cases –
|TCS – Tax Collection at Source – A Complete Guide|
|TDS Rate Chart for Financial Year 2019-2020|
|Section 192 – TDS on Salary|
|Section 192A – TDS on Premature withdrawal from EPF|
|Section 193: TDS on Interest on Securities|
|Section 194 – TDS on dividend|
|Section 194A: TDS on interest other than interest on securities|
|Section 194B and Section 194BB – TDS|
|Section 194C – TDS on Contractors|
|Section 194D – TDS on insurance commission|
|Section 194DA – TDS in respect of Life Insurance Policy|
|Section 194E – TDS on payment to Non-resident Sportsmen or Sports Association|
|TDS under Section 194EE and Section 194F|
|Section 194G TDS on Commission on Sale of Lottery Tickets|
|Section 194H – TDS on Commission or Brokerage|
|Section 194I of Income Tax Act, 1961 – TDS on Rent|
|Section 194IA TDS on transfer of immovable property|
|Section 194IB – TDS on Rent paid by Individual / HUF|
|TDS under Section 194LB, 194LBA, 194LBB and 194LBC|
|Section 194LC: TDS on income by way of interest from an Indian Company or a business trust|
|Section 194LD TDS on income by way of interest on certain bonds and Government Securities|
|Section 194J TDS on Fees for Professional or Technical Services|
|Section 194N – TDS on Cash Withdrawals|
|Section 194M: TDS on Payment of certain sum by certain Individual / HUF|
|Section 195 TDS on payment of any other sum to a non-resident|