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Understand TDS on Immovable Property as per Sec 194IA, including conditions, analysis, and examples for both resident and non-resident buyers and sellers.

TDS on Immovable Property – Sec 194IA  (as amended by Finance Act 2022)

Conditions:

  • Seller MUST be Resident.
  • Buyer may be Resident or Non-Resident.
  • Consideration or Stamp Duty Value of such Property is Rs. 50,00,000 or more.

Note :- For the purpose of TDS calculation, Consideration paid for acquisition of immovable property under same or different agreement such as Club membership fee, Car Parking fee etc. which are incidental to transfer of immovable property shall also be considered.

Important Note :- No TDS is required to deduct if Consideration amount of immovable property as well as Stamp duty Value of such property is less than Rs. 50,00,000.

Analysis of Provision

If any person (Resident or Non-Resident) purchases any immovable property (Except Specified Agricultural Land which is not a capital asset) then such buyer is required to deduct TDS @ 1% of Consideration Price or the stamp duty value of such property, whichever is higher and remit balance amount i.e 99% of Consideration price to the Seller/Transferor. In order to remove practical difficulties let us understand this provision with some examples.

1. When Both Buyer and Seller are Residents.

Mr. Sunil resident of Delhi sold his house property to Mr. Kamal of Noida for a consideration price of Rs. 60,00,000. Here Seller/Transferor of immovable property is Resident Indian, accordingly Buyer has to deduct 1% of Rs. 60,00,000 i.e. Rs. 60,000 and pay remaining amount i.e. Rs. 59,40,000 to seller in this case.

2. When Buyer is Non-Resident but Seller is Resident.

Mr. Vikram resident of Delhi sold his house property to Mr. Singh of New York for a consideration price of Rs. 60,00,000. Here Seller/Transferor of immovable property is Resident Indian, accordingly Buyer has to deduct 1% of Rs. 60,00,000 i.e. Rs. 60,000 and pay remaining amount i.e. Rs. 59,40,000 to seller in this case. Status of Seller must be resident to fall under this provision.

TDS on Immovable Property

3. When Buyer is Resident but Seller is Non-Resident.

Mr. Abhay resident of Canada sold his Flat situated in Mumbai to Mr. Kailash of Chandigarh for a consideration price of Rs. 60,00,000. Here Seller/Transferor of immovable property is Non-Resident Indian, accordingly Provision of Sec 194-IA is not applicable in this case. Status of Seller must be resident to fall under this provision. However Provision of Sec 195 is still applicable here for the purpose of TDS.

4. When more than 2 seller in a transaction

Mr. Sameer and Mr. Amir resident of Delhi sold there house property to Mr. Suresh of Jaipur for a consideration price of Rs. 60,00,000. Both the seller has equal share in property, accordingly both seller are eligible to receive Rs. 30,00,000 each which comes less than Rs. 50,00,000 if we take both the seller individually. Still in this case Buyer has to deduct 1% TDS of amount paid to each seller i.e. Rs. 30,000 (1% of Rs. 30,00,000) because aggregate consideration exceeds Rs. 50,00,000.

5. If Stamp duty Value exceeds the consideration paid by buyer.

Mr. Sanjay resident of Delhi sold his house property to Mr. Kishore of Merrut for a consideration price of Rs. 49,00,000. However, the stamp duty value of said property is 54,00,000. Here buyer is required to deduct TDS @ 1% u/s 194-IA on Stamp Duty Value amount i.e. Rs 54,000 (1% of 54,00,000) in this case because stamp value of property exceeds Rs. 50,00,000.

How to deposit TDS in this case.

In case if TDS is deducted u/s 194 IA, then the buyer has to file Form 26QB in order to pass credit of TDS to Seller.

Buyer has to provide following details

  • PAN details of buyer and seller.
  • Residential address of seller and buyer as well as address of property purchased by buyer.
  • Details of consideration paid for property.
  • For more than one seller, buyer should file separate Form 26QB for each seller and provide separate consideration paid to each seller in every Form 26QB in order to pass correct TDS to each seller.

After filling the relevant details buyer has to make payment after which challan is generated.

Buyer is also required to issue Form 16-B i.e. TDS certificate to the seller, which can be download from Traces portal by using credentials of buyer.

*****

(The author is practicing chartered accountant and can be reached out at ca.atif95@gmail.com, Mobile- 9811270863)

(Republished with amendments)

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11 Comments

  1. Mohit Munot says:

    If Property is purchased in the name of husband and wife but husband has make the all payment property purchased wife name in property is just as co owner as she did not make any payment for property then in that case if we deduct all tds u/s 194 IA by husband is it allowed

    1. Mohd ATif says:

      if you will check language of law then every buyer is obliged to deduct TDS. But if you are posing wife just to be a part of document and she is also not giving any amount to seller then only husband may deduct TDS. however it is advisable that both buyer should deduct TDS in order to avoid subsequent litigation out of this transaction.

  2. Prafulla Chandra says:

    Recently we have purchased a flat from Husband and Wife I.e two sellers . The buyer were also two I e. my self and my wife. We have paid the TDS in two parts i.e one for my wife and other of me while the recipient was one of the seller only as all the payment was done in the name of him only. Have I done the correct thing? Or my wife has to make payment to his wife. I am confused

    1. Mohd ATif says:

      as you have mentioned that payment is made only to husband and his wife name is just appearing on sale deed then in this case if buyers i.e. you and your wife may deduct TDS of one of seller i.e. husband by ignoring other seller i.e wife in your case. One thing you need to ensure is that you have deduct 1% of amount paid.

  3. Md.Kunju says:

    If both buyers are NRI husband and wife and the stamp duty value is rupees eighty lakhs for an immovable property puchased from.Resident Indian, what is the share of TDS? Since individual share consideration is 40 lakhs ech and beliw the taxable limit of 50 lakhs, do they still have to deduct TDS u/s 194la. Awaiting your early reply sir to my above email id.

  4. Vivek Verma says:

    At the time of payment of filing of form 26QB, Stamp Duty value details has to be filled up.
    Is that stamp duty value to be filled is the amount to be paid to government as stamp duty (certain percentage of the property) or the stamp duty value of the property?

    1. Mohd ATif says:

      It should be Stamp Duty Value. For example if Stamp Duty Value is Rs. 70 Lakhs and Stamp duty paid is Rs 4,90,000, then in this case Rs. 70 Laks is required to fill in Form 26QB as Stamp Duty Value.

  5. Ravindranath says:

    What is the rate if both seller and buyer are non residents of a property valued less than 50 lakhs?? Some say the buyer should recover 20.8% as TDS. Is this correct?

  6. Kacham Shekhar says:

    If there are two buyers having equal share and the total consideration is Rs. 60,00,000.00, do the buyers need to make TDS as each buyer has to make payment of Rs. 30,00,000.00 only to the seller/sellers?

    1. Mohd ATif says:

      TDS is not required to deduct if consideration for the transfer of an immovable property and the stamp duty value of SUCH property, are both less than fifty lakh rupees. Here important word used is SUCH PROPERTY. It can be inferred that ultimate consideration or stamp duty value is relevant for TDS irrespective of number of buyers. Hence to be safer side in your case, it is advisable to deduct TDS to avoid litigation.

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