Applicability, rate of tax & Tome of Deduction for TDS under Section 194IA on Sale of Immovable Properties
-Any transferee responsible for paying any sum of consideration to a resident transferor on transfer of immovable property (other than agricultural land)
-Need to deduct TDS on such sum.
-Rate of Tax – 1%
-TDS is need to be deducted at the
Earlier of the Following
(i) At the time of credit of such sum to the account of the transferor.
(ii) At the time of payment through cash or by cheque or draft or by any other mode.
2nd Case: ‘X’ purchased a house from ‘Y’ for Rs. 51,00,000.
So, in the 1st case as the Consideration money < Rs. 50 Lakhs, there is no need of deduction of tax.
But in the 2nd Case as the Consideration money > Rs. 50 Lakhs, TDS is to be done @ 1% on the amount of Rs. 51,00,000, not on the excess amount Rs. 1,00,000 (Rs.51,00,000 – Rs. 50,00,000).
Note: The exemption of Rs. 50 lakh in Sec. 194-IA(2) is applicable w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. Each transferee is a separate income tax entity and the law has to be applied with reference to each transferee as an individual transferee / person.
So in the case of Joint Buyers, the Tax is not required to be deducted if the Individual’s Share in a purchase consideration to acquire an immovable property does not exceed Rs. 50Lakh.
For Example: 1st case- ‘X’ and ‘Y’ jointly purchased a house from ‘Z’ for Rs. 60,00,000.
2nd Case – ‘X’ and ‘Y’ jointly purchased a house from ‘Z’ for Rs. 1,20,00,000.
So in the 1st case, even though the Total Consideration value is more than Rs. 50 Lakhs, there is no need of deduction of tax, as individual share of ‘X’ and ‘Y’ is less than Rs. 50 Lakhs.
But in the 2nd case, TDS need to be done because the total Consideration value as well as individual share of ‘X’ and ‘Y’ is more than Rs. 50Lakh.
Other Provisions related to Sec 194IA
Time and mode of payment of TDS u/s 194IA
i) Such sum deducted u/s 194IA need to be paid to Govt with in 30 days from the end of the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form 26QB.
E.g. ‘X’ purchased a house from ‘Y’ on 14.05.2020 for Rs. 62 Lakh and paid the money on 20.05.2020 after deducting tax @ 1% (TDS- Rs. 62000). So the TDS amount of Rs. 62,000 is need to be paid to the Govt within 30.06.2020 accompanied by the challan-cum-statement Form 26QB.
ii) Every person responsible for deduction of tax u/s 194IA shall furnish TDS certificate in Form No 16B to the payee with in 15 days from the due date for furnishing challan-cum-statement in Form No 26QB.
So in the above example ‘X’ shall furnish TDS certificate in form 16B to ‘Y’ with in 15.07.2020.