Rationalization of provisions of TDS on sale of immovable property
Section 194-IA of the Act provides for deduction of tax on payment on transfer of certain immovable property other than agricultural land. Sub-section (1) of the said section provides for deduction of tax by any person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property (other than agricultural land) at the time of credit or payment of such sum to the resident at the rate of one per cent. of such sum as income-tax thereon. Sub-section (2) provides that no deduction of tax shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
2. As per the provisions of the said section, TDS is to be deducted on the amount of consideration paid by the transferee to the transferor. This section does not take into account the stamp duty value of the immovable property, whereas, as the provisions of section per 43CA and 50C of the Act, for the computation of income under the head “Profits and gains from business or profession” and “capital gains” respectively, the stamp duty value is also to be considered. Thus there is inconsistency in the provisions of section 194-IA and sections 43CA and 50C of the Act.
3. In order to remove inconsistency, it is proposed to amend section 194-IA of the Act to provide that in case of transfer of an immovable property (other than agricultural land), TDS is to be deducted at the rate of one per cent. of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher. In case the consideration paid for the transfer of immovable property and the stamp duty value of such property are both less than fifty lakh rupees, then no tax is to be deducted under section 194-IA.
3.1 Stamp duty value shall have the meaning assigned to it in clause (f) of the Explanation to clause (vii) of sub-section (2) of section 56.
4. This amendment will take effect from 1st April, 2022.
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Note on Clause 56 of Finance Bill 2022
Clause 56 seeks to amend section 194-IA of the Income-tax Act relating to payment on transfer of certain immovable property other than agricultural land.
Sub-section (1) of the said section provides for deduction of tax by any person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall at the time of credit or payment of such sum to the resident at the rate of one per cent. of such sum as income-tax thereon.
Sub-section (2) of the said section provides that no deduction of tax shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
It is proposed to amend sub-section (1) of the said section to provide that the person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall at the time of credit or payment of such sum to the resident deduct tax at the rate of one per cent. of such sum or the stamp duty value of such property, whichever is higher, as income-tax thereon.
It is further proposed to amend sub-section (2) of the said section to provide that no deduction of tax shall be made where the consideration for the transfer of an immovable property and the stamp duty value of such property, are both less than fifty lakh rupees.
It is also proposed to insert clause (c) to the Explanation to define “stamp duty value”. These amendments will take effect from 1st April, 2022.
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Extract of Clause 56 of Finance Bill 2022
56. Amendment of section 194-IA.
In section 194-IA of the Income-tax Act,–– section 194-IA.
(i) in sub-section (1), after the words “one per cent. of such sum”, the words “or the stamp duty value of such property, whichever is higher,” shall be inserted;
(ii) in sub-section (2), for the words “immovable property is”, the words “immovable property and the stamp duty value of such property, are both,” shall be inserted;
(iii) in the Explanation, after clause (b), the following clause shall be inserted, namely:––
‘(c) “stamp duty value” shall have the same meaning as assigned to it in clause (f) of the Explanation to clause (vii) of sub-section (2) of section 56.’.
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RECOMMENDED BUDGET 2022 POSTS
