Section 194-IA of the Income Tax Act, effective from June 1, 2013, mandates a 1% tax deduction by the buyer on the consideration payable to the seller for the transfer of certain immovable property. This write-up provides comprehensive information about the applicability, scope, and other relevant details of Section 194-IA.
The article explains the provisions of Section 194-IA, covering the responsibility of the buyer to deduct tax at the time of credit or payment to the seller. It also outlines the conditions and criteria for the deduction, along with the rate of TDS and the need for a valid PAN. Additionally, the process of depositing tax and furnishing statements to the department is discussed.
Deduction of tax at source from payment on transfer of certain immovable property [AY 2023-24]*
1 Provisions of Section 194-IA:
(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 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.
(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property and the stamp duty value of such property, both, is less than fifty lakh rupees.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
Explanation — For the purposes of this section,—
(a) “agricultural land” means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;
(aa) “consideration for transfer of any immovable property” shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property;’
(b) “immovable property” means any land (other than agricultural land) or any building or part of a building.
2 Scope of section 194-IA:
Section 194-IA, provides that any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall deduct an amount equal to one per cent of such sum as income-tax 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 cheque or draft or by any other mode, whichever is earlier.
No deduction shall be made the consideration for the transfer of an immovable property and the stamp duty value of such property, both, is less than fifty lakh rupees.
3 What payment is covered by section 194-IA:
Any sum paid by way of consideration for transfer of any immovable property (other than agricultural land) is covered under section 194-IA, provided the consideration for transfer of an immovable property is not less than Rs. 50 lakhs.
3.1 Agricultural Land: Agricultural land means agricultural lands in India, not being a land situated in any area referred to in section 2(14)(iii)(a)/(b).
A land shall not be treated as Agriculture Land, if:
a) It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or
b) It is situated in any area within below given distance measured aerially:
|
Population of the Municipality |
Distance from Municipal limit or Cantonment Board |
| More than 10,000 but does not exceed 1,00,000 | Within 2 kms. |
| More than 1,00,000 but does not exceed 10,00,000 | Within 6 kms. |
| Exceeding 10,00,000 | Within 8 kms. |
3.2 Immovable Property: Immovable property means any land (other than agricultural land) or any building or part of building.
4 Who is the payer:
The payer is any person, being a transferee, responsible for paying (other than the person referred to in section 194-IA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land).
5 Who is the payee:
The payee is resident transferor of any immovable property (other than agricultural land).
6 Conditions to be satisfied for applicability of section 194-IA:
For applicability of section 194-IA following conditions need to be satisfied:
- The payer must be any person referred to in Para 4 above.
- The payee must be a resident transferor of an immovable property (other than agricultural land).
- The payment must be by way of consideration for transfer of any immovable property (other than agricultural land).
- The quantum of payment, or stamp duty value of property, must be Rs. 50 lakhs or more.
7 Time of deduction of tax:
Tax shall be deducted 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.
8 Rate of TDS:
Tax shall be deducted at the rate of 1%.
9 Effect of non-furnishing of PAN on rate of tax:
Section 206AA, as inserted with effect from 1-4-2010, provides as under:
- Every person whose receipts are subject to deduction of tax at source (i.e., the deductee) shall furnish his PAN to the deductor.
- If such person does not furnish PAN to the deductor, the deductor will deduct tax at source at higher of the following rates:
(a) the rate prescribed in the Act;
(b) at the rate in force, i.e., the rate mentioned in the Finance Act; or
(c) at the rate of 20 per cent.
- Where the PAN provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his PAN to the deductor and above provisions shall apply accordingly.
10 Tax Deduction and Collection Account Number (TAN):
Provisions pertaining to Tax Deduction and Collection Account Number, i.e., section 203A, shall not apply to a person deducting tax at source under Section 194-IA.
11 Deposit of tax to the credit of the Central Government:
Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.
The sum so deducted shall be deposited to the credit of the Central Government by remitting it electronically to the Reserve Bank of India or the State Bank of India or to any authorised bank.
12 Certificate for tax deducted at source:
Every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No. 16B to the payee within fifteen days from the due date for furnishing the Challan-cum-statement in Form No. 26QB under Rule 31A after generating and downloading the same from the web portal specified by the Director General of Income-tax (System) or the person authorised by him.
13 Furnishing of statements by tax deductor to department:
Every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorised by him a challan-cum-statement in Form No. 26QB electronically within 30 days from the end of the month in which the deduction is made. CPC-TDS has also enabled the online functionality for correction in Form No. 26QB.
[As amended by Finance Act, 2023]
(Republished with amendments)
In Feb’.24 ten grams sovereign gold bond will be matured after 8 yrs.Whether additional amount after purchasing price will be taxable?In which return form (ITR)filing will be applicable?
Buyer had deducted Higher TDS @ 20% u/s 206AA , due to not having PAN from seller. Now question is how to deposit the TDS and file the statement.
plz guide
Hi Sir, I am an NRI and purchasing site for the purpose of house construction from an another NRI (2 owners).
The document worth is around 60 Lakhs. As a buyer to pay the TDS, is TAN number to me is mandatory ?
I have collected TDS on sale of property and deposited in the Bank on 18/01/2022. But I am unable to download Form 16B from the traces.
Please guide to download the Form 16B.
Dear sir,
I am buying immovable property from NRI at more than one crore and we have multiple co-owners for property & same will be paid equily by all co-owners.Now do we all have to deduct TDS equily & deposit TDS by all under individual TAN Nos. or else first name owner can deposit full TDS under his TAN No. Please advice🙏
Is this section applied on DDA
DELHI DEVELOPMENT AUTHORITY IF WE BUY PROPERTY FROM DDA FOR MORE THAN 50 LAKH
Seller is NR and he has sold the rural agriculture land for Rs.35 lakhs. Is it required to deduct tds by buyer.
The actual sale prize is 45 lakhs but i forced to put the consideration as 53 lakhs due to the fair value fixed by the government stamp, duty valuatioin is more than the actual value. am i liable to deduct TDS ???
I am purchasing a property for sale consideration of Rs. 50 Lakhs +. The seller is actually selling the property in loss. He doesn’t want me to pay TDS of 1%. Please tell me if it is possible for him to obtain any certificate from IT office mentioning that he doesn’t need to pay TDS. If yes, then what is the procedure for the same. Thanking you in advance.
If buyer of the property is NRI what action he will take . is he deduct tax at 1 % or not
what %of rate of income tax for N RI buyer or seller for more than 5000000/- RS transaction.
The property value 7000000 and there are 3 equal joint owners. whether each owner shall liable to deduct tax when they make payment?
what will procedure when NRI purchase imm.property in india but they have no TIN & PAN so how they will be paid TDS to India Govt.?
because asking in Govt. site PAN in Mandatory when we going for TDS payment
WHAT WILL HAPPEN IN CASE WHERE PERSON BUYS PROPERTY WORTH RS. 2 CRORES IN 5 PARTS WORTH RS. 40 LACS EACH.
One person sold his property for Rs.70 lakhs. The buyer deducted 1% (Rs 70000) and deposited with Govt and it reflected in 26AS also. This sale amount was entirely invested in another house. So, there are no capital gains. To get the credit of this TDS u/s 194IA, which ITR form to be used. Earlier, we are using ITR1 only. To avoid last date, we used ITR1 this AY also and could not avail the tax credit. How to get that through which ITR? Kindly advise.
Whether TDS will be applicable in case of Exchange of property also where the guideline value of both the property are more than Rs. 50 Lacs.
1)I am buying a flat of value above 50 lakhs .But its a RESALE property.So will I have to deduct TDS ?
If yes-
2) I am getting it part finance by bank .So will he bank credit the full amount and I need to deduct TDS or the bank will deduct TDS and pay the seller.
TDS WAS DEDUCTED IN THE FY 2018-19, PROPERTY SOLD ( REGISTRATION) IN FY 2019-20. IN WHICH YEAR I HAVE TO SHOW SALE OF PROPERTY. WHICH YEAR I HAVE TO CLAIM TDS.
PLEASE DO THE NEEDFUL ITS URGENT
We- mysef, my son and my daughter -in- law bought a flat and deducted the TDS while paying the seller. The TDS has been paid to the govt. Now, could we consider the amount as something like self assessment tax while filing the returns? If yes , kindly enlighten me the process. Thank you.
RECENTLY PURCHASED A PROPERTY VOR CONSIDERATION ABOVE RS.50 LACS. I HAVE DEPOSITED 1% TDS THROUGH ONLINE AFTER DULY FILLING UP THE CHALLAN FORM 26QB ON LINE. I HAVE ALSO GENERATEDFORM 16B AND SUBMITTED TO THE TRANSFEROR (SELLER) OF THE PROPERTY.
MY QUERY IS WHETHER I NEED TO SUBMIT/FILE ANY OTHER RETURN OR DETAILS TO TAX AUTHORITIES OR TO ANYONE ELSE.
ABC Pvt ltd co. purchased a running factory under slump sales for Rs. 20 Crores. Whether TDS u/S 194IA applicable
advance tds on sales of property paid in a.y 2018-19, but sales of property & registration is don on oct 2018 a. y 2019-20
how to file my itr, when can i declared tds & file itr
I bought a under construction flat whose value without GST is below Rs 50 Lacs, but value exceeds Rs 50 Lacs with GST.
Should I deduct 1% TDS ?
There is a CBDT circular which clarifies that TDS is to be deducted on amount excluding GST, if GST is indicated separately. While this circular clarifies the ‘quantum’ on which 1% TDS should be applied, but it is not clear whether or not GST should be excluded from consideration value for the purpose of Scope TDS applicability (Rs 50 Lakhs threshold).
Could you please share your opinion with a case law or guidance note (if any) issued on this matter.
tax is deductable on consideration paid or crdited other deeming provisions are not relevant as far as tds is concerned.
Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of “””””seven days”””” from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.,
Is Seven days correct or it should be 30 days ?
I have an employee who is transferred during the 2nd qtr 2016-17 and his TDS deducted is Rs 40000.00.However while furnishing return for the entire F.Y 2016-17 TDS liability for that employee for the whole F.Y 2016-17 comes to Rs 30000.00.How to show the same in the revised return for the F.Y 2016-17.
If payment is made in instalments for under construction property , can I make one time TDS payment for the entire amount, even if only one instalment is paid to the builder. The builder says I can . Please advise which is correct – to pay TDS every instalment or it can be paid at one one go.
The buyer purchased two immovable properties belonging to two different individuals which are lying adjacent to each other.But they are two distinct properties and had two separate title deeds and belonged to two different individuals.The aggregate purchase value of both properties together exceeds Rs.50 lakhs but individually they do not exceed Rs.50 lakhs. Both properties though conveyed under a singe document, the purchase value of both properties and the description of each property have been separately mentioned in the title deed. The payments for both parties have been made vide two separate cheques to each seller. The department insist that since both properties are conveyed under same document the aggregate value of both the sales should be considered together for invoking S.194 IA. I seek opinion in this regard.I seek your opinion.
The payee must be a resident Transferor of an immovable property (other than agricultural land).
can DDA and HUDA covered under the meaning of transferor
MY BUILDER-BUYER AGREEMNET WAS MADE IN MAY2013 AND I PAID 8 LAKHS TOO IN MAY.
IN JUNE Sec.194IA WAS ANNOUNCED. AND AFTER THIS I PAID 45 LAKHS IN DECEMBER 2013.
ON WHAT AMOUNT SHOULD I PAY 1%TDS? 53LAKHS OR 45LAKHS?
TDS Section 194IA. Payment on transfer of Immovable Property.
In absence of PAN by the transferor, rate of TDS is specified as provided under section 206AA which is higher of (i) rate as per ACT, (ii) rate as per Finance Act, (iii) at the rate of 20 %.
Why create the confusion. Dont they know the rate of Act ??. They would also know if it Is higher or lower than 20 %. They can easily specify the higher one why mention both to lead to confusion.
As for Finance Act, the Finance Act should specify the rate if they propose rate higher than 20%.. If Not, mentioning it is meaningless.
Hence, and accordingly, Section 206AA should be more forthright and clear in specifying the rate and further provide rate shall apply unless provided differently in the relevant Finance Act.
Any comment.
I have a query: the actual sale prize is 45 lakhs but i forced to put the consideration as 55 lakhs due to the fair value fixed by the government is more than the actual value. am i liable to deduct TDS from the transfer or
Another question: the tranfereror trnasfers only the land but there is a reference of apartment constructed by builder at the cost and expenses of buyer himself. so for the purpose of computing the stamp duty and registration fee, the value of apartment also to be added with consideration. but such value of building is not deposited in the account of transferor. such case the total consideartion is more than 50 lakhs consisiting of vlaue of land transfered by tranferor being 20 lakhs and value of buulding being 30 lakhs utilised for constrctuiton. if so am i laible to deduct TDS 1% under section 1941A
I have a query. if the property is registered at government value, say, 40 lakh but the sale consideration is 60 lakh , tax is to be deducted at 1% on 60 lakh. But, the seller is insisting not to deduct tax as the entire proceeds will be reinvested by him. Is it ok?
Please advise.
I have selected wrong Financial year while filling form26QB, Now form16B is available for download.How can I get financial year / Assessment year get corrected in these forms ?please advise. tsahain@yahoo.com