As we all aware that in India, before introduction of Section 194IA there is no tax on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties. In order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time Government has introduce Section 194-IA.

Some important provisions or points related to section 194IA is as under:

  • TDS to be deducted @ 1% of the total sale consideration. However, TDS needs to be deducted @ 20%, if the deductee does not furnish PAN.
  • No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than Rs. 50,00,000/-.
  • Online Payment of TDS through challan cum statement on Form 26QB through NSDL Website:- Tax so deducted should be deposited to the Government Account through any of the authorized bank branches using the e-Tax payment option available at NSDL. TDS so deducted shall be paid within 30 days from the end of the month in which TDS was deducted.
  • TDS certificate must be issued to the deductee in Form 16B within 15 days from the due date of deposit of TDS.
  • The deductee shall be entitled to avail credit for the entire amount of TDS deducted during the financial year in its Return of Income.
  • TDS u/s 194-IA shall be deducted even if the transaction takes place before 1st June, 2013 and payment is made after 1st June, 2013.
  • However, if credit to the account of the transferor has been given before 1st June, 2013 then provisions of section 194-IA will not apply, even if payment has been made after 1st June, 2013. (Payment or credit whichever is earlier)
  • Threshold limit of Rs. 50 Lacs will be applicable to each & every property separately. Property can be either of residential or official purpose.
  • In case any installment becomes due before 1st June, 2013 but paid after 1st June, 2013 and the transferee has not credited the same to the account of the transferor before 1st June, 2013, then provisions of section 194-IA shall apply and TDS will be deducted on the amount paid after 1stJune, 2013.
  • In case of installment system of payment, TDS is required to be deducted on all such installments individually which fall due after 1stJune, 2013 but only on principal portion and not on the interest or penalty portion.
  • The threshold limit of Rs. 50 Lacs is with reference to each property. If a property transaction involves more than one buyer and share of each buyer in the property is less than Rs. 50 Lacs but the value of the property in aggregate is more than Rs. 50 lacs then provisions of section 194-IA will be applicable. In such case, TDS will be deducted and deposited by each buyer in respect of their respective share in the property.
  • Similarly, in case of a property transaction involving more than one seller, TDS will be deducted in respect of amount paid to each seller and their respective PAN will be quoted while making payment through Form 26QB.
  • TDS provisions of section 194-IA shall apply only if the transferor is resident in India.

Procedure of filing Form 26QB:

  • Firstly one has to go to the site of Tin.nsdl in following link: https://onlineservices.tin.egov-sdl.com/etaxnew/tdsnontds.jsp
  • Once this link is opened click on Form 26QB (Payment of TDS on sale of property).
  • Select (0021) in case of non corporate payer and 0020 in case of corporate payer.
  • On filling in the various details called for in that form, click on ‘Proceed’ at the bottom of the page, this will then take you to the next page, which will give you the option to select your bank.
  • Once you select the bank, then login using the normal online process for your bank. Once the payment is made the bank will let you print challan 280 with a tick on (800), which is payment of TDS on sale of property.
  • Take a printout of the challan and keep the same for your records and for the builder/seller if required. This is the first phase of the process.
  • There is also alternative mode payment if one does not have online banking registration.
  • One can fill in the form as above & while proceed there is option of “Subsequent payment through bank”
  • Choose that & it allows you to generate online receipt for Form 26QB with Ack no.
  • The same can be valid for 10 days from the date of generation online.
  • The same is to be carried at the authorized bank (list is given on the TIN.nsdl site) with cheque.
  • Bank will do online payment for you & generate Challan.

To Know more about Payment Procedure Please click the link given below :-

TDS on Property – FAQ , Payment Procedure & Points to Remember

TDS U/s. 194IA on Immovable Property to be paid by Form 26QB; TDS certificate in Form 16B

RELATED POSTS ON THE TOPIC

S. No. POST TITLE
1. CPC(TDS) releases Online Correction Facility for 26QB Statements
2.

Mandatory Filing of Form 26QB by Buyer of Immovable Property

3

CPC-TDS enables online correction in form 26QB

4.

Withholding tax Impact on Property transaction by Non-Residents Indian/Foreign Nationals

5.

TDS on sale of Immovable Property- Beware CPC TDS issuing intimation for late deposit of TDS

6.

TDS on sale of Immovable Property by Non-resident

7.

TDS- Sec.194IA – Payment on transfer of certain immovable property

8.

Transfer of Immovable Property & Income Tax – A Critical Analysis

9.

Procedure for TDS Payment (FORM 26QB) and Generation of Form 16B

10.

Tds On Purchase Of Immovable Property Effective 1st June,2013

Republished with Amendments

More Under Income Tax

0 Comments

  1. atul says:

    hi,

    have purchased an under construction property from an investor.

    As per tri party agreement total agreement cost of 1.1 crore to be paid to investor, out of which 80 lacs will be paid to investor & 30 lacs to be paid to builder as per demand letter. Have spent 3 lacs in S Duty & 30,000 in Registration.

    Whether 1% TDS to be deducted on agreement value of 1.1 crore or on 1.133 crores (which includes registration + SDuty)

  2. Vidyadhar says:

    Investor purchases flat from builder against issue of allotment letter.

    No agreement for sale is executed.

    Investor shall be exciting from the investment after certain period of time on agreed terms and conditions by surrending the allotment letter.

    Under this circumstances is tax required to be deducted @ 1% on the invested amount u/s 194IA.

  3. jcgoel says:

    i have booked a flat with one of the builder at faridabad and made a payment of rs 13 lakh before june 2013 and 8 lakh in july 2013 the total value of the flat basic sale price is rs 65 lakh and about 20 lakh is other charges including servive tax . my query is wheather i have to deduct tds on payment made before june 2013 wheather the taxes and other charges are taxable in a col of totatl value of property what amount i have to show. one thing the builder buyer agreement was executed on 3rd sep 2013. kindly help me

  4. CA. M. Lakshmanan says:

    It is not applicable for sale of Agricultural Lands. But in the latest Finance Act the basic definition agri lands is changed and according to which most of the lands which are in the vicinity of towns or even villages, though agricultural operations are carried on, will not be exempted. To avoid confusions and litigation the government should immediately notify the non-agri. lands with reference to patta no./survey no. which are near towns/villages so that they purchaser will deduct tax at source.

  5. Pattabhi says:

    Sir,

    Is this TDS could be a reduction in payment of Capital Gain Tax?
    Is it so even the Capital Gain Tax is paid during subsequent assessment year?

    Kindly clarify.

  6. vswami says:

    Add-on:

    Another aspect of concern is the timing of withholding. In one’s view, if special regard be had to the purport of the provision, – to be precise,the clinching words used namely, “payment on transfer”, “consideration for transfer”,‘transferor’ and ‘transferee’, emphasis must be on the event of actual transfer. If so, withholding will, logically, be called for only at the time when the ‘transfer’ can be regarded to become conclusive in law. That is when the document of transfer is duly stamped and registered.

    Not being free from doubt, however,for the sake of uniformity in enforcing the requirement,a categorical confirmation by the CBDT might help; thereby avoid varying practices being followed by deductors.

  7. vswami says:

    Personal Reaction:

    Some of the comments posted herein (also in some other websites) pertain to compliance of the new TDS requirement in cases where the subject matter of ‘transfer’ is a ‘unit’ of a building, commonly known as Flat or Apartment. The concept of “unit” is a special concept, with entirely different legal significance and characteristics.

    The Explanation (b), u/s 194 IA provides that, for it’s purposes , – “immovable property” means any land (other than agricultural land) or any building or part of a building. To focus on, the term used is “part of a building”.

    The special concept of “unit”, however, is, – though often confused with, not only by common men but also by advising professionals, – not the same but is clearly distinct from “part of a building “referred to in the Explanation. The stated proposition, in one’s longstanding conviction, is indisputable ; and finds ample support in the very fact that is the reason why the government itself considered it necessary hence later amended the law so as to specifically bring within the tax net, the so called asset ,- “unit” of a building. Reference is to the amendments made way back, wef 1-4-1988.

    Those are to be found in the then introduced sub-clause (vi) of section 2 (47), and clause (iiib) of Section 27 (both required to be read with clause (d) of Section 269 UA). These are provisions for taxing income from /in respect of “unit” of a building, respectively under the head of capital gains and house property.

    On the premise that the foregoing observations do not suffer from faulty logic but are well reasoned, the noted omission to cover “unit” for the propose of section 194 IA, is patently unintended and a lacuna over sighted. If so, the government, if and when realised, may come out with a suitable amendment of section 194 IA to plug in the corrective. Till then, need not add, to that extent, the TDS mandated would remain in animated suspense.

    Now, it is for the stalwarts/law experts in the field, if not in agreement with the foregoing viewpoints, to volunteer and come out with an independent opinion. For, any such useful and purposeful guidance may help out the honest taxpayers and retrieve them from the quandary pushed into.

  8. Atul maheshwari says:

    A has made a booking for a flat with a builder and has paid 60 lacs till this date.
    He sells his booking for 62 lacs to B.
    b has to pay another 60 lacs to builder.

    Now for tds purposes who is the seller and who is the buyer. Who will deduct how much tds

  9. J. Rangarajan says:

    Kindly clarify the following :

    Whether the Buyer to deduct TDS 1 % on the total consideration of Flat, i.e. both UDS value and constructed value or 1% to be deducted on only UDS value which registered with SRO.

    Thanks & regards,

    J. Rangarajan

  10. Esteyak Ansari says:

    TDS is payable on 1% of consideration payable to seller. Stamp duty & other charges are laibilities of buyer these all are not part of TDS payment.

  11. Esteyak Ansari says:

    it is 1% of consideration payable to seller and stamp duty & incidental charges are transferee’s obligation it should be not a part of TDS consideration

  12. Dhanesh says:

    Whether TDS @ 1% is to be deducted on the transfer prices (excl of stamp duty and other incidental exps.) or on the total purchase value of property (incl of stamp duty, registration exps. etc.)

  13. A K SARMA says:

    Sir,
    We have filed our revised return of form_26Q4 2012-2013 or correction in PAN of Deductee on 07.05.2013. till date the status is showing as “Under Process at CPC”. but the IT Rule says that Form_16A must be issued within 15 days from the due date of Filing of Return. the contact@tdscpc.gov.in is not respopnding our repeated requests other than an auto reply which is not useful. I am writing this problem to taxguru because taxguru is sending tax related updates to its customers. it became a mystery that to whom we can contact for customer problems of tdscpc.gov.in. it is requested to suggest a suitable way to solve the problem

    regards,
    A K Sarma

  14. raghava says:

    If i purchase an apartment where land owner and builder is different where in triparty agreement is made, whom should we consider as transferor?

    And what is the definition of total value? Is it including carparking charges, Water & electrcity charges, service tax etc., collected by the builder or it is only basic value?

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