Section: -194-IA (TDS on Payment on transfer of certain immovable property other than agricultural land)
Provision Extract from Section 194IA of the Income Tax Act
- 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.
- No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
- The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
Summary of Section 194IA
- Deductor/ Payer: Any person (other than the person referred to in section 194LA) or Buyer
- Deductee/ Payee: Resident person or Seller
- Applicable from: 01-06-2013
- Threshold Limit: If total consideration Rs. 50,00,000/- or more
- Rate of TDS: 1% of the total sale consideration
- Consideration Means (w.e.f. 01-09-2019):
Consideration for immovable property” to 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 the transfer of the immovable property. This is applicable for immovable property purchased on or after 1 September 2019.
- “Immovable property” means any land (other than agricultural land) or any building or part of a building.
- “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; (See below definition)
- If the payment is made by instalments, then TDS has to be deducted on each instalment paid.
- Time of deduction: At the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.
- No TDS: No TDS is required to be deducted if sales consideration for the transfer of an immovable property is less than of Rs. 50,00,000/-.
- Higher Rate of TDS: TDS must be deducted @ 20% on the transaction amount if PAN is not provided by the payee.
- Section 203A Does Not Apply:
The buyer does not require to obtain TAN (Tax Deduction Number) to deducted TDS. Buyer can us his PAN to deduct TDS. Hence, provisions of section 203A shall not apply.
- Form 26QB (Deposit of TDS & Furnishing of Statement):
The TDS on immovable property has required to be paid to Central Government within 30 days from the end of the month in which TDS was deducted by using Challan-Cum-Statement in Form 26QB.
- Form 16B (TDS Certificate):
Within 15 days of depositing TDS to the government by using Form 26QB, the buyer is required to furnish the TDS certificate in Form 16B to the seller.
- “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;
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:
|Distance from Municipal limit or Cantonment Board
|More than 10,000 but does not exceed 1,00,000
|Within 2 kilometres
|More than 1,00,000 but does not exceed 10,00,000
|Within 6 kilometres
|Within 8 kilometres
Explanation. —For the purposes of this sub-clause, “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;