Section 194IA- TDS on payment on transfer of certain immovable property

  • 1.Deductor- Any Purchaser (Other than person referred to in section 194LA)
  • 2. Deductee- Any seller being resident
  • 3. Time of deduction- At the time of credit or payment, whichever is earlier
  • 4. Rate of TDS- 1% of the total considerations for transfer of immovable property.
  • 5. Every person is liable to deduct TDS @ 1% on payment made for purchase of immovable property to a person resident in India except for:
    • (i) rural agriculture land (which is not coming in definition of capital asset), and
    • (ii) where the sale consideration for the property is less than Rs. 50 Lakh.
  • 6. Every person who is purchasing property of Rs. 50 Lakhs or more would have to deduct TDS @ 1% of the payment made to the seller.
  • 7. In the case of property whose sale price is Rs. 50 Lakhs or more and in the event of part payment is being made for the purchase, then such TDS would be required to be deducted on every part payment of consideration and not at the time of final payment.
  • 8. If the sellers jointly own a property and sells for a total consideration of Rs. 50 Lakhs or more, section 194-IA is attracted even if each co-owner’s consideration is less than Rs. 50 lakhs.
  • 9. It is not necessary that the land and building should be situated in India. If any person is purchasing property outside India from a person in India, he is liable to deduct tax at source on sale consideration@ 1%
  • 10. In case section 194-IA is attracted then the purchaser isn’t required to obtain TAN, i.e. Tax Deduction Account Number i.e., Section 203A is not applicable.
  • 11. In case seller does not have PAN, then instead of 1%, TDS will be applicable @ 20% because of section 206AA of the Income-tax act, 1961.
  • 12. TDS is required to be deducted irrespective of the fact that immovable property is held as capital asset or stock-in0trade by the buyer and seller.
  • 13. In case immovable property (Other than agriculture land which is not capital asset) is acquired under any law in force, the provision of section 194-LA shall apply and provision of section 194-IA is not applicable.
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