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TDS on transfer of immovable property

CA Alexandar Gazi , Last updated: 09 March 2023  
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Section 194IA of the Income Tax Act, 1961

Any person (i.e. Individual, HUF, Partnership firm including LLP, AOP, BOI, Company, Local authority, Artificial Juridical person) being a transferee of immovable property, other than the agricultural land, responsible for making payment to a resident transferor as consideration for transfer of any immovable property, shall deduct TDS @1% of such payment.

Note: Where stamp duty value of the property is higher than the consideration for transfer, 1% shall be calculated on the stamp duty value of the property.

When TDS shall be deducted

TDS @1% shall be deducted at the time of credit of consideration for transfer to the account of the transferor or at the time of payment in cash, or by issue of a cheque, or draft or by any other mode, whichever is earlier.

Note:

(i) U/S 269SS, no person shall be permitted to accept Rs. 20,000/- or more in cash in relation to transfer of an immovable property (even if transfer does not take place).
(ii) TAN is not required to deduct and payment of TDS under this section.

TDS on transfer of immovable property

Exception

(1) Where consideration for transfer and the stamp duty value of the property both are less than Rupees fifty lakh, no TDS is required to be deducted.
(2) No TDS will be deducted under this section where the immovable property is transferred on account of compulsory acquisition, under any law for the time being in force. In such a case, Section 194LA will be applicable instead of Section 194IA.

Meaning of Agricultural Land

Agricultural land means agricultural land in India. Land situated in the following areas shall not be considered as agricultural land under this section.

i) Agricultural land situated within the jurisdiction of any municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name or a cantonment board and which has a population of ten thousand or more according to the last census published before the 1st day of relevant previous year.

ii) Agricultural land situated within 2 kilometers, measured aerially, from the local limits of any municipality, etc. referred to in point (i) above and which has a population of more than ten thousand but not more than one lakh according to the last census published before the 1st day of relevant previous year.

iii) Agricultural land situated within 6 kilometers, measured aerially, from the local limits of any municipality, etc. referred to in point (i) above and which has a population of more than one lakh but not more than ten lakh according to the last census published before the 1st day of relevant previous year.

 

iv) Agricultural land situated within 8 kilometers, measured aerially, from the local limits of any municipality, etc. referred to in point (i) above and which has a population of more than ten lakh according to the last census published before the 1st day of the relevant previous year.

Consideration for transfer of immovable property- an inclusive definition

Consideration shall include all charges of the nature of club membership fee, car parking fee, electricity and water facility fee, maintenance fee, advance fee, or any other charges of similar nature, which are incidental to transfer of the immovable property.

Responsibility of the transferee after deducting TDS against payment to the transferor

The amount of TDS which has been deducted shall be deposited to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction was made.

How to deposit TDS amount to the Credit of the Central Government?

The amount TDS may be deposited either through: WWW.PROTEAN-TINPAN.COM or WWW.INCOMETAX.GOV.IN/IEC/FOPORTAL.

(i) Payment through WWW.PROTEAN-TINPAN.COM (when transferee is making payment through HDFC bank or Punjab & Sind bank or State Bank of India)

  • Go to the above website
  • Put the mouse pointer on SERVICES
  • Click on e-payment: Pay taxes online
  • Scroll down-TDS on Property (Form 26QB)- Click on PROCEED- Fill up the required information – make payment.

(ii) Payment throughWWW.INCOMETAX.GOV.IN/IEC/FOPORTAL (When transferee is making payment through other than HDFC bank, Punjab & Sind Bank and SBI)

  • Logging into the income tax e-filing account
  • Put the mouse pointer on e-File tab
  • Click on e-Pay from the drop-down list
  • Click on NEW PAYMENT (on the top right side)
  • Click on PROCEED under 26 QB (TDS on sale of Property)
 

Note:

(i) Preserve the Form Acknowledgement Number for future reference.

(ii) In case TDS was not deducted or deducted but not paid, the Income tax department may send a demand notice to the transferee. In such a situation , click on PROCEED under DEMAND PAYMENT FOR TDS ON PROPERTY (FORM 26QB)

(iii) No TDS return/statement is required to be filed.

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Published by

CA Alexandar Gazi
(PRACTICING CHARTERED ACCOUNTANT)
Category Income Tax   Report

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