Regarding IT TDS Liability

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This discussion clarifies IT TDS (Tax Deducted at Source) liability when a construction company (B) purchases a landowner's (A) share of a property. If the total consideration for this share is below £50 lakh, and the agreements for the land and construction are not combined, then TDS under Section 194IA is generally not applicable. This holds true even if the buyer is a partnership firm and the transaction is based on the Fair Market Value (FMV) of the property.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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08 July 2024 Land owner is "A", construction on it is done by "B".After the completion of construction, A's share is purchased by "B" & payment of same is below 50lakhs.

Does it attracts any TDS deduction liability on part of "B"?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 July 2024 Only if the agreements of both the transactions are not agglomerated.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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09 July 2024 What if party "B" is partnership firm?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 July 2024 Doesn't change the stand. Sec. 194IA is based on the FMV of the asset transferred.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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09 July 2024 If total consideration of such transaction is below 50 lakh then any TDS provision would be attracted?
Note: Agreement is done as per FMV of property.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 August 2024 No. The TDS is applicable for the properties having value of Rs. 50 lakhs or above.

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