Sec. 194ia

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2015 One of my client has made agreement to sale of Office in Dec. 2014 for purchase of the same for Rs.49.50 lacs
Now he wants to register his office by registered purchase deed, but now govt. value is coming to Rs.55 lacs.

So, he wants to know whether he will have any adverse implication, if he make purchase deed for the amount they have agreed in agreement to sale (i.e. Rs.49.50lacs) and pay full stamp duty on the govt. value (i.e. Rs.55lacs).

And if no adverse effect for him them whether he has to deduct TDS u/s. 194IA instead of actual purchase value of Rs.49.50 lacs paid by him.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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24 April 2015 1.He is not required to deduct TDS U/s 194-IA because The TDS liability is on the basis of amount paid /payable.
2. However, the difference of Rs 5.50 lac (55.00-49.50) will be taxable U/s 56(2)(vii)(b) w.e.f. AY 2014-15.
.
In such a situation paying the full govt. value will be more beneficial.
.

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2015 Thanks sir.

Rs.5.50 lacs taxable in the hands of seller or purchaser???

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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23 July 2025 In the situation you described, **the difference of Rs.5.50 lakhs (Rs.55.00 lakhs - Rs.49.50 lakhs)** will have implications \*\*in the hands of the ***purchaser***, under section **56(2)(vii)(b)** of the Income Tax Act, 1961 (now 56(2)(x)).

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### ✅ **Explanation:**

Your client (the **purchaser**) entered into an **Agreement to Sale in Dec 2014** for **Rs.49.50 lakhs**, but **registration is happening later**, and the **stamp duty value is now Rs.55 lakhs**.

As per **section 56(2)(vii)(b)** (applicable at that time), if:

* An immovable property is received for consideration,
* And the **stamp duty value exceeds the consideration by more than Rs.50,000**,
* Then **the difference is taxable in the hands of the purchaser** under **"Income from Other Sources"**.

👉 Here, the difference is **Rs.5.50 lakhs**, so it **is taxable** in the hands of **your client (purchaser)**.

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### 📌 **TDS under section 194-IA:**

Under **section 194-IA**, the buyer is required to deduct **TDS @1%** if the **sale consideration exceeds Rs.50 lakhs**.

* The **TDS is calculated on the amount paid/payable**, i.e., Rs.49.50 lakhs in your case.
* Since the **actual agreed value is Rs.49.50 lakhs**, **TDS under section 194-IA is not applicable** (as it is **below Rs.50 lakhs**).

> ✔️ No TDS required **if the consideration is below Rs.50 lakhs**, **even if** the stamp duty value is more.

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### ✅ **Summary:**

| Aspect | Treatment |
| ---------------------------- | --------------------------------------------------------------------------------- |
| **TDS u/s 194-IA** | Not applicable (agreement value < ₹50 lakhs) |
| **Taxability of difference** | ₹5.50 lakhs taxable in the hands of the **purchaser** under section 56(2)(vii)(b) |
| **Stamp duty to be paid on** | ₹55 lakhs (Government value) |

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### 💡 **Tip to Avoid Tax on Difference:**

If the buyer and seller had registered the **Agreement to Sale (Dec 2014)** by paying **sufficient advance and stamp duty**, they could have **averted this tax** implication under **Section 56(2)(vii)(b)**.

Let me know if you want help drafting an explanation for the client or a detailed calculation of tax liability.

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