Tds of 1% on sale of property > 50 lacs

This query is : Resolved

pjrao (Querist)
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16 October 2013 Dear Sir,

W..e.f 1/06/2013, as per new section 194IA, 1 % TDS has to be deducted by purchaser while making payment to seller for property sale of over Rs 50 lacs. My query is that:
If a single plot sale value of Rs 60 lacs is divided into two sale deeds and property is registered twice say on 30 th Oct13 for Rs30 lacs for half plot and on 30 NOV 13 for Rs 30 LACS for the other half of the plot.
Please clarify whether 1 % TDS is to be deducted or not.

Thanks and regards,
pjrao

CA Rinkal

CA Rinkal (Expert)
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16 October 2013 dear

there is dispute regarding the same

but according to the provision u/s. 194I person has to deduct TDS @ 1% on total payment, if the same exceeds 50 lac,

but as per my understanding
1. one to one transaction must be consider in mind.

it means one seller pay 50 lac to one buyer then only this 194I section applies.

if the buyer purchase a property and there is two registered seller and the individual amount to be payable is being less than 50 lac then this provision should not apply.

but as per lower or nil litigation, yoou must deduct tax and deposit the same with govt.

mind well this is my personal view as there is no notification regarding this matter.

pjrao

pjrao (Querist)
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17 October 2013 In the referred query there is only one seller and only one purchaser but the dates for registry of plots are different.To make it more clear, only one big plot is divided into two parts and each part is registered on separate dates .
What will be the tax status in that case.

Regards,

p.j.rao

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Great question! Here’s a detailed explanation regarding **TDS under Section 194IA on sale of property when the transaction is split into two deeds**:

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### Relevant section:

* **Section 194IA** mandates that **1% TDS** must be deducted by the purchaser **if the total sale consideration exceeds ₹50 lakhs**.
* The TDS is deducted on the **amount paid or credited** to the seller.

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### Your scenario:

* One plot valued at ₹60 lakhs is sold in **two parts**, two separate sale deeds:

* ₹30 lakhs on 30th Oct 2013
* ₹30 lakhs on 30th Nov 2013
* Single seller, single purchaser, but registration and payments are in two tranches.

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### Key points and analysis:

1. **Aggregate value matters:**

* The law is intended to tax **total consideration for the entire property**.
* If the total sale consideration **exceeds ₹50 lakhs**, then TDS @1% should be deducted on the **entire payment**.

2. **Splitting transactions:**

* Splitting the sale consideration into multiple deeds or payments just to avoid TDS is **not in the spirit of the law**.
* Income tax authorities generally consider the **substance over form** — i.e., total consideration between the same parties for the same property.

3. **Practical implication:**

* Even though the transaction is registered twice, it is **one sale agreement split into two parts**.
* Hence, **TDS @1% should be deducted on the full ₹60 lakhs**.

4. **If no TDS is deducted:**

* The purchaser may be liable to pay TDS along with interest and penalty.
* The seller may lose credit of the TDS if it’s not properly deducted and deposited.

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### Conclusion:

* **You should deduct TDS @1% on the entire amount of ₹60 lakhs**, not separately on ₹30 lakhs twice.
* The two sale deeds are considered as parts of one transaction.
* Deduct TDS on ₹60 lakhs when making the payment or crediting the seller's account.

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### Suggestion:

* While depositing TDS, mention both the transactions clearly.
* Obtain a **TDS certificate (Form 16B)** for the total amount.
* Consult your tax advisor or legal counsel for any case-specific nuances.

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If you want, I can help draft a note or calculation for TDS deposit based on your transactions. Just let me know!

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