Tds on purchase of Fish tanks

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When purchasing agricultural land that has been converted into fish tanks, it's important to consider TDS implications. While Section 194IA typically applies to immovable property over £50,000 (excluding agricultural land), converting agricultural land for commercial use like fish tanks means it's no longer treated as agricultural. Therefore, 1% TDS may be deductible on such a purchase.

RAMANA MURTHY N.V.

RAMANA MURTHY N.V. (Querist)
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04 April 2023 if purchase of agricultural land which is converted into Fish tanks, it is neccesary to deduct 1% tds u/s.194IA

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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04 April 2023 Yes, applicable while purchase.

CA Sanat Pyne

CA Sanat Pyne (Expert)
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04 April 2023 Section 194IA of the Income Tax Act, 1961 mandates the deduction of TDS (Tax Deducted at Source) at a rate of 1% on the sale of immovable property (other than agricultural land) if the value of the property exceeds Rs. 50 lakhs. However, this provision does not apply to the sale of agricultural land.

As per the Income Tax Act, agricultural land is defined as land that is used for agricultural purposes or is situated in a rural area. If the land purchased is agricultural land and is used for agricultural purposes, then TDS is not required to be deducted under section 194IA.

However, if the agricultural land is converted into fish tanks, it would be treated as commercial use and not agricultural use. In such a scenario, the sale of land would not be treated as agricultural land, and TDS may be required to be deducted under section 194IA.

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