Tds on transfer of inmmovable property u/s 194ia
This query is : Resolved
03 March 2014
As per 194IA , any person , being a trasferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property, deduct an amount equal to 1% lf such sum as income-tax thereon.
My client is local transferor transferred his immovable property to non-resident Indain (NRI) who doesn't have PAN. How TDS is deducted and paid by the transferee as per TDS provisions?
My client is local transferor transferred his immovable property to non-resident Indain (NRI) who doesn't have PAN. How TDS is deducted and paid by the transferee as per TDS provisions?
03 March 2014
TDS is required to be deducted by the BUYER. The BUYER has to deduct TDS and deposit the same. There is NO liability on the seller.
Since in your case the client is the SELLER, he is NOT required to comply with the above provision.
Since in your case the client is the SELLER, he is NOT required to comply with the above provision.
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03 March 2014
yes in this case buyer needs to deduct tds under this section.
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05 March 2014
I know that in case of transfer of immovable property buyer has to deduct TDS. But in this case buyer is NRI and seller asked to us what to do by the buyer to deduct TDS as he is NRI having no PAN ? Please suggest us from buyer's point of view who is NRI?
27 July 2025
Great question! Here’s how TDS deduction and compliance under **Section 194-IA** works when the **buyer (transferee) is an NRI without PAN**:
---
### Key points:
* **Section 194-IA** applies to the buyer (transferee) deducting TDS at 1% on the consideration paid for immovable property.
* The buyer (NRI) is **mandated to deduct TDS at 1%** of the purchase price and deposit it with the government.
* If the buyer **does not have a PAN**, the **TDS deduction rate increases to 20%** as per Income Tax rules (Section 206AA).
---
### What the NRI buyer should do:
1. **PAN is mandatory:**
* The NRI buyer must obtain a PAN before the transaction.
* If no PAN is furnished, TDS has to be deducted at 20% instead of 1%.
2. **TDS Deduction and Payment:**
* The buyer deducts TDS @ 1% (or 20% if no PAN) of the sale consideration.
* The buyer must deposit the TDS with the Income Tax Department within the prescribed time (usually within 7 days from the date of deduction or before the due date of filing TDS return, whichever is earlier).
3. **Form 26QB and 16B:**
* The buyer files **Form 26QB** (online challan-cum-statement for TDS on property) to deposit TDS.
* After deposit, Form **16B** (TDS certificate) is generated for the seller.
4. **Seller’s compliance:**
* The seller (resident in this case) can claim credit of the TDS deducted against their tax liability.
---
### Practical Steps for NRI buyer without PAN:
* Urgently apply for PAN. The NRI buyer can apply for PAN through the online PAN application form for NRIs.
* Until PAN is obtained, the buyer should deduct TDS at 20% (higher rate due to no PAN).
* Once PAN is obtained, the buyer may revise the TDS return to reflect the correct TDS rate (1%).
---
### Reference:
* **Section 206AA** — "In case of no PAN furnished, TDS rate is higher (20%)."
* **Section 194-IA** — Buyer deducts 1% TDS on transfer of immovable property.
---
### Summary Table:
| Buyer Type | PAN Available? | TDS Rate on Property Purchase |
| -------------- | -------------- | ----------------------------- |
| Resident Buyer | Yes | 1% |
| NRI Buyer | Yes | 1% |
| NRI Buyer | No | 20% (due to Section 206AA) |
---
If you want, I can help draft a note or checklist for your client explaining these points clearly. Would that help?
---
### Key points:
* **Section 194-IA** applies to the buyer (transferee) deducting TDS at 1% on the consideration paid for immovable property.
* The buyer (NRI) is **mandated to deduct TDS at 1%** of the purchase price and deposit it with the government.
* If the buyer **does not have a PAN**, the **TDS deduction rate increases to 20%** as per Income Tax rules (Section 206AA).
---
### What the NRI buyer should do:
1. **PAN is mandatory:**
* The NRI buyer must obtain a PAN before the transaction.
* If no PAN is furnished, TDS has to be deducted at 20% instead of 1%.
2. **TDS Deduction and Payment:**
* The buyer deducts TDS @ 1% (or 20% if no PAN) of the sale consideration.
* The buyer must deposit the TDS with the Income Tax Department within the prescribed time (usually within 7 days from the date of deduction or before the due date of filing TDS return, whichever is earlier).
3. **Form 26QB and 16B:**
* The buyer files **Form 26QB** (online challan-cum-statement for TDS on property) to deposit TDS.
* After deposit, Form **16B** (TDS certificate) is generated for the seller.
4. **Seller’s compliance:**
* The seller (resident in this case) can claim credit of the TDS deducted against their tax liability.
---
### Practical Steps for NRI buyer without PAN:
* Urgently apply for PAN. The NRI buyer can apply for PAN through the online PAN application form for NRIs.
* Until PAN is obtained, the buyer should deduct TDS at 20% (higher rate due to no PAN).
* Once PAN is obtained, the buyer may revise the TDS return to reflect the correct TDS rate (1%).
---
### Reference:
* **Section 206AA** — "In case of no PAN furnished, TDS rate is higher (20%)."
* **Section 194-IA** — Buyer deducts 1% TDS on transfer of immovable property.
---
### Summary Table:
| Buyer Type | PAN Available? | TDS Rate on Property Purchase |
| -------------- | -------------- | ----------------------------- |
| Resident Buyer | Yes | 1% |
| NRI Buyer | Yes | 1% |
| NRI Buyer | No | 20% (due to Section 206AA) |
---
If you want, I can help draft a note or checklist for your client explaining these points clearly. Would that help?
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