WHO WILL PAY TDS UNDER SECTION 194IA?

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This discussion addresses who is responsible for paying Tax Deducted at Source (TDS) under Section 194IA when a director purchases a property exceeding £50 lakh in their own name, but the payment is made from the company's bank account. While the director is technically the buyer and responsible for TDS, the company will likely deduct and pay it. However, this arrangement raises ethical and legal concerns under company law and could be viewed as a Benami Transaction if not handled correctly.

praveen Nautiyal

praveen Nautiyal (Querist)

07 August 2025 Dear Sir,

A DIRECTOR PURCHASE A PROPERTY HIS OWN NAME ABOVE 50 LAC AND PAY ALL THE PAYMENT TO SELLER THROUGH PVT LTD. COMPANY'S BANK ACCOUNT. IT IS POSSIABLE OR WHO WILL PAY TDS AMOUNT DIRECTOR OR COMPANY?

DIRECTOR, NEVER PAY SINGLE AMOUNT FROM HIS BANK ACCOUNT AND COMPANY WILL PAY ALL THE PROPERTY VALUE?

IT IS ETHICAL AS PER COMPANY LAW?
PLEASE SUGGEST.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

08 August 2025 If the property is in the name of the Director, but payment is made by the company, this could be considered a Benami Transaction under the Benami Transactions (Prohibition) Act, 1988.
Section 2(9) defines a benami transaction as where a person pays consideration for a property, but the property is held in another person's name.

TDS @1% is required if sale value exceeds ₹50 lakh.
Buyer (Director) is required to deduct and pay TDS.
But since the Company paid, practically Company will deduct and pay TDS in Form 26QB.
However, this creates ownership and tax confusion.
Current setup is not ethical/legal under company law unless corrected immediately.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 September 2025 Good Luck...

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