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Section 194-ia on immovable property

anjali (article assistant) (24 Points)

24 October 2015

Hi i have two queries regarding the said section:

1. In the first case there are 2 buyers(joint buyers) and a single seller where the consideration of immovable property is 54 lacs. Whether the TDS is required to be deducted in this case as consideration for each buyer would be less than 50 lacs.

2. Second case is the vice versa of the above case wherein there are 2 sellers(joint sellers) and a single buyer and the consideration for the property is 81 lacs. Whether the TDS is required to be deducted in this case u/s 194-IA?

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9 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 24 October 2015

In sec 194 ia the thresh hold limit is not for person but for the property. If the consideration for the property exceeds 50 lacs then tds needs to be deducted irrespective of buyers and sellers.

Ashok J (CA Final) (880 Points)
Replied 25 October 2015

In case 1 tds is reqd and in case 2 not reqd..in case of joint ownership it should b interpreted as 50 lacs per co owner....

Miss Rinkal (Student) (1304 Points)
Replied 25 October 2015

@ Ashok J.

I do not agree to your opinion. As per the act, the threshold limit of 50 lacs is to be determined property wise and not transferee wise

"(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees."

So whether it be joint buyers or joint sellers, doesn't matter. The total consideration of the said property is to be considered.

@ Anjali:

Case1: There are joint buyers. The tds will be deducted @ 1% on 54 lakhs. The proportion of tds will be based on consideration paid by each buyer. I.e say Buyer A paid 30 lakhs and buyer B paid 24 lakhs, then tds will be 30000 for buyer A and 24000 for buyer B. In absence of proportion of property not determined in the deed, presumed to be equal

Case 2: There are joint sellers. The tds will be deducted @ 1% on 81 lakhs, I.e 81000/-. The consideration proportion will be determined in same manner as shown in case 1.

Hope I m able to clear your doubt

Ashok J (CA Final) (880 Points)
Replied 25 October 2015

Ms rinkal i suggest you see the video on tds on immovable property on icai cloud campus website.....speaker is ashok Raghavan....my principal....leading property law n capital gain expert.....

Ashok J (CA Final) (880 Points)
Replied 25 October 2015

In case of renting of building tds is reqd only if amt exceeds 180000 per co owner...same analogy is applied here also

Vijayalakshmi (Articled Student) (37 Points)
Replied 25 October 2015

194IA is different from 194I .. as per strict interpretation of 194IA, TDS needs to done on property wise.. but different views can be taken for controversial cases

Miss Rinkal (Student) (1304 Points)
Replied 25 October 2015

@ Ashok:

Could not check the video. But would like to check that as well. If you don't mind please send me the link here

However what I would like to state is 194I and194IA are 2 different sections altogether and many CA express the same view as I am having.

Irrespective of the views expressed by CA. What I have commented is what I have interpreted from the act. It was my opinion and would still like to say the same thing as mentioned earlier. It is what I have understood from the Act.

Ashok J (CA Final) (880 Points)
Replied 26 October 2015

Its on youtube...not on icai cloud campus....

https://www.youtube.com/watch?v=m49L1SEYZ0Y

Miss Rinkal (Student) (1304 Points)
Replied 26 October 2015

@ Ashok J:

I did watch the video. However he said it is in his opinion. Also he mentioned you can file a writ petition. But it is not necessary that the petition will favour the assessee concerned. Also there is no such case law, so till that time I would like to go with my opinion.

I am not in any way trying to dismean your principal in any manner. It is just my opinion that I have shared.

Thanks for bothering you.