Tds on sale of immovable property (sec 194ia) Simplified


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TDS on sale of Immovable Property (Sec 194IA) – Detailed Overview

 

Provisions of TDS on sale of Immovable Property (Sec 194IA) – as stated:-

The provisions of this section states that TDS on sale of Immovable Property should be deducted at source from payment on transfer of immovable properties (other than agricultural land) where the consideration paid or payable is more than Rs 50,00,000/-. Earlier, there was no such deduction in case of immovable properties as it is in the case of salary, interest, rent etc. Any person responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), is liable to deduct tax at source under section 194-IA.Where the transaction is less than Rs 50,00,000 /-, the liability to deduct tax at source will not be applicable. 

 

Rate at which TDS shall be deducted :-

  • Tax is deductible at the rate of 1% of the consideration payable to a resident transferor.
  • If a valid PAN is not provided by the seller, the tax rate would go up to 20%.

 

 

Obtaining TAN:-

Purchaser is not required to obtain a TAN for deduction. 

 

Payment and return of TDS :-

  • Tax shall be deducted at the time of payment or at the time of giving credit to the transferor, whichever is earlier.  If advance payment is being made then TDS would be required to be deducted at the time of advance payment itself. And if installment payment is made, the TDS would be required to be deducted at each such installment.
  • The tax deducted shall be paid to the credit of Central Government within a period of seven days from the end of the month of deduction.
  • Online payment u/s 194IA is mandatory and the tax should be deposited on challan-cum-statement on Form No.26QB. Form No 16B (TDS Certificate) will be issued by the deductor within fifteen days from the due date of depositing tax.

 

 

Applicability of section :-

Section 194IA is only attracted for the transactions on or after 1st June, 2013. For example:-

  • Sale agreement is made before 1st June, 2013 but consideration received after 1st June, 2013 – Sec 194IA is not applicable.
  • Advance consideration of Rs 5000,000 or more is received before 1st June, 2013 but sale agreement made after 1st June, 2013. – Section 194IA is not applicable.

 

 

Where property is held by Joint-owners :-

In case of joint owners, the threshold limit of Rs 50,00,000/- is to be determined property-wise and not transferee-wise. The number of buyer or seller would not matter at all. The value of property should be more than Rs 50,00,000/- for applicability of deduction of tax.

For example:- A,B and C  jointly purchased an immovable property. The purchase price for each owner is Rs 20lakhs, Rs 15 lakhs and Rs 35 Lakhs respectively. In this case individual purchase price is less than Rs 50,00,000 but the aggregate value of the transaction is exceeds Rs 50,00,000. Thus section 194-IA would be applicable.

 

Scope :-

  • Section 194-IA is applicable to all including relatives, minor, senior citizens etc.
  • However, if transfer is made without payment of any consideration like in case of gift, then this section will not apply.

 

 

Provisions for Non Resident Indian:-

  • If payment is made to a Non-Resident then section 194-IA will not be   applicable. Rather section 195 will be attracted and TDS is required to be deducted @ 20%+EC&SHEC on the sale consideration. Surcharge @ 10% will be applicable if amount paid exceeds Rs 1 crore. The limit of Rs 50,00,000/- is not applicable in case of payments made to NRI’s.

 

 

Non Compliance:-

In case of failure to comply with the provisions, interest and penalty would be imposed to the purchaser.

  •  Interest will be charged @ 1% p.m or part of the month for failure to deduct tax or short deduction of tax from the date the tax was deductible till the date the same is deducted.
  •  Interest will be charged @ 1.5% p.m or part of the month for tax deducted but not paid to the government from the date of deduction till the date of actual payment.

 

 

Courtesy: Alok Patnia, ICAI.org, Journals

 

Aryan Singhania

 


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❤ Work Hard Party Harder ❤

You can download the file..

 



Attached File : 375061 1241438 tds under section 194ai simplified.doc downloaded 9801 times

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Believe!! Live your dreams!

Again good work bro..


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chief accountant

Article was a goodand useful

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Wealth Manager

Nice information.

Thanks again.


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CA- Final

Hello Aryan, Please tell whether sec 194ia is applicable in case of Sale of "New Flat"/ H.P. by a Builder to an individual.
 
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Dear All,

 

If the TDS is paid by Manually by applying to Bank then how would I download 26qb from site?

 

 
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Dear All C A 's

How to pay TDS on Property purchased by Joint Buyers ? Whether we can pay thro separate challan in 26 Q ?

c c m

 
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Accounts Manager

Dear All,

I am working in construction co and the total consideration of one villa is 5.25 crores. (Including Land cost and Construction cost)

One customer has made a payment of 1.50 crores in 2012 and 62 lacs in November 2013. The agreement was made in July 2013. Let me know on what amount they have to deduct TDS.

Regards,

Eshwar

 

 
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B.Com, CA Final, CS

BOOKMARKED...yes

 

 

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