Tds u/s 194ia

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j.thennarasu

deputy manager (accounts)

28 Points Posted on 24 August 2015

Sir,

We are a Pvt. Ltd. Company, getting transfer of lease hold rights of Land (along with Building constructed by existing lessor) belonging to SIPCOT Ltd, (a State Government owned organisation) from the existing lessor (also a PVT Ltd. Company).

We are paying consideration to the existing lessor for giving concurrence for this transfer as per MOU signed by us with this lessor seperately.

Joint requisition has been given to SIPCOT and on approval of this transfer proposal by SIPCOT authorities a fresh modified lease deed will be executed between SIPCOT and us.

Here my request is whther the payment of consideration to the existing lessor will attract TDS u/s 194IA or under any other section.

Kindly clarify this.

Thennarasu J

Replies (2)

Udgam Koomar

Tax Technologist

2037 Points Posted on 24 August 2015

You can check this /forum/tds-on-sale-of-immovable-property-sec-194ia-simplified-268528.asp

Rajagopalakrishnan R

PARTNER

1145 Points Posted on 24 August 2015

As I understand the consideration you pay to the present holder of leashold right is to get this right transferred in your name. This is only a capital payment for getting residual leashold rights for balance lease period. Also, this co will not have any transferable rights as such, since SIPCOt will enter into fresh lease agreement with you once the proposal is accepted by SIPCOT. Even the building will not be capable of being transferred.

In my opinion no TDS under 194IA or any other section is attracted. 194IA talks about TRANSFER of immovable property. It does not specifcally mention RIGHTS in immovable property. Also, I think, the existing holder has no transferable rights in the property ( normally in SIPCOT leases) SIPCOt alone has the ownership of the property. The leaseholder can just use enjoy possession and use the property for the purpose for which it was leased.But even if there are trasferable rights for the existing company there, it wold still not attract 194IA for reason above.

But if you are getting a registered sale deed for the building ( for adequate title protection) and consideration exceeds 50 lakhs, then 1% TDS is attracted.