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Urgent query on sec 194ia

Prabhat Modi (Student) (301 Points)

30 November 2015

one of my client is resident of india have a property located in dubai. He sold this property to a person resident of Dubai. Now question arises whether sec194 ia will apply here and dubai resident who purchase property at Rs. 2.5 crore deduct yes @ 1% on sale consideration. further Dubai resident is not wants to follow indian income tax law so he does not apply the requirement of sec 194ia to" deduct tds @ 1%. further in income tax there is no provision of Reverse Charge which shift tax liability from buyer to resident seller. pls suggest what will be here.

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5 Replies

Amit Bavishi (Student) (1086 Points)
Replied 01 December 2015

Sec 194-IA is only applicable when payee is any resident person. Sec 194-IA is not applicable when the payee is non-resident. Disclaimer : I shall not be liable, for any actions taken or not taken, on basis of this comment.

(Guest)

U are saying he sold his property.... There is no TDS issue on ur clients side....its ok if the dubai purchaser doesnt deduct TDS...

CA Goutam Sharma (Chartered Accountant in Practice) (468 Points)
Replied 01 December 2015

Dear All,

194 IA is a stiff provision which require a ANY TRANSFEREE to deduct TDS @ 1 % from the amount Paid/ Payable to RESIDENT in restion to transfer of ANY IMMOVABLE PROPERTY other than agricultural land provided the consideration is Higer than 50Lakh

In case as specified by Mr . Prabhat in his query, all the aspects of 194 IA are there and hence the Dubai Purchase shall have to deduct TDS.

(Guest)

what if he doesnt ? Isnt deducting TDS responsibility of payer ?

CA Goutam Sharma (Chartered Accountant in Practice) (468 Points)
Replied 01 December 2015

Logically, the core base of TDS provison under 194 IA is that the high value dealings in Immovable property shall not escape from the charge of Income Tax.

Whereas other TDS provisions particularly in case of Deduction from Payments to residents and non residents specifically disallow such expenditure if the TDS is not deducted.

However our case is not alike them. On the Safer Side, 1% the value can be deposited by the resident as advance tax and later on the assessee shall file return and disclose the sale of such asset.