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TDS on Transfer of Immovable Property – Sec 194IA

U.C Date : 02 Apr 2016

This section is inserted by finance act 2013 and applicable from 1st of June , 2013.

A person who is purchasing non agricultural property from a resident is required to deduct TDS @ 1% from the amount payable in this behalf.

Tax is to be deducted at the time of credit of such sum to the account of the payee or at the time of payment whichever is earlier. The date of registration, agreement or contract is irrelevant for deciding the time of payment of TDS.

Rate of TDS1%. If the recipient of income doesn’t furnish his PAN to deductor then TDS is to be deducted @ 20%.

No tax is required to be deducted where the total amount of consideration is less than Rs. 50 lakhs. When amount of consideration exceeds rs. 50 lakhs then the tds is to be deducted on the whole amount not only on the amount exceeding rs. 50 lakhs.

There is no requirement of obtaining Tax deduction account number (TAN) to the person who is required to deduct tax in this section.

The provisions of this section is not applicable where section 194LA regarding compulsory acquisition is applicable.

Payment of TDS and filing form 26QB

The deductor i.e the purchaser of property has to file form 26QB which is a Challan cum declaration statement within 7 days of the next month in which payment is made. No separate TDS return is to be filed in respect of such deduction. Manual submission of form is not allowed.

See the complete procedure of filing form 26QB on Incometaxindia.com. Please take care while filing this form because there is no process of its amendment and you are required to contact income tax department to make any changes.

Form 16B is to be downloaded by the deductor from www.tdscpc.gov.in and given to the seller of the property within 15 days from the date of filing of form 26QB.

Bare Act for Sec 194IA

Bare Act for Sec 194IA

(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.

(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.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

Explanation.—For the purposes of this section,—

(a) “agricultural land” means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

(b) “immovable property” means any land (other than agricultural land) or any building or part of a building.

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