Section 194IA - TDS on Sale of Immovable Property
- TDS (Tax Deducted at Source) u/s 194IA is required to be deducted @1% by the buyer of an Immovable Property from a RESIDENT transferor of the said immovable property.
- No TDS is required to be deducted where sale consideration and stamp duty value of the property, both, are less than Rs. 50 Lakhs.
- TDS is required to be deducted only when either the Sale Consideration(01) or Stamp Duty Value of the immovable property is more than or equal to Rs. 50 Lakhs. TDS @ 1% is required to be deducted on the entire sale consideration or stamp duty value, whichever is higher.
EXAMPLE_A:
Sale Consideration = Rs. 49 Lakhs
Stamp Duty Value = Rs. 60 Lakhs
TDS of Rs. 60,000/- will be deducted @ 1% on stamp duty value (being higher than the sale consideration) - Immovable Property means Land (except Agricultural Land) or any Building or any part of a Building. It is important to note here that Agricultural Land(02) is exempted from definition of Immovable Property under this section.
- If the seller of immovable property does not have or does not provide PAN to the deductor, then TDS @ 20% or higher rate (as specified u/s 206AA) is required to be deducted.
- Time of Deduction of TDS: TDS is required to be deducted at the time of credit of such sum to the account of seller or at the time of payment whichever is earlier.
- Time limit & manner of payment of TDS: TDS deducted shall be paid into the Central Government within 30 days from the end of the month in which TDS is required to be deducted using a Challan-cum-Statement in Form 26QB.
EXAMPLE_B:
If TDS of Rs. 60,000/- was required to be deducted on dated 10.11.2023, you have to pay the same into the Central Government within 30 days from the end of the month of tax deduction. The month of tax deduction is November, 2023 and 30 days from the end of November, 2023 means the due date for payment of TDS u/s 194IA would be 30.12.2023. - TDS Certificate: The buyer/deductor shall within 15 days from the end of due date for filing of TDS Statement in Form 26QB, generate a TDS Certificate in Form 16B from the website https://www.tdscpc.gov.in and deliver it to the seller/deductee.
EXAMPLE_C:
In our EXAMPLE_B, the due date for filing Form 26QB is 30.12.2023 and hence the due date for furnishing TDS Certificate in Form 16B to seller would be 15 days from 30.12.2023 i.e. 14.01.2024 - No TAN (Tax Deduction Account Number) is required to be procured by the buyer. The buyer shall quote his & seller's PAN while filing Form 26QB. The Form 26QB can be filed using the website www.incometax.gov.in using the login ID & Password of the deductor.
- SPECIAL SCENARIOS:
- TDS u/s 194IA will be required to be deducted for each installment (03) of sale consideration paid to the seller. Hence TDS will be required to be deducted even on the Booking Amount paid to the seller if the whole of the sale consideration or stamp duty value of property is more than or equal to Rs. 50 Lakhs. Also Form 26QB to be submitted for each installment and TDS Certificate for each installment will be generated and furnished by the buyer to the seller.
- In case of multiple buyers & single seller, TDS u/s 194IA is required to be deducted if the Sale Consideration or Stamp Duty Value of Immovable Property is more than or equal to Rs. 50 Lakhs even though individual shares of each of buyer may fall below Rs. 50 Lakhs.
- In case of multiple buyers & single seller, each buyer will file a separate Form 26QB as per his share and generate and furnish Certificate in Form 16B to the seller.
- In case of multiple sellers & single buyer, multiple Form 26QB need to be filed deducting TDS as per the respective shares of the sellers.
- In case of multiple buyers & multiple sellers, multiple Form 26QB will be required to be filed as per unique buyer-seller combinations.
- Example: In case of one buyer and two sellers, two forms have to be filed and for two buyers and two seller, four forms have to be filed for their respective property shares.
(01) “Consideration for transfer of immovable property” shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property
(02) "Agricultural Land" means agricultural land in India, not being a land situate in any area referred to in Section 2(14)(iii). As per the said section, A land shall not be treated as Agriculture Land, if:
- (a) It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or
- (b) It is situated in any area within below given distance measured aerially :
| Population of the Municipality | Distance from Municipal limit or Cantonment Board |
|---|---|
| More than 10,000 but does not exceed 1,00,000 | Within 2 kms |
| More than 1,00,000 but does not exceed 10,00,000 | Within 6 kms |
| Exceeding 10,00,000 | Within 8 kms |
(03) Installment of Sale Consideration paid to the seller is not same as EMI paid to the bank for housing loan.
(04) For the purpose of this Section, the terms Buyer, Deductor, Payer & Transferee may be used interchangeably.
(05) For the purpose of this Section, the terms Seller, Deductee, Payee & Transferor may be used interchangeably.
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