T.D.S ON SALE OF IMMOVABLE PROPERTY 2022

Section - 194IA, Income-tax Act, 1961-2022

Payment on transfer of certain immovable property other than agricultural land.

1. 194-IA. (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 the issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one percent of such sum  [or the stamp duty value of such property, whichever is higher,] as income-tax thereon.

(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an  [immovable property and the stamp duty value of such property, are both,] less than fifty lakh rupees.

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

Explanation.—For this section,—

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

  "consideration for transfer of any 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 the transfer of the immovable property;

 "immovable property" means any land (other than agricultural land) or any building or part of a building;

  "stamp duty value" shall have the same meaning as assigned to it in clause (f) of the Explanation to clause (vii) of sub-section (2) of section 56.

 Requirements under Section 194IA of Income Tax :

The Section 194 IA of the income tax stipulates that-

1.     TDS on the property is always being deducted by the buyer and never by the seller.

2.    There are no applicable TDS under section 194IA in case the transaction is worth less than Rs. 50 lakhs.

3.  TDS on any property must always be paid in the full amount of the sale and not the sum which is above Rs. 50 lakhs. For instance, if you purchase a property that is of a value of  Rs. 80 lakhs, TDS would be calculated on Rs. 80 lakhs and not on the extra Rs. 30 lakhs.

4.    The payments are made in installments; TDS would be deducted on every installment.

5.    Since September’19, the payments like the club membership, advance fees, car parking,  electricity fees, and maintenance fees have also been compromised under consideration for immovable property. This implies that such charges which are attached to a property will also be added to the cumulative taxable total.

6.    PAN cards of both buyer and seller are mandatory for the TDS on the property deduction that is under Section 194IA.

7.   In case a buyer is unable to obtain a seller’s PAN details, then, that case, the TDS fairly rises to 20%.

8.    The TDS on an immovable property must be paid using Form 26QB in 30 days from the month-end when the TDS was deducted.

9.    The buyer of the property is required to obtain Form 16B and issue the form to a seller.

TDS is charged for purchasing a property :

With the initiative of the Government to keep a check on the extensive usage of black money in numerous immovable property transactions, the government of India has also introduced a law that any purchaser of the property would have to deduct tax at the source, i.e. TDS on the property at the time of paying the seller for the concerned property.

Under Section 194IA of the Income Tax Act, a buyer is necessarily required to deduct a TDS at a rate of 1% of the sales. This is indeed applicable in case the value of the payment is either Rs. 50 lakh or exceeding Rs. 50 lakhs.

The Section covers commercial property, residential property, and land as well. You must note that the transactions that relate to the buying of agricultural land are not covered under this particular provision. The buyer is supposed to deduct the TDS on the concerned property at the time of crediting the agreed amount to the seller’s account or the time of payment, which one appears to be earlier.