SECTION 194IA: TDS ON PAYMENT ON  TRANSFER OF CERTAIN IMMOVABLE PROPERTY.( INSERTED BY FINANCE ACT 2013, APPLICABLE W.E.F 1ST JUNE 2013.- 

QUICK REFERENCE:- SEC.194IA TDS ON TRANSFER OF CERTAIN IMMOVABLE PROPERTY.

S.NO. PARTICULARS REQUIREMENT
1 SCOPE OF SECTION 194IA Cover all transfer of immovable property if value of consideration is 50 lacs or more except Rural Agricultural land and & transaction covered under section 194LA.
2. Person liable to deduct Tax Buyer of property
3. When TDS will be deducted  date of crdit or date of payment, whichever is earlier.
4. Rate of TDS 1%
5. Whether TAN required No, Only PAN is required of both buyer and seller.
6 Retun of TDS In Form No. 26QB challan cum statement to be filled electronically
7. Due date of furnishing return By the 7th of the month from the end of the month in which TDS is deducted.
8 Due date of deposit TDS amount Either at the time of filling form26QB or within 7 days from the date of filling 26QB
9. Where & How to deposit TDS TDS deposited through filling of challan 26QB  either by self net banking or through designated bank by visiting the income tax website- https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
10 Issuance of certificate In Form No. 16B
11 Due date of issue of form 16B Within 15 days from due date of filling of statement under section 194IA.

 

Provision of Section 194IA: can be explained in FAQ Mode .

  1. 1.    Who is required to Deduct Tax at Source.

Ans: Any person being a Transferee i.e. Buyer of property is required to deduct tax .

Explanation : Any person means  all the person whether individual, HUF, Company , firm, Aop/BOI etc.

       2          When tax is to be deducted,

 Ans: Tax Is deducted at the time of credit or payment made , whichever is earlier.

Explanation : Credit refers to the date of transaction

Explanation: Payment include consideration discharged by way of cash or cheque or DD or any other mode.

Explanation:  Thus, even at the time of giving earnest money or advance money  or installment money , provision of this section 194IA will attract and Buyer is required to deduct tax and deposit to same .

Suppose value of property is Rs. 60 Lac and buyer pay 100000/-advance payment and rest in installment. The buyer is required to deduct tax on each payment.

Example: Suppose if Real Estate Agent Receive Immovable Property against his commission for selling of flat of Developer, then this case will be covered u/s 194iA, if title of property is transferred from developer to agents and here Agent is required to Deduct Tax @1% on the value of consideration.

3       At what amount tax shall be deducted.

Ans: Tax shall be deducted on amount of consideration paid for transfer of immovable property ,if value of consideration for transfer of immovable property is Rs 50 Lacs or More.

Example: if the sale value of property is 49.99 Lacs, no Tds is required to be deducted. However if value of property is 60 lacs, then TDS will be deducted on the entire amount , say Rs.60 Lacs.

4.At what rate tax is required to be deducted.

Ans. Tax deducted @1%. However if PAN is not provided by the Seller than Tds Will be deducted at the rate of 20%.

5.What is immovable Property for the purpose of TDS.

ans. Immovable property means any Land ( Other than Rural Agriculture Land),or Building or any part of Building.

6. When Tax is to be deposited.

Ans. Tax is to be deposited by 7th of month following the month in which tax is deductd.

7.When TDS certificate is required to be issued.

Ans. TDS certificate in Form No. 16B IS REQUIRED TO BE ISSUED WITHIN 15TH DAYS FROM THE DUE DATE OF FILLING OF RETURN.

8. Whether the provision of section 194IA apply if property has been financed through Bank Loan.

Ans. Yes. In such a case buyer will have to ensure either he himself or the bank deduct tax before disbursing the loan to the Seller.

9. Whether the provision of Sec.194IA apply, if buyer bought an under construction property prior to the provision coming into effect.

Ans .Yes, if buyer  has to make balance payment after june 1st  2013 .( as per clarification issued by Department.).

10.Whether the buyer is required to obtain TAN no . to deposit of tax and filling of return.

Ans. No, buyer is neither required to obtain TAN No.  for deduction & deposit of Tax., and nor required to file TDS Return if buyer is not subject to Tax Audit.

10. How to make payment of TDS.

Ans.TDS can be Paid by the buyer either online or duly filled TDS Challan Form( New Challan Issued by department Specifically for Deposit of TDS on sale of immovable property- see Format in  can be deposited in any authorized Bank.

11. Who is required to deduct tax if transaction for sale of property is routed  through  intermediary.

Ans. The responsibility of ultimate deduction of TDS is of Buyer. In case of property sell through Agent, the buyer is required to deduct Tax because buyer make payment ultimately  to actual owner ie. Seller. And TDS certificate will be issued  in the Name of Seller, because agent has no title of Property.

Example: Suppose ABC Company enter into contract with B to sell the property on his behalf. B sell property to C on behalf of ABC. In this case C will deduct the TDS and certificate will be issued by c in the name of ABC.

12. WHETHER BUYER IS REQUIRED TO OBTAIN  TAN FOR DEDUCTION OF TDS.

ANS: No, Tan is not required for buyer and seller. PAN number of both Buyer and Seller is sufficient to comply the requirement of Law.

 

13. WHETHER THE BUYER/DEDUCTOR IS REQUIRED TO FURNISH  RETURN OF TAX DEDUCTED U/S 194IA.

ANS: Yes, Deductor is required to furnish the Statement in Form No. 26QB by the 7th of the month following the month in which TDS is deducted.- form 26Qb challan cum statement

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