Section 194-IA of the Indian Income Tax Act

Section 194-IA

Section 194-IA of the income tax act, 1961 covers the provisions related to TDS deduction from payment on the transfer of specific immovable property other than agricultural land.

Section 194-IA of the Income Tax Act

Under this section, any person being a transferee, responsible for paying any sum to a resident, by way of consideration for the transfer of any immovable property other than agricultural land; shall deduct TDS at 1%; if such sum exceeds Rs. 50 lakhs. He must deduct TDS on the whole amount and not only on the amount exceeding Rs. 50 lakhs. If a person makes any payment to a non-resident, then this section will not apply instead; section 195 will apply which includes TDS at 20% and surcharge at 10%.

The deductor must deduct TDS at the time of credit of such amount to the account of a transferor; or at the time of payment of such amount in cash or by cheque or a draft; or by any other mode; whichever is earlier. The provisions of section 203A shall not apply to a person required to deduct tax under the provisions of this section.

In case of an under construction property, TDS will be deducted on installments paid on or after 1st June 2013, but the total consideration should be more than Rs. 50 lakhs. For the installments paid before 1st June 2013, there will be no tax deduction.

Any person whose receipts are subject to TDS deduction shall furnish his PAN to the deductor. In case he fails to provide PAN, the deductor shall deduct TDS at 20%. There is no requirement of obtaining TAN.

Time Limit for  Deposit of TDS

Any sum deducted under this section shall be paid to the credit of the Central Government within one week from the end of a month in which the deduction is made & shall be accompanied by the challan-cum-statement in a Form 26QB. In case of failure of non-deduction, interest will be levied at 1% per month for the period from the date on which TDS is deductible to the date on which TDS is actually deducted. Interest at 1.5% per month will be levied in case of failure of non-payment. A penalty for late filing of Form 26QB is Rs. 200 per day for which default continues. Provided the default continues for a period of more than one year, an additional penalty of Rs. 10000 to 1 lakh shall be paid U/S 271H.

A person responsible for deduction shall furnish the deduction of TDS in Form 16B to the payee within 15 days from the due date for furnishing the challan-cum-statement in Form 26QB after generating & downloading the same from the web portal specified by the director general of income tax department or the person authorized by him. He shall furnish to the director general of income-tax (system) or the person authorized by him; a challan-cum-statement in Form 26QB electronically within 7 days from the end of the month; in which he deducts the TDS.

For the purpose of this section; ‘agricultural land’ means agricultural land in India, not being a land situated in an area as referred to in section 2(14)(iii)(a)/(b), whereas ‘immovable property’ means any land (other than agricultural land) or any building or part of a building.

Agricultural Land

A land shall not be treated as Agricultural Land if it is situated,

  1. Within jurisdiction of Municipality or Cantonment Board which has a population of 10000 or more
  2. In any area within below given distance measured aerially
    Population of the Municipality

Population of the Municipality

Distance from Municipal Limit or Cantonment Board

10,000 – 1 lakh

Within 2 kms.

1 lakh – 10 lakhs

Within 6 kms.

More than 10 lakhs

Within 8 kms.

Immovable Property

Immovable property means any land (other than agricultural land) or any building or part of a building.

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