Section 194-IC of the Indian Income Tax Act

Section 194-IC

Section 194-IC of the Income Tax Act, 1961 covers provisions relating to TDS deduction on payment of monetary consideration under Joint Development Agreements.

Section 194-IC of the Income Tax Act

U/ Section 194-IC, notwithstanding anything contained in section 194-IA; any person responsible for paying any sum by way of consideration; not being consideration in kind, to a resident, under the agreement referred to in section 45 (5A) i.e. Joint Development Agreement; shall deduct TDS at 10% on such sum, at the time of credit of such sum to the account of the payee; or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode; whichever is earlier.

However, if PAN of the recipient is not furnished, TDS will be deductible at the rate of 20%.

Joint Development Agreement

Joint Development Agreement is a registered agreement in which a land or building owner admits to allowing another person; to develop a real estate project on such land or building or both; in consideration of a share in such project; whether with or without payment of part of the consideration in cash.

As per section 45 (5A) of the Income Tax Act, where the capital gain arises to an assessee, being an individual or HUF; from the transfer of a capital asset, being land or building or both; under a specified contract; the capital gains will be chargeable to income tax as income of the PY in which; the competent authority issues the certificate of completion for the whole or part of the project; & for the purposes of section 48, the stamp duty value, on the date of issue of the said certificate, of his share, being land or building or both in the project, as increased by the consideration received in cash, if any, shall be deemed to be full value of the consideration received or accruing as a result of the transfer of the capital asset.

The provisions of this subsection will not apply where the tax-payer transfers his share in a project on or before the date of issue of said certificate of completion, & the capital gains shall be deemed to the income of the PY in which such transfer takes place & the provisions of this Act, other than the provisions of this subsection, will apply for determination of full value of consideration received or accruing as a result of such matter.


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