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Section 194IA

Highlights of Section 194-IA (TDS On Sale/Purchase of IMMOVABLE PROPERTY)

Finance Act 2013, Inserted a new section, ie Sec 194-IA, TDS on sale/purchase of
Immovable Property, As per Section 194-IA, Any person, being a transferee ( Buyer) ,
responsible for paying (other than the person referred to in section 194LA) to a
resident transferor (Seller) 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 Seller or at the time of payment of such sum in cash or by
issue of a cheque or draft or by any other mode, whichever is earlier, deduct an
amount equal to one per cent of such sum as income-tax thereon.
where the consideration for the transfer of an immovable property is less than fifty
lakh rupees no TDS is to be Deducted.
provisions of section 203A shall not apply to a person required to deduct tax in
accordance with the provisions of this section.
Tax @ 1% should be deducted by the buyer of the property at the time of making payment
of sale consideration or installment. (Whether by Cash, Cheque, Draft or by any other
mode, whichever is earlier.)
Any sum so deducted under section 194 IA shall be required to be paid to the credit of the
Central Government within a period of seven days from the end of the month in which the
deduction is made .
Penalty /Interest on default of Payment : Interest under section 201 of Income Tax
Act,1961 will be payable if TDS is not paid within the date mentioned above and such
person who defaulted in deduction/payment of TDS shall be treated as Assessee In
Default.
If TDS has been deducted but not paid: In this case one and one-half percent (1.5%) for
every month or part of a month, on the amount of such TDS from the date on which such
TDS was deducted to the date of actual payment.
If TDS is not deducted: In this case one percent (1%) for every month or part of a month on
the amount of such tax from the date on which such TDS was deductible to the date on
which such TDS is deducted.

4. Furnishing statement of TDS (26QB)


It should be filed with challan within a period of seven days from the end of the month in
which the deduction is made.
In Case of Default,
Late Fees u/s 234E shall be levied T Rs. 200 per day of default subject to a maximum of
amount of TDS deductibe for which statement was required to be filed.
Penalty u/s 271H : In addition to late filing fees, Deductor shall pay penalty of minimum Rs
10,000/- to Rs 1 lakh for not filing the TDS statement within one year from the specified date
within which he was supposed to file the statement, or for filing incorrect return.
5. TDS certificate in Form 16B is required to be issued by the Buyer of property to the
Seller, in respect of the taxes deducted and deposited into the Government Account , within
fifteen days from the due date for furnishing the Challan-cum-statement in Form No. 26QB
under Rule 31A.
Notes:
1. TDS has to be deducted on the entire amount of consideration and not only on amount
exceeding RS 50,00,000/-. Ex: If consideration is Rs.75 Lakhs, Tds has to be deducted on
entire Rs.75 lakhs and not 25 Lakhs.
2. Buyer of the property is exempt to procure Tax Deduction Account Number (TAN) for Tax
deduction and payment of TDS under this section.
3. Tax needs to be deducted at the time of payment either it is payment of entire amount or
installment. If the payments are being made in installments then at the time every
installment payment.
4. TDS has to be deducted on payment of consideration with effect from 1st June,2013. If
some amount has been paid prior to that, TDS has to be deducted only from subsequent
payments if total consideration touches the threshold.
5. In case of more than 1 buyer or seller, Challan and Form 26QB will be filled in by all the
buyers for respective sellers for their respective share .
6. Agricultural Land: Agricultural land means agricultural lands in India, not being a land
situated in any area referred to in section 2(14)(iii)(a)/(b).
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 Muncipality

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.