TDS ON IMMOVABLE PROPERTY (NEW SECTION 194-IA)

W.e.f. 1^st June, 2013 a new TDS section 194-IA brought into effect which states that TDS on transactions of immovable property is to be deducted at 1% where the consideration for the transfer of immovable property other than agricultural land exceeds Rs. 50 lakhs.

For the purpose of this section,

Ø  Agricultural land means any agricultural land in India, not being urban land.

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

Reason for Insertion

 The main reason behind the introduction of this section is to keep a check on the transactions of Immovable property. Finance Minister while introducing this section said that transactions of Immovable property are usually undervalued and underreported. With a view to improve the reporting of these transactions and to correctly estimate the capital gains this section has been introduced.

Provisions:-

·         Applicability: This section is applicable to any person whether he is an individual, HUF, AOP, BOI, Company, firm. 

·         Rate of deduction: TDS on transactions of Immovable property is to be deducted at the time of payment at 1% where the consideration exceeds Rs.50 Lakhs. In case PAN is not provided by the seller to the buyer then rate would be 20%.

·         Form and Due date of deposit of tax: As per the Notification No.39 dated 31^st May, 2013 the TDS deducted by the buyer at the time of making payment to the seller has to be deposited within 7 days from the end of the month in which the deduction has been made. Form 26QB has been prescribed for this purpose.

·         No need to apply TAN: Person deducting TDS on property is not required to apply for TAN as per the new sub-section(3) to section 194-IA.

·         Issuance of TDS certificate: The TDS certificate shall be issued in Form 16B within 15days from the due date of deposit.


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This Article has been shared by Student of ICAI Palak Aggarwal. She can be reached at aggarwal.palak2809@gmail.com