Section 194-IA is effective from 1st June 2013 on the sale/ purchase of immovable property. A buyer of immovable property at the time of making payment of contribution has to deduct the TDS (Tax deducted at source) from the amount. This section applies to every transaction of INR 50 Lakhs or more.
TDS Return Forms
Depending upon the purpose of
deduction, the following forms are filed for TDS return:
TDS on salary: Form 24Q
TDS in case of a foreign company: Form 27Q
TDS for transfer of immovable property: Form 26QB
TDS for other cases: Form 26Q
Applicability of Section 194-IA of TDS on Immovable Property
Section 194-IA applies in the
any person purchases an immovable property from the transferor, an amount of
consideration is paid for such transfer by the transferee to the transferor. A
person who purchases the property is known as transferee and transferor is the
person who is selling his immovable property for the amount termed as
consideration. The transferee has to
deduct the amount of 1% of consideration as an Income tax from such amount at
the time of making the payment through cash, bank transfer, cheque, draft or
any other mode.
section is applicable if the amount of consideration involved is INR 5000000
(Rupees Fifty Lakhs) or more.
budget of 2019 has introduced the definition of “consideration.” It
includes all forms of other charges such as maintenance fees, electricity fees,
water facility fees, advance fees, etc.
section applies to the transfer of all the immovable property other than
Exception for Applicability of Section 194 IA
Section 194-IA does not apply to
cases of compulsory acquisition
the seller is NRI and TDS is to be deducted based on Capital gains.
construction properties, TDS will be deducted on the installments paid before 1st
June 2013. This section was applicable from 1st June 2013.
Exception for Agricultural Land
The land shall not be treated as
agricultural land for this section & shall be considered as immovable
property if it is situated within the following range of area:
the population of the municipality is more than 10000 but up to 100000, land
should be located within the distance of 2Km from Municipal limit
the population of the municipality is more than 100000 but up 1000000, land
should be located within the distance of 6Km from Municipal limit
the population exceeds 1000000, land should be located within the distance of 8Km
from the Municipal limit.
Key Points for Understanding Section 194-IA
Following are the key points for
better understanding about section 194-IA
is paid on the entire sale consideration. For example, a property worth INR 60
Lakhs is sold. And transferee has paid electricity fee of INR 1 Lakhs and
maintenance fees of INR 2 Lakhs. The total amount of consideration will be
60+1+2= INR 63 Lakhs, and TDS is deducted at the rate of 1% of INR 63 Lakhs
that is INR 63000.
of the immovable property who deducts the TAN needs not to have Tax deduction
account Number, though permanent account number (PAN) is sufficient.
is submitted and paid in the form of 26QB. After the tax is deposited with the
Government, the buyer has to give a TDS certificate in form 16B to the seller. This
has to be issued within 15 days.
26QB is to be filed for each buyer-seller separately. For example: if there is
one buyer & 2 sellers, the total amount of 26QB to be filled will be two.
The Requirement of PAN of the Seller of an Immovable Property
is compulsory for the seller of the property whose receipt of consideration for
the transfer is subject to TDS has to furnish his PAN to the transferee
the PAN is not provided, TDS will be deducted at the rate of 20% of
consideration instead of 1% of the consideration.
is deemed that PAN is not furnished in case the PAN provided is invalid or does
not belong to the transferor.
The Due Date for Deducting and Payment of TDS
Payment: TDS on the
immovable property has to be paid within 30 days from the end of the month in
which TDS is deducted. For example, TDS is deducted on 06/09/2019, TDS becomes
payable within 31/10/2019.
The transferee has to deduct the amount of 1% of consideration as an Income tax
from such amount at the time of making the payment through cash, bank transfer,
cheque, draft or any other mode. The transferee has to deduct the TDS right
from the beginning of the first installment. Transferee doesn’t have to wait
for the final installment or amount to exceed INR 50 Lakhs for deducting TDS
Steps of Payment of TDS through 26QB and Downloading of Form 16B
Following are the complete
procedure for payment and filing of 26QB and furnishing of form 16B:
Go to the online website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and click on the form 26QB.
Once the form is opened first, most corporate payers need to select 0020 and non-company has to select 0021.
Fill the complete details of the form
After completing the form, select the mode of payment. The payment can be made in two ways, online & offline. An amount can be paid online through net banking or offline by visiting any bank branch for payment.
After the payment is completed, registration with TRACES has to be done. In the case of a new user, registration as a new user can be done using PAN number and completing the details.
Once the payment is made it is reflected within seven days in form 26AS of the transferee under the head of details of TDS on Sale of Immovable Property.
Once the registration is completed, and payment is reflected in form 26AS, the TDS payer can download approved form 16B for issuing it to the seller.
16B can be downloaded by login to TRACES & click on the download tab and select Form 16B.
Complete the details and fill the PAN of the seller and click on proceed.
After verification of complete details, click on the option “submit a request,” and the request will be generated within a few hours.
One can see the status of the form 16B. If it is available, it can be downloaded.
Penalty & Interest on Non-payment and Non-filing of TDS.
Following are the penalty &
interest depending upon the case of failure:
No TDS deducted:
Interest at the rate of 1% per month has to be deducted for the period of TDS
liable to be deducted to the date it is deducted
TDS deducted but not paid:
Interest at the rate of 1.5% per month has to be deducted from the date TDS
deducted to the date TDS paid.
Late filing of 26QB:
The penalty is also payable at the rate of 200 per day for the days of defaults
continued. The maximum amount of penalty
is subject to the number of TDS to be deducted.