Tds on transfer of immovable property - 194IA

Section 194IA of Income Tax Act - Applicability
Procedure to make payment of TDS and Issue of Certificate

1. Section194
IA
Section
194
‐
IA
TDS on Transfer of Certain
Immovable Property other than
Agriculturalland Agricultural
land
Somaiya & Co.
Chartered Accountants
Compiled by :

2. WhyTDSontransferofImmovableProperty?
Mr. P. Chidambaram while
introducing TDS on Property said
that the transactions of Immovable
Property are usually undervalued
d
d
td
an
d
un
d
er‐repor
t
e
d
The parties don’t even mention the
PAN No. in the agreement or while
enteringintothetransaction. With a view to improving the
reporting of such transactions, the
Section194‐IAwasintroducedinthe
FinanceBillof2013

3. IntroducedthroughFinanceAct2013 CBDT
vide
its
notification
no
.
39
/
2013
dated
31
st
May,
2013
has
CBDT
vide
its
notification
no
.
39
/
2013
dated
31
May,
2013
has
prescribed the rules regarding Mode of Deduction, Deposit and
Issuance of TDS Certificates in respect of deduction made on
transfer
of
certain
Immovable
Properties
other
than
rural
transfer
of
certain
Immovable
Properties
other
than
rural
agricultural land value exceeding Rs. 50 lakhs as per new provisions ofSection194‐IA Means a Person purchasing a property other than agricultural land
having agreement value exceeding INR 50 Lakhs has to deduct TDS
u/s194‐IAandpayintogovernmenttreasury.

4. ApplicabilityofSection194‐IA

This
new
section
is
applicable
w
.
e
.f

This
new
section
is
applicable
w
.
e
.f
01
st
June, 2013 for sale of
immovable property (other than
agricultural
land)
agricultural
land)
Consideration should be Rs.50 lacs
orabove

The
purchaser
is
exempt
from
the

The
purchaser
is
exempt
from
the
obligation to obtain TAN, which is
otherwise mandatory for all
dd t d
e
d
uc
t
ees.

6. ExemptionLimit
NoTDSisrequiredtobedeductedwhereconsiderationisless
thanRs.50lakhs
The limit of Rs. 50 lakhs is per property and not aggregate
value
of
consideration
of
all
properties
during
the
year
value
of
consideration
of
all
properties
during
the
year

7. Type of Properties Covered under Section 194‐IA
Residential Property
Commercia
lProperty
Commercia
l Property

8. Type of Properties Not Covered under Sec 194‐IA
RlAilt lLd R
ura
l A
gr
icu
lt
ura
l L
an
d

9. WhatisRuralAgriculturalLand? The meaning for Agricultural Land is given under Section 2(14) of
theIncomeTaxAct,1961underDefinitionofCapitalAssets

Th
t
diti
t
k
ld
ilt l
ld

Th
ereare
t
wocon
diti
ons
t
oma
k
e
lan
d
anagr
icu
lt
ura
l
lan
d
:
i. in government records, the use of land must be for agricultural
purpose,and
ii. the criteria of distance from a town as per Section 2 (14) iii (a)
and (b) the land in question must be situated away from certain
distance
from
any
municipality
or
cantonment
board
the
distance
distance
from
any
municipality
or
cantonment
board
,
the
distance
dependingonthepopulationofthetown.

10. Continued…
Interestingly, if the land is situated within the periphery of gram panchayat, having population above the limit of population
prescribed in Section 2 (14) iii (a) and (b) yet it be will treated as
a
g
ricultural land. Section 2
(
14
)
refers to distance from “munici
p
al
g
(
)
p
town and not from panchayat “though both municipality and panchayat are human habitant but the difference between panchayat
and
municipality
is,
panchayat
is
governed
by
the
panchayat
and
municipality
is,
panchayat
is
governed
by
the
panchayat act and municipality is governed by a different act, considering this land is situated in proximity of any panchayat irrespective
of
population,
will
be
treated
as
“
agricultural
land
”
irrespective
of
population,
will
be
treated
as
agricultural
land

11. Rate of Tax Deduction

TDS
needs
to
be
deducted
@
1
%
on
purchase

TDS
needs
to
be
deducted
@
1
%
on
purchase
valueofimmovableproperty.
If seller doesn’t have PAN or if it is not valid,
tax needs to be deducted at a higher rate of
2
0
%
.
0
%
However, practically online forms do not
accept transaction without PAN. Hence, one
willhavetoobtainPANforthesame.

12. TypesofPersonCovered
Purchaser and seller may be anyone i.e. either
individual/HUF/AOP/BOI/Partnership firm/LLP/Company/Artificial
juridicialperson. This is as per definition of person covered under Section 2(31) of
theIncomeTaxAct,1961.

13. Who is Liable to Deduct Tax and When?
The
Buyer
of
the
Property
needs
to
deduct
TDS
at
the
time
of
The
Buyer
of
the
Property
needs
to
deduct
TDS
at
the
time
of
making payment to the seller or at the time of booking in books of
Purchaserwhicheverisearlier.

14. Deposit of Tax Anytaxdeductedundersection194‐IAwillbe Deposit within 7 days from the end of month in which tax was
deducted.
DepositbywayofChallan‐cums‐statementinForm26QB. ElectronicPaymentcompulsory.

15. TDS Return NoneedtofileTDSReturnseparatelyonQuarterlybasis TDS Challan‐cum‐Statement i.e. 26QB shall need to be filled for
itti
TDS
t
t
t
hi h
ll
th
dtil
rem
itti
ng
TDS
amoun
t
t
ogovernmen
t
w
hi
c
h
covers a
ll
th
e
d
e
t
a
il
s
asrequiredtobefurnishedunderTDSReturn

16. TDSCertificate TDSCertificateinrespectofdeductionundersection194‐IAwillbe
issuedbydeductorinFormNo16B

F
16
B
h
t
b
id
ithi
15
d
f
th
d
dt
f

F
orm
16
B
h
as
t
o
b
e
issue
d
w
ithi
n
15
d
ays
f
rom
th
e
d
ue
d
a
t
eo
f
depositingtax
Form16Bwillhavetobedownloadedfromincometaxwebportal

17. Non Compliance of Provisions of Section 194‐IA
In case of failure to comply with the provisions, interest and penalty would be
imposedtothepurchaseraspersection201(1A):

Interest
will
be
charged
@
1
%
p
m
or
part
of
the
month
for
failure
to
deduct

Interest
will
be
charged
@
1
%
p
.m
or
part
of
the
month
for
failure
to
deduct
taxorshortdeductionoftaxfromthedatethetaxwasdeductibletillthedate
thesameisdeducted. Interest will be charged @ 1.5% p.m or part of the month for tax deducted
but not paid to the government from the date of deduction till the date of
actual
payment
actual
payment
.

18. Points to be remembered by the Purchaser
of
the
Property
Purchaser
of
the
Property

Deduct
tax
@
1
%
from
the
sale
transaction
.

Deduct
tax
@
1
%
from
the
sale
transaction
.
CollectthePANNo.ofthesellerandverifythesamewiththe
originalPANCard.
PAN of the seller as well as the purchaser should be mandatorily
furnished in the online Form for furnishing information regarding
thesaletransaction. DonotcommitanyerrorinquotingthePANorotherdetailsinthe
online Form as there is no online mechanism for rectification of
errors
For
the
purpose
of
rectification
you
are
required
to
contact
errors
.
For
the
purpose
of
rectification
you
are
required
to
contact
IncomeTaxDepartment.

19. Points to be remembered by the Seller
of
the
Property
Seller
of
the
Property
Provide your PAN to the Purchaser for furnishing information
regardingTDStotheIncomeTaxDepartment
Verify Deposit of taxes deducted by the Purchaser in your Form
26
AS
26
AS

20. WhetherTANisrequiredforPurchaser?

No
need
to
register
for
TAN
with

No
need
to
register
for
TAN
with
Department
YoucanuseyourPAN to deposit tax
deducted from payment made to
se
ll
e
r
se e

21. What if the Property is held by Joint‐Owners? In case of joint owners, the threshold limit of Rs 50,00,000/ ‐is to be
determinedproperty‐wiseandnottransferee‐wise.
The number of buyer or seller would not matter at all. The value of
property should be more than Rs 50,00,000/‐for applicability of
deductiono
f
tax.
Forexample:‐
d
ji l
hd
ibl
h
h
i
A,B an
d
C
jo
int
ly purc
h
ase
d
an
immova
bl
epropert
y
.T
h
epurc
h
ase pr
ice
for each owner is Rs 20lakhs, Rs 15 lakhs and Rs 35 Lakhs respectively. In
this case individual purchase price is less than Rs 50,00,000 but the
aggregate
value
of
the
transaction
exceeds
Rs
50
00
000
Thus
section
aggregate
value
of
the
transaction
exceeds
Rs
50
,00
,000
.Thus
section
194‐IAwouldbeapplicable.

22. WHAT IF PART PAYMENT OF RS. 30 LAKHS HAS ALREADY BEEN
MADE
BEFORE
THE
APPLICABILITY
OF
THE
SECTION
BEEN
MADE
BEFORE
THE
APPLICABILITY
OF
THE
SECTION
ANDRESTRS.25LAKHSTOBEMADETHEREAFTER,THEREBY
TOTALAMOUNTEXCEEDINGTHELIMIT
As per the provisions the TDS has to be deducted at the time of
payment
or
credit
so
the
payment
made
earlier
prior
to
the
date
of
payment
or
credit
so
the
payment
made
earlier
prior
to
the
date
of
applicability of this section is not liable to TDS. On rest of the
paymentthebuyerwillhavetodeductthetax.

23. What are the provisions if Payment is made to a Non
‐
Resident?
Non
‐
Resident?

If
payment
is
made
to
a
Non
Resident
then

If
payment
is
made
to
a
Non
‐
Resident
then
section194‐IAwillnotbeapplicable.
Rathersection195willbeattractedandTDS
isrequiredtobededucted@20%+EC&
SHEConthesaleconsideration. Surcharge @10% will be applicable if amount paid exceeds Rs 1
crore.

The
limit
of
Rs
50
00
000
/
‐
is
not
applicable
in
case
of
payments

The
limit
of
Rs
50
,
00
,
000
/
is
not
applicable
in
case
of
payments
madetoNRI’s.

24. What if after charging Service Tax on value of Rs
49
lakhs
Payable
amount
is
equal
to
or
greater
Rs
.49
lakhs
,
Payable
amount
is
equal
to
or
greater
than50lakhs?
TDS has to be deducted as the total amount payable exceeds the
ti
li it
hi h
i
bl
t
th
ll
exemp
ti
on
li
m
it
w
hi
c
h
ispaya
bl
e
t
o
th
ese
ll
er

25. What if the seller is Government?
No TDS is supposed to be deducted as the payment falls within
th
bit
f
ti
/
196
th
eam
bit
o
f
exemp
ti
onu
/
s
196
.

26. WhatifthePropertyisfinancedthroughLoan?
A standing instruction shall be furnished to bank to remit amount
directly to seller after deducting TDS @1% of the total payment
made and asked to deposit the same with government by them directly.
Incaseofpurchaseofpropertyfromsellerwithconsiderationtopay
in installments, then TDS shall be deducted @1% on all the
installments
which
are
due
on
or
after
01
06
2013
installments
which
are
due
on
or
after
01
.
06
.
2013

27. Whether transfer includes any right like
developmental right/exchange/relinquishment in
ibl
?
i
mmova
bl
eproperty
?

Section
2
(
47
)
of
the
Income
Tax
Act
defines

Section
2
(
47
)
of
the
Income
Tax
Act
defines
whatis“Transfer”
Accordin
g
tothesection“transfer”includes:
g
i.Sale
ii.Exchange
iii.Relinquishmentoftheassetsor
iv.Extinquishmentofanyrightstherein
Hence,itcanbesaidthatSection194‐IA applies to all i.e.
developmental right, exchange, relinquishment in immovable
property

28. ImmovableProperty–AsaGift!!! TheSectionstatesthatpaymentwouldincludeby
wayofcash,draftoranyothermode.
Incaseoffamilyarrangement,thereisnosale,neither
there
is
any
consideration
the
assets
are
transferred
without
any
there
is
any
consideration
,
the
assets
are
transferred
without
any
consideration,inthatcasethissectionwillnotbeapplicable

29. ImmovableProperty–Exchanged!!! In caseofExchangeofAssets,sinceoneassetis transferredinlieu
ofotherasset,itwillbesubjecttoTDSbecausethereissomekind
of
consideration
In
such
cases
both
seller
and
buyer
will
need
to
of
consideration
.
In
such
cases
both
seller
and
buyer
will
need
to
deducttaxofeachother

30. CanSellerapplyforalowerdeductioncertificate Inviewofsavingcitizensfromtheunwarrantedexercise
of deduction of tax, then claiming refund from the government,
Section
197
was
introduced
Section
197
was
introduced
However in Section 197 payments made under Section 194 IA is
not covered, so the seller cannot apply for a lower deduction
tifi t
cer
tifi
ca
t
e

31. Lumpsumsaleofbusiness
Forthisthereisnoguidanceavailableinthelaw However as per section 2(42C) “slump sale means transfer
of the business for a lump sum consideration without any
value
assigned
to
individual
assets
and
liabilities
value
assigned
to
individual
assets
and
liabilities
In such a sale there is transfer of undertaking which
includes transfer of immovable property but there is no
f
f
ibl
di l
trans
f
ero
f
immova
bl
eproperty
d
irect
ly
HenceSection194IAwillnotbeapplicableincaseofslump
sale

32. Consequencesofcancellationofdeal 
Two
situations
are
possible
:
Either
the
Seller
will
forfeit
the

Two
situations
are
possible
:
Either
the
Seller
will
forfeit
the
advanceorhewillreturnthemoneytotheBuyer
If the seller forfeits the amount then it becomes “capital receipt”
f
ll
hi h
i
t
tbl
h
th
TDS
t
b
li d
b
f
orse
ll
erw
hi
c
h
isno
t
t
axa
bl
e,
h
ence
th
e
TDS
canno
t
b
ec
la
ime
d
b
y
thesellerinhisreturnasperSec199readwithrule37BA(3)(i).
In case, seller refunds the entire amount with TDS, the TDS credit
maybeclaimedontheprincipalofunjustenrichment.

34. Requirement for Payment of TDS by Buyer PermanentAccountNo.(PAN)ofTransferee(Payer/Buyer) PermanentAccountNo.(PAN)ofTransferor(Payee/Seller)
CategoryofPANofTransferee

Category
of
PAN
of
Transferor

Category
of
PAN
of
Transferor
FullNameoftheTransferee
FullNameoftheTransferor
CompleteAddressoftheTransferee
CompleteAddressoftheTransferor

Complete
Address
of
the
Property
Transferred

Complete
Address
of
the
Property
Transferred
Detailsofamountpaid/Credited
TaxDepositDetails

35. Steps to Pay Tax Online
1. Lo
g
 on to www.tin‐nsdl.com
website
g

36. 2. Under TDS on Sale of Property, click on the option  “lifffihi” “
On
li
ne 
f
orm 
f
or 
f
urn
is
hi
ng TDS on Property
”
a. Click on the
option “TDS on
Sale of Property
”
b. Click on the option
“Online Form for
furnishing TDS on
Sale

of

Property
furnishing

TDS

on

property”

37. 3. Select Form for Payment of TDS on Purchase of    Property(Form26QB) Property
 (Form
 26QB)
Click on the option “Payment of
TDS on Sale of Property”

38. 4. Fill in Details in Form 26QB
Select financial Year for
Select Tax applicable
for which payment is
to be done
Select

financial
Year

for

which payment is to be
done
Mention PAN of the
Transferee/Buyer
Mention PAN of
Transferor/Seller
Re
-
enter PAN of
Re
enter PAN of
Re
enter

PAN

of

Transferee/Buyer
Re
-
enter

PAN

of

Transferor/Seller

39. Details of Transferee and Transferor
Provide Complete
Provide Complete
address of
Transferee/Buyer
Provide

Complete

address
Transferor/Seller

40. Details of Property
Select Relevant Type of
Property from the drop down
menu
Provide Complete Address of
Property Transferred
Mention the date of Agreement
/Booking of Property
Mention total value of consideration
(Property Value)
Mention if the above payment is Mention

if

the

above

payment

is

done in Lump sum or in
Installments

41. Details of Amount
Please enter the amount
/
paid
/
credited to the
Transferor/Seller
Please enter the amount
paid/credited to the transferor/
Seller
Please enter the TDS Rate at
which TDS deducted by the
purchaser
Please enter TDS Amount to
be paid

42. Final Details in Form 26QB
Please select the mode Please

select

the

mode

of payment of Tax
Select the bank through which
payment is to be made
Select the date of
payment/credit
Sl tth dt fDd ti S
e
lec
t

th
e
d
a
t
e o
f

D
e
d
uc
ti
on
Please enter the
characters.
After entering all the above
required details please click on
PROCEED button to continue.

43. Continue….. On Proceed, confirmation page is displayed to verify the detail s entered entered
.
On confirmation, nine digit alpha numeric Acknowledgement
number would be generated
ElE
xamp
l
e:
9 Digit 9

Digit

Acknowledgement
Number

44. 5. Payment of Tax On clicking on Submit to the Bank, Deductor will have to login to the net-
b
anking site with the use
r
ID/
p
asswor
d
p
rovide
d
b
ythe
b
ank fo
r
net-
bankingpurpose.
On successful login, enter payment details at the bank site.
On successful
p
a
y
ment a challan counterfoil will
b
edis
p
la
y
e
d
containin
g
py
py
g
challan
N
umber,
p
ayment details an
d
b
ank name through which e-
p
ayment
hasbeen made.Thiscounterfoilisproofofpayment

45. 6. View Acknowledgement Number In case Acknowledgement Number is not saved by us then we can get it 
from website.
Login towww.tin‐nsdl.com
a. Click on the option “
TDS on Sale of Property”
b. Click on “View
Acknowledgement
Number”

46. Enter the Details
Enter PAN of
Transferee/Buyer
Enter PAN of
Transferor/Seller
Enter the amount of tax Enter

the

amount

of

tax

paid
Enter the relevant A
ssessment Yea
r
Enter the characters
shown
Then Click on Submit

47. Steps to download Form 16B i.e. TDS Certificate
1
. Lo
g
on to www.tdsc
p
c.
g
ov.in
g
pg

48. 2. Click on “Register as New User”, then Click on “Tax Payer”
Click on Tax Payer
Click on
“
Register
Click

on

Register

as New User”

49. Continued….. 
YillbkdidBiDilh

Y
ou w
ill
 b
e as
k
e
d
 to prov
id
e 
B
as
ic 
D
eta
il
s suc
h
 as your:
i.PAN
ii
DateofBirth
ii
.
Date
 of
 Birth
iii.Last, Middle and First Name and would also be required to 
further validate details of either tax deducted (Option 1) or tax 
idb(O ti2)
pa
id
 b
y you 
(O
p
ti
on 
2)

50. Validation of Details OnValidationofdetails,youraccountwillbecreated User ID by default would be your PAN, You would have the option
ofprovidingPasswordofyourchoice

A
il
ld
b
ttill
td
idi

A
nema
il
wou
ld
b
eau
t
oma
ti
ca
ll
ygenera
t
e
d
prov
idi
ng you an
activation link with a second code being text on your mobile.
Havingactivatedyouraccount,itisnowreadytobeused
Services currently available would be: to view 26AS statement and
download Form 16B in case you are the buyer of immovable
Pro
p
erties
p

51. 3. Login to www.tdscpc.gov.in
, there you need to make
arequestforForm16B a
request
for
Form
16B
Click on “Form 16B
(For Buyer)
”
(For

Buyer)

52. Fill the Details asked for, then Click on “Proceed”
c. Enter the PAN of
Seller
b. Enter the
Acknowledgement Number
a. Select the
Assessment Year from
the drop down menu

53. 4. After a successful Request made, you can download
Form16Bfrom
“
RequestedDownloads
”
section
Form
16B
from

Requested
Downloads
section

Please
note
the
Request
Number
to
search
for
the
download

Please
note
the
Request
Number
to
search
for
the
download
request
After some time the same shall be available under download
Cli k
“R t d
Dld”
menu,
Cli
c
k
on
“R
eques
t
e
d
D
own
loa
d
s
”
Enter the Request Number (Option 1) or Request Date (Option 2)
tosearchforthedownloadrequest
List of all the Requests would be displayed, Click on the row
containingForm16BandthenclickonHTTPDownload

Print
sign
and
send
the
Form
16
B
to
the
Seller

Print
,
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54. Disclaimer This presentation provides general information existing as at the time of preparation. The presentation is meant for general
guidance and no responsibility for loss arising to any person acting
or refrainin
g
from actin
g
as a result of an
y
material contained in
g
g
y
this publication will be accepted by Somaiya & Co. It is recommended that professional advice be taken based on the specific
facts
and
circumstances
.
This
presentation
does
not
specific
facts
and
circumstances
.
This
presentation
does
not
substitutetheneedtorefertotheoriginalpronouncements.

55. Thankingyou !! Thanking
 you
..
!!
Last reviewed on 26/05/2014
Team Somaiya
&Co
on

26/05/2014
Somaiya
&
 Co
. 
Chartered Accountants
Contact : 288 288 44 ; 288 288 55
Email:
[email protected]
Email
 :
 [email protected]