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Section 194-IA : TDS On Sale Of Immovable Property : Compliance Procedure

The recent amendment to TDS on transfer of immovable property has become effective from June 1, 2013 with a view to improve reporting of immovable property transaction and taxation of capital gains. The new amendment under section 194-IA of the Income Tax Act, 1961 is applicable to all transactions of transfer of immovable property of Rs 50 lakh or more. The new provision required TDS to be deducted at 1%  (20% in the absence of PAN of seller) of the price being paid by the purchaser of an immovable property.

Important Points :

  • Section 194-IA is applicable only if the total consideration of the property to be transferred is Rs. 50 Lakhs or more.
  • The amount to be deducted is 1% of the total consideration but if the SELLER does not provide PAN details it is 20% of the total consideration
  • The TDS so deducted should be deposited by the BUYER  in Challan Form 26QB electronically in the NSDL site (Payment of TDS on Sale of Property) within 7 days from the end of month in which tax was deducted.
  •  It is mandatory to provide PAN of both TRANSFEROR (SELLER) and TRANSFEREE (BUYER) with the complete address of SELLER, BUYER and the PROPERTY to be transferred.
  • The BUYER should issue TDS certificate to the SELLER in Form 16B within 15 days from the due date of depositing tax.
  • The above would not require the BUYER to obtain a TAN as the Forms 26QB and 16B are to be filled using the PAN details of the parties to the transaction.

Electronic Payment by deductors not having net-banking facility

  • Since Section 194-IA transactions will be one off and deductor may not have net-banking facility, an alternate has been provided.
  • The deductor has to fill the information online and then opt for e-tax payment on subsequent date option.
  • On completing the form, an acknowledgement will be generated.
  • The deductor can then visit a bank branch for payment, provide the acknowledgment number.
  • Bank will use TIN web site to retrieve payment information based on the acknowledgement number and then proceed to make electronic payment