The document discusses the provisions related to TDS under section 194-IA of the Income Tax Act for the transfer of certain immovable property other than agricultural land where the consideration is Rs. 50 lakhs or more. It provides details on the applicability of TDS, rates of tax deduction, deposit and certification requirements, exemptions, and responsibilities of both the purchaser and seller. Key points include that the purchaser must deduct 1% TDS on payment made to the seller and deposit it within the prescribed timeline, while following proper procedures for obtaining PAN details and issuance of TDS certificates.

1. Section 194 IASection 194‐IA
TDS on Transfer of Certain
Immovable Property other than
Agricultural landAgricultural land
Somaiya & Co.
Chartered AccountantsCompiled by :

2. Why TDS on transfer of Immovable Property?
 Mr. P. Chidambaram while
introducing TDS on Property said
that the transactions of Immovable
Property are usually undervalued
d d t dand under‐reported
 The parties don’t even mention the
PAN No. in the agreement or while
entering into the transaction.
 With a view to improving the
reporting of such transactions, the
Section 194‐IA was introduced in the
Finance Bill of 2013

3. Introduced through Finance Act 2013
CBDT vide its notification no. 39/2013 dated 31st May, 2013 hasCBDT 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 ruraltransfer of certain Immovable Properties other than rural
agricultural land value equal to or exceeding Rs. 50 lakhs as per new
provisions of Section 194‐IA
Means a Person purchasing a property other than agricultural land
having agreement value equal to or exceeding INR 50 Lakhs has to
deduct TDS u/s 194‐IA and pay into government treasury.

4. Applicability of Section 194‐IA
 This new section is applicable w.e.f This new section is applicable w.e.f
01st June, 2013 for sale of
immovable property (other than
agricultural land)agricultural land)
 Consideration should be Rs.50 lacs
or above
 The purchaser is exempt from the The purchaser is exempt from the
obligation to obtain TAN, which is
otherwise mandatory for all
d d tdeductees.

6. Exemption Limit
 No TDS is required to be deducted where consideration is less
than Rs. 50 lakhs
 The limit of Rs. 50 lakhs is per property and not aggregate
value of consideration of all properties during the yearvalue of consideration of all properties during the year

7. Type of Properties Covered under Section 194‐IA
Residential Property
Commercial PropertyCommercial Property

8. Type of Properties Not Covered under Sec 194‐IA
R l A i lt l L dRural Agricultural Land

9. What is Rural Agricultural Land?
 The meaning for Agricultural Land is given under Section 2(14) of
the Income Tax Act, 1961 under Definition of Capital Assets
 Th t diti t k l d i lt l l d There are two conditions to make land an agricultural land:
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 distancedistance from any municipality or cantonment board, the distance
depending on the population of the town.

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
agricultural land. Section 2 (14) refers to distance from “municipalg ( ) 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 thepanchayat 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
value of immovable property.
 If seller doesn’t have PAN or if it is not valid,
tax needs to be deducted at a higher rate of
20%.0%
 However, practically online forms do not
accept transaction without PAN. Hence, one
will have to obtain PAN for the same.

12. Types of Person Covered
 Purchaser and seller may be anyone i.e. either
individual/HUF/AOP/BOI/Partnership firm/LLP/Company/Artificial
juridicial person.
 This is as per definition of person covered under Section 2(31) of
the Income Tax Act, 1961.

13. Who is Liable to Deduct Tax and When?
The Buyer of the Property needs to deduct TDS at the time ofThe 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
Purchaser whichever is earlier.

14. Deposit of Tax
Any tax deducted under section 194‐IA will be
 Deposit within 7 days from the end of month in which tax was
deducted.
 Deposit by way of Challan‐cums‐statement in Form 26QB.
 Electronic Payment compulsory.

15. TDS Return
 No need to file TDS Return separately on Quarterly basis
 TDS Challan‐cum‐Statement i.e. 26QB shall need to be filled for
itti TDS t t t hi h ll th d t ilremitting TDS amount to government which covers all the details
as required to be furnished under TDS Return

16. TDS Certificate
 TDS Certificate in respect of deduction under section 194‐IA will be
issued by deductor in Form No 16B
 F 16B h t b i d ithi 15 d f th d d t f Form 16B has to be issued within 15 days from the due date of
depositing tax
 Form 16B will have to be downloaded from income tax web portal

17. Non Compliance of Provisions of Section 194‐IA
In case of failure to comply with the provisions, interest and penalty would be
imposed to the purchaser as per section 201(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
tax or short deduction of tax from the date the tax was deductible till the date
the same is deducted.
 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 paymentactual payment.

18. Points to be remembered by the
Purchaser of the PropertyPurchaser of the Property
 Deduct tax @ 1% from the sale transaction. Deduct tax @ 1% from the sale transaction.
 Collect the PAN No. of the seller and verify the same with the
original PAN Card.
 PAN of the seller as well as the purchaser should be mandatorily
furnished in the online Form for furnishing information regarding
the sale transaction.
 Do not commit any error in quoting the PAN or other details in the
online Form as there is no online mechanism for rectification of
errors For the purpose of rectification you are required to contacterrors. For the purpose of rectification you are required to contact
Income Tax Department.

19. Points to be remembered by the
Seller of the PropertySeller of the Property
 Provide your PAN to the Purchaser for furnishing information
regarding TDS to the Income Tax Department
 Verify Deposit of taxes deducted by the Purchaser in your Form
26AS26AS

20. Whether TAN is required for Purchaser?
 No need to register for TAN with No need to register for TAN with
Department
 You can use your PAN to deposit tax
deducted from payment made to
sellerse 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
determined property‐wise and not transferee‐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
deduction of tax.
For example:‐
d j i l h d i bl h h iA,B and C jointly purchased an immovable property. The purchase price
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 sectionaggregate value of the transaction exceeds Rs 50,00,000.Thus section
194‐IA would be applicable.

22. WHAT IF PART PAYMENT OF RS. 30 LAKHS HAS ALREADY
BEEN MADE BEFORE THE APPLICABILITY OF THE SECTIONBEEN MADE BEFORE THE APPLICABILITY OF THE SECTION
AND REST RS. 25 LAKHS TO BE MADE THEREAFTER, THEREBY
TOTAL AMOUNT EXCEEDING THE LIMIT
 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 ofpayment 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
payment the buyer will have to deduct the tax.

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
section 194‐IA will not be applicable.
 Rather section 195 will be attracted and TDS
is required to be deducted @20%+EC &
SHEC on the sale consideration.
 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
made to NRI’s.

24. What if after charging Service Tax on value of
Rs 49 lakhs Payable amount is equal to or greaterRs.49 lakhs, Payable amount is equal to or greater
than 50 lakhs?
 TDS has to be deducted as the total amount payable exceeds the
ti li it hi h i bl t th llexemption limit which is payable to the seller

25. What if the seller is Government?
 No TDS is supposed to be deducted as the payment falls within
th bit f ti / 196the ambit of exemption u/s 196.

26. What if the Property is financed through Loan?
 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.
 In case of purchase of property from seller with consideration to pay
in installments, then TDS shall be deducted @1% on all the
installments which are due on or after 01 06 2013installments which are due on or after 01.06.2013

27. Whether transfer includes any right like
developmental right/exchange/relinquishment in
i bl ?immovable property?
 Section 2(47) of the Income Tax Act defines Section 2(47) of the Income Tax Act defines
what is “Transfer”
 According to the section “transfer” includes:g
i. Sale
ii. Exchange
iii. Relinquishment of the assets or
iv. Extinquishment of any rights there in
Hence, it can be said that Section 194‐IA applies to all i.e.
developmental right, exchange, relinquishment in immovable
property

28. Immovable Property – As a Gift!!!
 The Section states that payment would include by
way of cash, draft or any other mode.
 In case of family arrangement, there is no sale, neither
there is any consideration the assets are transferred without anythere is any consideration, the assets are transferred without any
consideration, in that case this section will not be applicable

29. Immovable Property – Exchanged!!!
 In case of Exchange of Assets, since one asset is transferred in lieu
of other asset, it will be subject to TDS because there is some kind
of consideration In such cases both seller and buyer will need toof consideration. In such cases both seller and buyer will need to
deduct tax of each other

30. Can Seller apply for a lower deduction certificate
 In view of saving citizens from the unwarranted exercise
of deduction of tax, then claiming refund from the government,
Section 197 was introducedSection 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 tcertificate

31. Lump sum sale of business
 For this there is no guidance available in the law
 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 liabilitiesvalue 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 i bl di ltransfer of immovable property directly
 Hence Section 194 IA will not be applicable in case of slump
sale

32. Consequences of cancellation of deal
 Two situations are possible: Either the Seller will forfeit the Two situations are possible: Either the Seller will forfeit the
advance or he will return the money to the Buyer
 If the seller forfeits the amount then it becomes “capital receipt”
f ll hi h i t t bl h th TDS t b l i d bfor seller which is not taxable, hence the TDS can not be claimed by
the seller in his return as per Sec 199 read with rule 37BA(3)(i).
 In case, seller refunds the entire amount with TDS, the TDS credit
may be claimed on the principal of unjust enrichment.

34. Requirement for Payment of TDS by Buyer
 Permanent Account No. (PAN) of Transferee(Payer/Buyer)
 Permanent Account No. (PAN) of Transferor (Payee/Seller)
 Category of PAN of Transferee
 Category of PAN of Transferor Category of PAN of Transferor
 Full Name of the Transferee
 Full Name of the Transferor
 Complete Address of the Transferee
 Complete Address of the Transferor
 Complete Address of the Property Transferred Complete Address of the Property Transferred
 Details of amount paid/Credited
 Tax Deposit Details

35. Steps to Pay Tax Online
1. Log on to www.tin‐nsdl.com websiteg

36. 2. Under TDS on Sale of Property, click on the option
“ li f f f i hi ”“Online form for furnishing TDS on Property”
a. Click on the
option “TDS on
Sale of Property”
b. Click on the option
“Online Form for
furnishing TDS onSale of Property furnishing TDS on
property”

37. 3. Select Form for Payment of TDS on Purchase of
Property (Form 26QB)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 ofRe 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 isMention 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 modePlease select the mode
of payment of Tax
Select the bank through which
payment is to be made
Select the date of
payment/credit
S l t th d t f D d tiSelect the date of Deduction
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 details
enteredentered.
On confirmation, nine digit alpha numeric Acknowledgement
number would be generated
E lExample:
9 Digit9 Digit
Acknowledgement
Number

44. 5. Payment of Tax
 On clicking on Submit to the Bank, Deductor will have to login to the net-
banking site with the user ID/ password provided by the bank for net-
banking purpose.
 On successful login, enter payment details at the bank site.
 On successful payment a challan counterfoil will be displayed containingp y p y g
challan Number, payment details and bank name through which e-payment
has been made. This counterfoil is proof of payment

45. 6. View Acknowledgement Number
 In case Acknowledgement Number is not saved by us then we can get it
from website.
 Login to www.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 taxEnter the amount of tax
paid
Enter the relevant
Assessment Year
Enter the characters
shown
Then Click on Submit

47. Steps to download Form 16B i.e. TDS Certificate
1. Log on to www.tdscpc.gov.ing p g

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

49. Continued…..
 Y ill b k d id B i D il h You will be asked to provide Basic Details such as your:
i. PAN
ii Date of Birthii. 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
id b (O ti 2)paid by you (Option 2)

50. Validation of Details
 On Validation of details, your account will be created
 User ID by default would be your PAN, You would have the option
of providing Password of your choice
 A il ld b t ti ll t d idi An email would be automatically generated providing you an
activation link with a second code being text on your mobile.
Having activated your account, it is now ready to be used
 Services currently available would be: to view 26AS statement and
download Form 16B in case you are the buyer of immovable
Propertiesp

51. 3. Login to www.tdscpc.gov.in, there you need to make
a request for Form 16Ba 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
Form 16B from “Requested Downloads” sectionForm 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 D l d ”menu, Click on “Requested Downloads”
 Enter the Request Number (Option 1) or Request Date (Option 2)
to search for the download request
 List of all the Requests would be displayed, Click on the row
containing Form 16B and then click on HTTP Download
 Print sign and send the Form 16B to the Seller Print, sign and send the Form 16B to the Seller

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 refraining from acting as a result of any material contained ing 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 notspecific facts and circumstances. This presentation does not
substitute the need to refer to the original pronouncements.

55. Thanking you !!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 : clients@somaiyaco.comEmail : clients@somaiyaco.com