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TDS on Transfer of certain Immovable Properties (other than Agricultural Land) [Section 194-IA)

  1. Meaning of 'Immovable Property' & 'Agricultural Land' as per Section 194-IA

  2. Who is liable to Deduct TDS under Section 194-IA

  3. When TDS under Section 194-IA is to be Deducted

  4. TDS Rate under Section 194-IA for the Financial Year 2018-19 and 2019-20

  5. When TDS under Section 194-IA is Not to be Deducted in case of Transfer of certain Immovable Property

  6. Procedure of Deposit of TDS Deducted under Section 194-IA

  7. Form, Time Limit and Procedure for Issue of TDS certificate of Deduction of Tax under Section 194-IA

  8. Quarterly Statement to be Filed in case of TDS deduction under Section 194-IA

1. Meaning of 'Immovable Property' & 'Agricultural Land' as per Section 194-IA

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

‘Agricultural land’ means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of section 2(14)(iii) are as under :

"Agricultural land situate—

  1. in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than 10,000 ; or
  2. in any area within the distance, measured aerially,—
    1. not being more than 2 kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 10,000 but not exceeding 1 lakh; or
    2. not being more than 6 kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 1 lakh but not exceeding 10 lakh; or
    3. not being more than 8 kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 10 lakh.
    4. not being more than 8 kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 10 lakh.

In other words, section 194-IA shall not be applicable in case of transfer of rural agricultural land situated in India.

TDS on Transfer of certain Immovable Properties (other than Agricultural Land) [Section 194-IA)

2. Who is liable to Deduct TDS under Section 194-IA

Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA, relating to compensation in case of compulsory acquisition of property) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall be liable to deduct TDS under Section 194-IA.

3. When TDS under Section 194-IA is to be Deducted

Tax is to be deducted:

  1. at the time of credit of such sum to the account of the transferor, or

  2. at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode,

whichever is earlier.

4. TDS Rate under Section 194-IA for the Financial Year 2018-19 and 2019-20

The rates of TDS in case of transfer of immovable property shall be 1%.

Notes:

  1. No surcharge, education cess or SHEC shall be added to the above rates. Hence, tax will be deducted at source at the basic rate.

  2. The rate of TDS will be 20% in all cases, if PAN is not quoted.

5. When TDS under Section 194-IA is Not to be Deducted in case of Transfer of certain Immovable Property

In the following cases tax is not to be deducted at source under section 194-IA:

  1. The immovable property transferred is a rural agricultural land.

  2. The immovable property has been compulsory acquired under any law.

  3. The total amount of consideration for the transfer of immovable property is less than Rs.50,00,000.

6. Procedure of Deposit of TDS Deducted under Section 194-IA

Notification No. 39/2013, dated 31.5.2013 has prescribed the procedure for deposit of tax deducted at source, which is as under:

  1. Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

  2. The tax shall be deposited by remitting it electronically within 30 days from the end of month in which deduction is made into the Reserve Bank of India or the State Bank of India or any authorised bank.

  3. The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purposes of remitting the amount electronically to the Reserve Bank of India or the State Bank of India or any authorised bank and shall be responsible for the day-to-day administration in relation to the remitting of the amount electronically in the manner so specified.

  4. Online payment of TDS is mandatory. Online payment of challan is available on TIN NSDL website.

  5. Both transferee and transferor must have Permanent Account Number (PAN). Transferee is not required to hold/obtain TAN for payment of TDS.

7. Form, Time Limit and Procedure for Issue of TDS certificate of Deduction of Tax under Section 194-IA

As per Notification No. 39/2013, dated 31.5.2013, every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No.16B to the payee within 15 days from the due date for furnishing the challan-cum-statement in Form No. 26QB under rule 31A after generating and downloading the same from the web portal specified by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (System) or the person authorised by him.

The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purposes of generation and download of certificates and shall be responsible for the day-to-day administration in relation to the generation and download of certificates from the web portal specified by him or the person authorised by him.

8. Quarterly Statement to be Filed in case of TDS deduction under Section 194-IA

Every person responsible for deduction of tax under section 194-IA shall furnish to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or Director General of Incometax (Systems) a challan-cum-statement in Form No. 26QB electronically in accordance with the procedures, formats and standards specified by Principal Director General of System or Director General of System within 30 days from the end of the month in which the deduction is made.

CONTENT-Tax Deducted at Source (TDS) [Section 190 to 206CA]

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