Section 194IA- Payment on Transfer of Immovable Property

1. Time of Deduction- TDS to be deducted at the time of credit or payment, whichever is earlier.
2. Deductor- Any person (other than a person referred to in Section 194LA- tax deducted in case of property acquired under force of law).
3. Deductee- Any seller being a resident.
4. TDS Rate- 1% of total consideration for transfer of immovable property.

If PAN is not furnished, then TDS to be deducted at a higher rate.

5. No deduction of TDS when-
   1. Immovable property is a rural agricultural land AND
   2. Sale consideration for the property is less than Rs. 50Lakh.

6.  Points to Note-

1. If property is purchased from a Non-Resident person for any value, no TDS is required to be deducted under this section. But TDS under section 195 shall apply.
2. If the property value is Rs. 50Lakh or more but part payment is being made; TDS needs to be deducted on every part payment.

• If sellers jointly own a property and it sells for a total consideration of Rs. 50Lakhs or more, then section 194IA is attracted even if each co-owners consideration is less than Rs.50Lakh.

1. If multiple buyers are paying for the property for a total consideration of Rs. 50Lakh or more. Applicability of this section shall be seen as per total individual contribution being more than Rs. 50Lakhs.
2. Even if land or building is situated outside India, TDS needs to be deducted under this section
3. TDS needs to be deducted irrespective of the fact that immovable property is held as a capital asset or stock in trade by the buyer and seller.

• If property is acquired under force of law then Section 194LA shall apply and not Section IA.

7. Meaning-
   1. Immovable Property:
      • Any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also.
      • Any rights in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein)

8.  Consideration: The term “consideration for transfer of any immovable property” shall include all charges in the nature of-

1. 1. 1. club membership fee,
      2. car parking fee,
      3. electricity and water facility fees,
      4. maintenance fee,
      5. advance fee, or
      6. any other charges of similar nature which are incidental to transfer of the immovable property.

∼Authored by – CA Anushka Saraogi∼

Section 194 – TDS on Dividend