The provisions relating to TDS on payments under Joint Development Agreements have been restructured under the Income-tax Act, 2025. The earlier Section 194IC of the Income-tax Act, 1961 is now covered under Section 393(1) [Table: Sl. No. 3(ii)], effective from 1st April, 2026.
This change introduces a tabular classification for such payments while retaining the existing scope and applicability. The fundamental provisions governing deduction of tax on monetary consideration under such agreements remain unchanged.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(1)
- Table Reference: Table: Sl. No. 3(ii)
- Nature of Payment: Payment on any consideration, not being consideration in kind, under the agreement referred to in section 67(14)
- Earlier Section (IT Act 1961): Section 194IC
- Return Form: 26Q
- Code (for return filing): 1011
Applicability of TDS on Joint Development Agreement
Any person responsible for paying monetary consideration under a Joint Development Agreement is required to deduct tax at source.
The provision applies only to payments made in cash or other monetary form and does not apply to consideration in kind.
Time of Deduction
TDS is required to be deducted at the earlier of:
- At the time of credit of such sum to the account of the payee
- At the time of payment
Rate of TDS
- 10% on the monetary consideration paid
In cases where PAN is not furnished, tax shall be deducted at the higher of:
- The rate specified above, or
- 20%, as per applicable provisions
Threshold Limit
- No minimum threshold
- TDS is applicable irrespective of the amount
Meaning of Joint Development Agreement
A Joint Development Agreement refers to an arrangement where:
- The owner of land or building allows another person to develop a real estate project on such property
- In return, the owner receives consideration in the form of cash, share in property, or both
Important Note
- Capital gains are taxable in the year in which the certificate of completion is issued by the competent authority
- TDS credit under this provision shall be claimed in the same year in which such capital gains are taxable
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