Section 194IA: TDS on Payment on Transfer of Immovable Property (Not Being an Agricultural Land)

Who has the need to deduct TDS u/s 194IA?

Any person (Buyer or Transferee) who enters into an agreement with a resident for transfer of an immovable property (land or building or both but not an agricultural land) is required to deduct TDS under this section.

What is the rate & time of tax deduction u/s 194IA?

The rate of the tax deduction is 1%. And the time of deducting tax is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).

Some Other Points if-

  • The total amount of consideration for the transfer of immovable property is less than Rs.50 Lakhs then no TDS u/s 194IA is required.
  • The provisions of this section are attracted then there is no requirement of TAN.
  • If Section 194LA (i.e TDS on Payment of Compensation on Acquisition of Certain Immovable Property) is applicable then provisions of Section 194IA will not be applicable.

Frequently Asked Questions

Q- Can I pay 1% TDS under section 194IA for purchasing a property from an NRI?

No, the transferor should be resident for TDS deduction under this section.

Q- As stated in Section 194IA of the Income Tax Act, if one buys 2 properties from the same seller in a two-month gap, and each property value is 32 lakhs, should the buyer still pay the TDS?

No, as there are two different properties and each has a value below 50 lakhs.

Q- What is the meaning of consideration under Section 194 IA of the Income Tax Act?

Actual Consideration not stamp Duty Value.

Q- Does paying 1% TDS on property as per Sec 194 IA of the Income Tax Act 1961 include only basic cost of the property?

No, This Section Clearly points out that if the sale consideration exceeds 50 lakhs, buyer has to deduct 1% TDS and the seller need not to worry about deducting TDS and from the point of view of buyer GST can be considered as an additional tax and it does not form part of sale consideration.

Q- Is Section 194-IA applicable to the JDA agreement?

Yes, there is no difference in a JDA Agreement. So 194-IA will apply on JDA agreement as well.

Q- Can we take a refund of the TDS paid under Sec. 194IA and later deal cancelled? If so, which form should be filed to take a refund? Is it online or manual?

Yes, we can take TDS refund on cancellation of deal There is an online procedure for Refund.

Q- Can a salaried person claim TDS Section 194-IA while filing a return?

YES, there will be a sale of Immovable Property, Salaried person will also have a Capital gain in this case.

Q- Can we take the benefit of section 194-IA when the property is purchased by a different four person in one registry for the amount of Rs. 60 lakhs?

Yes, as the sale consideration is more than 50 lakhs 194-IA is applicable.

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.