TDS on Transfer of Immovable Property
Provisions of Section 194-IA
A person who is purchasing any immovable property (other than agricultural land) from a resident is required to deduct TDS @ 1% from the amount payable in respect of transfer of immovable property. So if a person purchase any immovable property and make payment of Rs. 50 lakhs or more then deduct TDS @ 1%. However no deduction of TDS shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
As per provision of Section 194-IA "Any person, being a transferee/Purchaser, responsible for paying to a resident transferor/Seller any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall 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, deduct an amount equal to one percent of such sum as TDS thereon"
Explanation — For the purposes of this section
(a) "agricultural land" means agricultural land in India.
A land shall not be treated as Agriculture Land, if:
- a) It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or
- b) It is situated in any area within below given distance measured aerially:
| Population of the Municipality | Distance from Municipal limit or Cantonment Board |
| More than 10,000 but does not exceed 1,00,000 | Within 2 kms. |
| More than 1,00,000 but does not exceed 10,00,000 | Within 6 kms. |
| Exceeding 10,00,000 | Within 8 kms |
(b) "consideration for transfer of any immovable property" shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property;’
(c) "immovable property" means any land (other than agricultural land) or any building or part of a building.
Conditions to be satisfied for applicability of section 194-IA
For applicability of section 194-IA following conditions need to be satisfied:
(a) The payee must be a resident transferor of an immovable property.
(b)The payment must be by way of consideration for transfer of any immovable property (other than agricultural land).
(c)The quantum of payment must be Rs. 50 lakhs or more for transfer of any immovable property.
Time of deduction of TDS
TDS shall be deducted at the time of credit of such sum to the account of the transferor or 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.
Rate of TDS
Tax shall be deducted at the rate of 1%.
Effect of non-furnishing of PAN on rate of tax
Section 206AA, as inserted with effect from 1-4-2010, provides as under:
- Every person whose receipts are subject to deduction of tax at source (i.e., the deductee) shall furnish his PAN to the deductor.
- If such person does not furnish PAN to the deductor, the deductor will deduct tax at source at higher of the following rates:
(a) the rate prescribed in the Act;
(b) at the rate in force, i.e., the rate mentioned in the Finance Act; or
(c) at the rate of 20 per cent.
- Where the PAN provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his PAN to the deductor and above provisions shall apply accordingly.
Tax Deduction and Collection Account Number (TDCAN)
Provisions pertaining to Tax Deduction and Collection Account Number, i.e., section 203A, shall not apply to a person deducting tax at source under Section 194-IA.
Deposit of TDS to the credit of the Central Government
The TDS on the immovable property has to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.
The sum so deducted shall be deposited to the credit of the Central Government by remitting it electronically to the State Bank of India or to any authorised bank.
Consequences of Non Deduction Or Non Payment TDS
(a) Interest for TDS not deducted
Interest at the rate of 1% per month or part thereof, for the period from the date on which TDS is deductible/collectible to the date on which TDS/TCS is actually deducted/collected.
(b) Interest for TDS deducted but not paid
Interest at the rate of 1.5% per month or part thereof, for the period from the date on which TDS is actually deducted/collected to the date on which such TDS/TCS is actually paid.
(c) Penalty for late filing of Form 26QB
Penalty is payable at the rate of Rs. 200 per day for which the default continues. The penalty amount cannot exceed the amount of TDS to be deducted. And if the default continues for a period of more than one year then additional penalty of Rs. 10,000 to 1,00,000 is to be paid under section 271H.
Certificate for tax deducted at source
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 fifteen 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 TRACES portal ( www.tdscpc.gov.in) .
Furnishing of statements by tax deductor to department
Every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorised by him a challan-cum-statement in Form No. 26QB electronically within 30 days from the end of the month in which the deduction is made. CPC-TDS has also enabled the online functionality for correction in Form No. 26QB.