TDS on sale of Immovable Property – TDS Section 194IA

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TDS on sale of Immovable Property– TDS Area 194 IA

1. Should the buyer need to comply with TDS provisions if the contract is gone into prior to 1st June 2013 but the payments are made after 1st June 2013?

What if when part payment has been made on or prior to the agreement date and agreement was made after 1st June 2013?

What if the part payment is made before 1st June and balance is paid after 1st June? Whether TDS to be subtracted on the entire amount or the balance amount?

On abovementioned concerns there is judicial deadlock. Th us, it is advisable for buyers to deduct tax on every payment made after 1st June 2013, if overall payment after 1st June 2013 is likely to be INR 50 lakh or more


3. In case of under building and construction property and payments are made in installments Now the concern here is whether the banks/FIs will deduct tax @ 1% and pay to the government or bank will pay the complete installments and the buyer will pay the tax and get it refunded from the contractor. Th ere is no clearness on this element till date. In my view, Banks/ FIs will not take the extra administrative concern and buyer should release these commitments

As per section 199 (checked out with Guideline 37 Bachelor’s Degree) of the Act, an individual can avail credit of TDS in the year in which the income is assessable. In case of Real Estate Developers who are following task conclusion approach, TDS refund has actually to be claimed each year throughout the construction phase.

5. Facility of lower or NIL reduction is not offered under area 194- IA

6. In case of joint ownership of home.

For example, a residential or commercial property under joint ownership is cost INR 60 lakh, where individual share of each of the seller is less than INR 50 lakh. In case of jointly purchase of residential or commercial property having a value of INR 60 lakh, where each purchaser had contributed less than INR 50 lakh, whether each purchaser needs to make abide by the provisions of the Serve as per their share or 1 purchaser can make compliance for whole deal?

In case of 2 or more purchasers or two or more sellers, there is no clear assistance. Th ough, a bare reading of the section provides an impression for applicability of the section if the consideration for unmovable home value in Rs.

7. Whether deemed factor to consider, being stamp duty worth based on section 50 C/ 43 CA, can be replaced with real factor to consider for compliance?

In Finance expense 2012, there was a proposition to take stamp duty worth for TDS. However, the same is missing out on in the freshly introduced section. Th us, actual consideration should be considered for compliance.

8. In case of cancellation of transaction/booking, procedure of declaring refund has not been recommended.

9. Sellers can not apply for lower deduction certificate as section 197 does not cover area 194- IA.

10 Th ere is no assistance relating to sale of unmovable property as slump sale.


Section 194 IA puts additional compliance problem for home purchasers.

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