Section 194IA of Income Tax Act.

Section 194IA of Income Tax Act – Payment in consideration of transfer of certain immovable property other than agricultural land to a Resident

Introduction to Section 194IA

Section 194IA of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) specifies that any person buying immovable property from a resident seller is required to deduct tax where such payment exceeds the threshold limit.

Who is liable to deduct TDS under Section 194IA of Income Tax Act

Any buyer in charge of making payment of sales consideration for purchasing immovable property shall be responsible for deducting income tax under this section.

Notably, only payments made to Indian residents are subject to TDS under this clause. If the amount is payable to a foreign national, then income tax must be withheld by the deductor under Section 195 of the Act.

Rate of TDS on Immovable Property

TDS is required to be deducted at the rate of 1% of the sale consideration or stamp duty value, whichever is higher. Surcharge or Health and Education Cess will not be added to these rates. If the deductee doesn’t provide his PAN to the deductor, the tax will be deducted under Section 206AA at 20%. If the deductee has not filed their applicable tax return for a specified period, the tax will be deducted at the rate prescribed by Section 206AB.

There is no necessity to apply or get a Tax Deduction or Collection Account Number (TAN) for deducting tax under this section. Hence, a deductor can use his PAN in place of TAN.

Threshold Limit under Section 194IA of Income Tax Act

Section 194IA provides for deduction of tax at a specified rate by the deductor if the immovable property’s consideration or stamp duty value is Rs. 50 lakhs or more.

Timing for deduction under Section 194IA

TDS on the immovable property must be deducted at the time of payment or credit of consideration in the account of the deductee, whichever is earlier.

Exemption on TDS under section 194IA of Income Tax Act

• No TDS shall be deducted on immovable property on any payment payable to the Govt., RBI, Mutual Fund or any Corporation constituted under the Act, assuch income is exempted from tax in their hands.
• No TDS on immovable property on any payment made to ‘Air India Limited’ for the transfer of immovable property to ‘Air India Holding Limited’ under a plan authorised by the Central Government.

TDS Sections

• Section 192 of Income tax act
• Section 193 of Income tax act
• Section 194 of Income tax act
• Section 194B of Income tax act
• Section 194C of Income tax act
• Section194EE of Income tax act
• Section 194H of Income tax act
• Section 194I of Income tax act
• Section 194IA of Income tax act
• Section 194 J of Income tax act
• Section 194K of Income tax act
• Section 194LD of Income tax act
• Section 194LBB of Income tax act
• Section 194M of Income tax act
• Section 194N of Income tax act
• Section 194O of Income tax act
• Section 194Q of Income tax act
• Section 194R of Income tax act