Sec 194-IA of Income Tax Act TDS on Immovable Property

Sec 194-IA of Income Tax Act TDS on Immovable Property:

A New Section 194-IA has been inserted in the Income Tax Act, 1961 of India. Section 194 IA is inserted for TDS liability on transfer of Immovable Property other than Agricultural Land.

Tax to be deducted from payment on transfer of certain immovable property other than agricultural land [New Section 194-IA] 

TDS will be deducted at the rate of 1% of the sales consideration amount of immovable property if the sales consideration of such property exceeds RS. 50 Lakhs. Section 194-IA applies all immovable properties other than Agricultural land.

In case of transfer of immovable property by a non-resident, the TDS provisions under section 195 are attracted in the hands of the transferee. However, in case of transfer of immovable property by residents, there is no requirement to deduct tax at source, the only exception being a case of compulsory acquisition of immovable property (other than agricultural land) in respect of which tax deduction is required under section 194LA.

For the twin purposes of having a reporting mechanism of transactions in the real estate sector and also collecting tax at the earliest point of time, new section 194-IA has been inserted to require every transferee responsible for paying any sum as consideration for transfer of immovable property (land, other than agricultural land, or building or part of building) to deduct tax, at the rate of 1% of such sum, at the time of credit of such sum to the account of the resident transferer or at the time of payment of such sum to a resident transferer, whichever is earlier.

However, tax is not required to be deducted at source where the total amount of consideration for the transfer of immovable property is less than  Rs. 50 lakh.