Section 194IA-Purchase of Immovable Property

Section 194IA – TDS On Transfer of Immovable Property

1. Any person, being a transferee responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), is liable to deduct tax at source under this section.
2. Therefore, if the immovable property is purchased from a non-resident person for any value, no TDS is required to be deducted under this section. However, TDS shall be deducted under Section 195.
3. Tax shall be deducted under this section, either at the time of credit to the account of the payee or at the time of payment thereof, whichever is earlier.
4. For this purpose, “payment” can be in cash or by issue of a cheque or draft or by any other mode.
5. No tax is deductible where the consideration paid or payable for the transfer of an immovable property is less than ₹ 50,00,000.
6. Tax shall be deducted at the rate of 1% in excess of 50,00,000.
7. No surcharge and Health & Education Cess shall be added to the above rates. Hence, tax will be deducted at source at the basic rate.
8. The rate of TDS will be 20% in all cases, if PAN is not quoted.
9. In case the immovable property is partly financed by bank/lender then TDS will be required to be deducted by the transferee on the entire amount of consideration irrespective of the amount of financing.
10. Transfer of share in the society effectively results in transfer of immovable property and such transfer for a consideration shall be interpreted and all the provisions of section 194IA are applicable.
11. where, the sale of immovable property by the bank or financial institutions will be on behalf of the defaulter and the defaulter is the transferor. Under provisions of income tax act, such auction sale, the defaulter borrower shall be liable to pay capital gain tax on sale of the property. Therefore the provisions of section 194IA for deduction of tax at source shall be applicable.

Provision is not applicable

1. The immovable property transferred is a rural agricultural land.
2. The immovable property has been compulsory acquired under any law.
3. The total amount of consideration for the transfer of immovable property is less than Rs.50,00,000/-
4. Where the transferor is a Non-Resident. In this case section 195 will be attracted.

Form 26QB and Form 16B

1. Form 26QB is a return cum challan for payment of TDS to the Government which shall be furnished electronically for tax deducted under Section 194-IA.
2. Form 26QB shall be furnished within 30 days from the end of the month in which deduction is made.
3. In case of payment/credit in installments, as TDS is required for each installment, Form 26QB shall also be furnished for each such deduction.
4. Form 26QB shall be furnished for each buyer and seller combination.
5. Deductors under Section 194-IA has been provided with an exception and they can file TDS return without TAN and a separate Return cum Challan Form 26QB has been provided to facilitate deductors without TAN to file TDS return for the purpose of Section 194-IA.
6. Deductor shall issue Form 16B to the payee within 15 days from the due date for furnishing Form 26QB and Form 16B can be generated and downloaded from TRACES – TDS

Procedure to generate and download Form16B from TRACES

1. Click here to register as taxpayer on TRACES with details of PAN and either detail of tax deducted or details of challan or details of Form 26QB. Also, enter the verification code and click on ‘Proceed’. Activation link will be sent to email id through which account can be successfully created
2. If already registered login to TRACES here with username as ‘PAN’ and password
   Under downloads tab Select ‘Form 16B (For Buyer)’
3. Furnish details such as assessment year, acknowledgment no. of the Form 26QB and PAN of the seller
4. Form 16B will now be available on requested downloads section under Downloads category
5. Form 16B can now be printed/saved