Scope of the Section 194IC of Income Tax Act
- As per section 194IC of the Income Tax Act any person who is paying a resident a consideration under a joint development agreement needs to deduct TDS.
- Joint Development agreement means It is an agreement with the owner of the asset who agrees to let another person build a real estate project on such assets in return for the share or payment that was made in cash.
- Also, there is no threshold limit is specified under the section 194IC for deduction of Tax.
Who is Responsible to deduct tax under section 194IC ?
Any person responsible for paying to a resident any sum by way of consideration under the specified agreement under section 45(5A) i.e. under the Joint Development Agreement, shall deduct tax at source.
Meaning of Joint Development Agreement?
Joint Development Agreement is an agreement between two people i.e. the owner of the land or building and another person who is given the permission to build a real estate project and in return, he or she must give a share to the owner or the payment in cash must be done.
Rate of TDS under Section 194IC:
- The rate of tax deduction under section 194IC is 10%.
- If the PAN of the receiver is not available, then the rate will be 20%.
Time of Tax Deduction:
The time of tax deduction is earlier of the following
- The credit of income to the account of the payee (or)
- At the time of actual payment thereof
TDS u/s 194IC is not Deductible:
Tax deduction at source shall not be made in respect of that part of consideration which is in kind under the specified agreement
TDS Deposit Form 26QC:
- TDS is required to deposit under section 194IB with challan cum statement in the specified FORM 26QC.
- The TDS deducted needs to be deposited within 30 days and should accompany Form 26QC.
- The tenant must provide Form 16C, a TDS certificate to the landlord as proof of the tax deposited.
- A tax deduction account number (TAN) is not necessary to make the transaction.
Penalty is Applicable in the Case of Non-deduction or Delay:
- If the tax deposited to the government is delayed, penal interest at 1% for delay in deducting and depositing and 1.5% for delay in depositing tax will be levied.
- In case of a failure on the filing Form 26QC within 30 days from the end of the month in which tax payment is made, will result in a late fee of Rs 200 per day.
