Please help on the following issue If an NRI is purchasing an immovable property from an Indian Co. for Rs. 1.50 Crore then:
I) Is e liable to deduct TDS u/s 194IA? II) If he (NRI) purchase such property in joint name with his spouse (a resident Indian), then who is liable to deduct TDS u/s 194IA?
46. After section 194-I of the Income-tax Act, the following section shall be inserted with effect from the 1st day of June, 2013, namely:—
'194-IA. Payment on transfer of certain immovable property other than agricultural land.—(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.
(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.
Explanation.— For the purposes of this section,—
(a) "agricultural land" means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (b) "immovable property" means any land (other than agricultural land) or any building or part of a building.'.
29 May 2020
What is the rate of TDS for such deduction? The rate of TDS for this deduction is 1%.
What are the conditions for the application of Section 194IA of Income Tax Act? TDS is to be deducted by the buyer and not by the seller. There is no TDS applicable under Section 194IA if the transaction is worth less than Rs.50 lakhs. TDS has to be paid on the complete amount of sale and not just the amount above Rs.50 lakhs. For example, if you buy a property worth Rs.60 lakhs, TDS will be calculated on Rs. 60 lakhs and not Rs.10 lakhs. For payment made in installments, TDS will be deducted on each installment. Since September 2019, charges such as club membership, car parking, maintenance fees, advance fees, electricity fees have also been included under ‘consideration for immovable property’. This means that such charges attached to the property will also be added to the taxable amount. PANs of both buyer and seller are mandatory for TDS deduction under Section 194IA. If the buyer does not obtain the seller’s PAN, the rate of TDS rises to 20%.
How to pay TDS under Section 194IA of Income Tax Act? This TDS payment has to be made using Form 26QB. It has to be paid within 30 days from the last day of the month in which the sale was conducted. After payment of TDS, the buyer will receive Form 16B which they need to submit to the seller. From 16B can be generated and downloaded from the TRACES portal.
CAclubindia
