Tds on immovable property 194ia

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2013 MR X HAS PURCHASED AN UNDERCONSTRUCTION PROPERTY FROM THE DEVELOPER 3 YEARS AGO(i.e JUNE 2010) FOR WHICH AGREEMENT WAS MADE BUT THE PROPERTY WAS NOT REGISTERED BECAUSE MR X HOLDED IT AS AN INVESTMENT. MR X WAS TO PAY TO THE DEVELOPER IN 10 INSTALLMENTS IN WHICH 8 ARE DUE AND PAYMENT HAS BEEN MADE FOR 8 INSTALLMENTS AND 2 INSTALLMENTS ARE NOT YET DUE. NOW MR X HAS ASSIGNED THE PROPERTY TO MR Y ON DEC 2013 AND MR Y NEEDS TO PAY 70 LACS TO MR X AND 10 LACS FOR 2 INSTALLMENTS WHICH ARE NOT YET DUE TO THE DEVELOPER i.e MR Y HAS BEEN SUBSTITUTED IN PLACE OF MR X IN THE AGREEMENT.MY QUESTION IS
1. WILL MR Y HAVE TO DEDUCT TDS ON AMOUNT PAID TO MR X i.e 70 LACS AS PER SECTION 194IA?
2. WILL MR Y HAVE TO DEDUCT TDS ON AMOUNT PAID TO DEVELOPER i.e 10 LACS AS PER SECTION 194IA?

Annu Agarwal

Annu Agarwal (Expert)
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28 December 2013 Sir as per my view,effectively Mr.Y is paying 80 lacs for the property,which is far more than the limit of section 50 lakhs under section 194IA.Therefore TDS shall be deducted on Rs 80Laks @1% i.e 80,000.

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2013 One of my friend said that no tds is to be deducted on payment to Mr Y as he does not hold property he holds rights in property and payment to Mr Y is merely an reimbursement beacuse in definaton it is clearly mentoned that there should be a buyer, a seller and a property and property means land, building or part thereof. So plz give guidance to me

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Annu Agarwal

Annu Agarwal (Expert)
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30 December 2013 Sir i couldnt get you.can you please explain your point again.
You have mentioned,that no TDS on payments to Mr Y,but here Mr Y is making payment and not receiving payment.