Tds u/s. 194ia i.e. on sale of immovable property

This query is : Resolved

Ruchi Agarwal (Querist)
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28 December 2013 Whether TDS u/s. 194IA on Sale of Immovable Property @ 1% has to be deducted on the amount inclusive of Service Tax or Exclusive of Service Tax??

Aditya Maheshwari

Aditya Maheshwari (Expert)
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28 December 2013 A very confusing situation on which still there is no clarification from any source. Better to deduct on the amount including service tax to be on the safer side.

Ruchi Agarwal

Ruchi Agarwal (Querist)
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28 December 2013 Sir, we are a Construction Co. and we have received payments from clients. Our Clients have made payments to us after deducting tds on the amount exclusive of service tax. In any case it is a default made by client if tds to be deducted on Inclusive of service tax amount. Hence, are we liable for short deduction of tds amount?

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Guest

Guest (Expert)

28 December 2013 It Should be deducted inclusive Service tax..Though no official clarification in this regard.

Ruchi Agarwal

Ruchi Agarwal (Querist)
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28 December 2013 But sir, Client has given payment for Service tax amount seperately to us

Guest

Guest (Expert)

28 December 2013 deducting TDS is the liability of your client.You need not to worry in that.

CA Abhishek

CA Abhishek (Expert)
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28 December 2013 According to Sec. 194-IA, Tax is to be deducted :
1. at the time of credit of SUCH SUM to the account of the transferor, or
2. 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.

It is quite clear from the language of the Section that the sum paid by the transferee, if, inclusive of service tax, tax will have to be deducted at source service tax inclusively. but, if no service tax is payable by the transferee then he is required to deduct tax at source only on the sale amount of immovable property.