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Tds on immovable property

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)

28 March 2015

A called company taken over B company including Land during 2005 and paid amount accordingly. Now the sale agreement is to be made in current year i.e. 2014-15. In this regards can A has to pay 1% TDS on agreement of Land ?

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7 Replies

Sowmya.G (CA) (504 Points)
Replied 28 March 2015

As per Section 194IA immovable property means any land or any building being part of it. TDS is not required to be deducted in case of a agricultural land. You have not mentioned the amount of sale consideration in your query. If it is below Rs 50 lakhs no need to deduct TDS.

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Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 28 March 2015

Sir, Agreement cost is 1.07 Crore (Commercial Land) . which paid in 2005-06. But Sale Deed is done in 2014-15

Shishir Nayak ((Expert)) (369 Points)
Replied 28 March 2015

Agree with @ sowmya G

You need to pay TDS of @ 1% on all immovable property transaction over Rs. 50 Lakhs under sec 194IA

J. K. Ratan (Compliance Advisor) (794 Points)
Replied 28 March 2015

What about the capital gain in the year 2005-06.

Since sale is taken place in the year 2005-06 and consideration was also received in the year 2005-06.

As transfer of the land has done in the year 2005-06 and the section 194IA was not applicable in that year.

So no need to deduct TDS in year 2014-15.

kishan kakra (Accountant) (26 Points)
Replied 28 March 2015

Yes...I agree with Jay...Since the tranfer is completed in FY 05-06 and also the consideration was received in the same year....the capital gains taxability arises in case of transfer of capital asset like land/building or any part thereof when the possession of caiptal asset is with purchaser..then only transferor is liabilty to pay capital gains....registration/executing sale deed are mere formalities in the eye of law...so far as section-194IA is concerned. ..it has no retrospective effect...also tax has already been paid in fy 05-06..there is no point of applicability of tds provision...thnks

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kishan kakra (Accountant) (26 Points)
Replied 28 March 2015

Sowmya.G (CA) (504 Points)
Replied 28 March 2015

Thanks Kishan and Jai kumar. TDS under Section 194IA is applicable only for amount payable/paid from 01 June 2013 not on any payments made prior to this date.