Tds u/s 194-ia

Sumit Grover (Chartered Accountant ) (3652 Points)

02 July 2013  

Whether TDS u/s 194-IA(i.e. TDS on acquisition of immovable property exceeding Rs. 50Lakhs) needs to be deducted on the amount inclusive or exclusive of service tax???

Since, in construction industry, Service tax is also levied by Builders, by virtue of section 66E(b) of Finance Act, 1994.

Section 194-IA(1) of Income Tax Act reads out as follows:

"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"

  • In my opinion, TDS should be levied on the amount exclusive of service tax....Since, the servie tax portion can't be said to be the consideration for transfer...It is just the statutory liability being met out by builder after recovering from the buyer.
  • Though, Income Tax Department may subsequently issue a clarificatory explanation in respect of above. So, taking a practical view, TDS may be deducted on amount inclusive of service tax.

Please share your views on above.