TDS ON IMMOVABLE
PROPERTY - 194 -IA
~ Budget 2013 ~
Object of bringing
into effect the provision of Sec-194- IA:
The Finance Minister has
proposed that, in order to introduce a reporting mechanism of transactions in
the real estate sector and also to collect tax, deduction of tax at source has
been mandated for transfer of immovable property (other than agricultural
land) to a resident transferor @1 % of the transfer consideration.
The reason for
introducing section 194-IA is to widen the tax base and to check tax avoidance
measures pertaining to the real estate sector.
Note: Any transaction other than agricultural land
involving apparent consideration of Rs.50 lakh or more is liable
for tax deduction at source under section 194-IA.
The provision sec-194I
seeks deduction of tax at source on transfer of certain immovable property
other than agricultural land referred to in section 2(14). Any person being a
transferee who is liable to pay to a resident by way of consideration for
transfer of any immovable property shall at the time of credit of such sum to
the account of the transferor or at the time of payment in whatever manner, has
to deduct tax at source at 1 percent. The liability to deduct tax at source is
at the time of actual payment or credit of such sum to the account of the
transferor whichever is earlier. The threshold limit for application of tax
deduction at source is Rs.50 lakhs. Where the transaction is less than Rs. 50
lakhs, the liability to deduct tax at source will not be applicable. Since the
expression used in the section is "any sum by way of consideration"
the provisions of section 50C will not interfere. Hence, tax deduction at
source will be with reference to apparent consideration only.
This provision Sec-194
-IA would be applicable in respect of transactions effected on or after
01.06.2013.
