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1. A purchaser of Immovable Property(Land or Building or both) is required to deduct TDS @ 1% of consideration amounting to 50 lakhs or more, payable to Resident Seller.

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2. Point of Taxation: TDS shall be deducted at the earlier of following:

    a) Book entry: Credit of such to the account of Seller or transferor

    b) Payment (Cash, cheque draft etc)

 

3.  Whether property is Residential or Commercial is not Relevant

 

4. Non-Applicability of this Section:

    a) Compulsory Acquisition of Immovable Property as per section 194LA. 

    b) Transfer of Agricultural Land

    c) Transfer to Non-Resident

   d) Sale Value less than 50 lakhs

 

5. Section 203A not applicable - TAN Number

   A purchaser who has deducted tax under this section is not required to apply for Tax deduction account number (TAN) if     not already allotted.

 

6. "Consideration for transfer of any immovable property” shall include all charges of the nature

• club membership fee,

• car parking fee,

• electricity or water facility fee,

• maintenance fee, advance fee or

• any other charges of similar nature, which are incidental to transfer of the immovable property;

 

"Immovable property" means any land (other than agricultural land) or any building or part of a building.

 

7. Compliances:

• Challan-cum-statement – Form 26QB electronically within 30 days from the end of the month in which the deduction is made.

      Example: If TDS is deducted on 15th May. Form 26QB to be submitted by 30th June

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• Certificate of Deduction: Form 16B to the Transferor or Seller within 15 days from the due date Form 26QB

       In above example by 15th July

 

8. Peculiar Situation

• Two Seller and One Buyer

• One Seller and two Buyer 

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Question: Whether the limit of 50 lakh is to be reckoned Sale deed wise or Individual buyer/seller??

 

Answer: The limit shall be reckoned on Individual buyer or Seller wise.

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Case law supporting above views: 

 

More than One Seller or Joint Owner

M/s. Oxcia Enterprises Private Limited Vs. DCIT

Decision in Favour of Assessee

Date of Judgement : 5th June, 2019

 

Summary

A and B were joint owner of an Immovable Property. C was appointed as authorised representative by power of attorney to transfer property to Mr X.

Sale consideration was 60 lakhs (Assumed)

Mr. X deducted TDS @ 1% u/s 194I-A quoting Mr C’s PAN.

 

Assessing Officer: AO said TDS should have been deducted on original owners i.e. Mr A and Mr. B as Mr C is just an agent acting on their behalf.

AO applied section 206AA – Higher rate of TDS if PAN not furnished. So Mr X should have deducted 20% TDS on original owners and raised a demand along with Interest.

 

Appeal to CIT(A) by Mr X

CIT Appeals upheld the order of AO

 

Appeal to ITAT

• Yes, Mr C cannot be termed as transferor of Immovable Property as he just acting as agent of the actual owners Mr. A and Mr. B

• TDS should have deducted from the actual owners

• The Tribunal referred the section 46 of the Transfer of Property Act which prescribed that where immovable property is transferred for a consideration by persons having distinct interest therein, the transferors are, in the absence of a contract to the contrary, entitled to share in the consideration equally.

       

Since Mr A and Mr B are joint owners, they will get consideration of 30 lakhs each which is below threshold limit of 50 lakh as per section 194-IA(2).

Hence TDS is not required to be deducted.

 

 

More than One Buyer

Honourable Delhi ITAT in the case of Vinod Soni v ITO  - In favour of Assessee.

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