Buying a property is an exciting and significant decision in anyone’s life. However, it also comes with several financial obligations, including taxes. As a property buyer, you must know the tax implications related to property transactions to avoid any legal issues. Section 194IA of the Income Tax Act, 1961, deals with TDS (Tax Deducted at Source) on payment made while purchasing property. Let’s take a closer look at Section 194IA of the Income Tax Act and understand its provisions.
What is Section 194IA?
Section 194IA of the Income Tax Act, 1961, was introduced in the Union Budget of 2013 to broaden the scope of TDS provisions. According to this section, any individual buying property with a value of Rs. 50 lakhs or more has to deduct TDS at the rate of 1% on the total purchase amount. The buyer is responsible for deducting TDS and depositing it with the government within 30 days from the end of the month in which TDS was deducted.
Who is liable to deduct TDS under Section 194IA?
The buyer of the property is liable to deduct TDS under Section 194IA of the Income Tax Act. The buyer can be an individual or an entity, such as a company, partnership firm, or HUF (Hindu Undivided Family). The TDS has to be deducted on the total purchase value of the property, including any registration fees, stamp duty, or any other payment made to the seller.
When is TDS not required to be deducted under Section 194IA?
The following scenarios are exempted from TDS deduction under Section 194IA of the Income Tax Act:
- If the total purchase value of the property is less than Rs. 50 lakhs.
- If the property is inherited.
- If the property is being transferred under a gift.
- If the property is being transferred as part of a Will or an irrevocable trust.
- If the property is being transferred under a court order, such as a divorce decree or a partition deed.
- If the seller is a non-resident Indian (NRI), TDS has to be deducted at the rate of 20% under Section 195 of the Income Tax Act.
How to deposit TDS under Section 194IA?
After deducting TDS, the buyer must deposit it with the government within 30 days from the end of the month in which TDS was deducted. The buyer can deposit TDS through any authorized bank or using the online payment gateway on the Income Tax Department’s website.
Conclusion
Section 194IA of the Income Tax Act, 1961, is an essential provision that every property buyer should be aware of. As a buyer, it is your responsibility to ensure that TDS is deducted and deposited with the government within the specified time. Failure to comply with this provision can attract penalties and legal action. Therefore, it is advisable to seek professional guidance while dealing with property transactions to avoid any tax-related issues.
Read more useful content:
- section 234e of income tax act
- section 286 of income tax act
- section 90a of income tax act
- section 40a(7) of income tax act
- section 226(3) of income tax act
- section 24 of income tax act
Frequently Asked Questions (FAQs)
Q: What is Section 194IA of the Income Tax Act?
A: Section 194IA of the Income Tax Act, 1961, deals with the Tax Deducted at Source (TDS) on payment made while purchasing property.
Q: Who is liable to deduct TDS under Section 194IA?
A: The buyer of the property is liable to deduct TDS under Section 194IA of the Income Tax Act.
Q: What is the rate of TDS under Section 194IA?
A: The rate of TDS under Section 194IA is 1% of the total purchase value of the property.
Q: Is TDS applicable if the property value is less than Rs. 50 lakhs?
A: No, TDS is not applicable if the total purchase value of the property is less than Rs. 50 lakhs.
Q: Is TDS applicable on registration fees, stamp duty, or any other payment made to the seller?
A: Yes, TDS is applicable on the total purchase value of the property, including any registration fees, stamp duty, or any other payment made to the seller.
Q: What is the time limit for depositing TDS under Section 194IA?
A: The buyer must deposit TDS with the government within 30 days from the end of the month in which TDS was deducted.
Q: Are there any exemptions from TDS deduction under Section 194IA?
A: Yes, there are exemptions from TDS deduction under Section 194IA. For example, if the property is inherited, being transferred as part of a gift, will, or an irrevocable trust, or under a court order, TDS is not required to be deducted.
Q: Is TDS applicable if the seller is a non-resident Indian (NRI)?
A: Yes, TDS is applicable if the seller is an NRI, but the rate of TDS is 20% under Section 195 of the Income Tax Act.
Q: Can the buyer deposit TDS online?
A: Yes, the buyer can deposit TDS online using the online payment gateway on the Income Tax Department’s website.
