Section 194(IA) has been inserted by Hon’ble Finance Minister Mr. P. Chidambaram while presenting the Budget 2013 and would come into force with effect from 1st June 2013.
The main motive behind such action is to curb the laundering of black money through sale of immovable property (other than rural agricultural land).
The section burdens the buyer of the property to deduct tax @ 1% of the amount paid or payable to the seller in case of value of transaction exceeding Rs.50,00,000/-.
But this provision is applicable only for the payment made to Residents for transactions with Non-Residents as covered under section 195 of The Income Tax Act, 1961.
What about the applicability of Sec 203A for obtaining the TAN by the buyer?
In order to remove such hardship, sub-section 3 of section 194(IA) has been introduced which doesn’t mandate the procurement of TAN.
As per Notification No. 39 dated 31st May 2013, the TDS deducted has to be deposited within a period of 7 days from the end of the month in which the deduction is made.
Form 26QB has been prescribed for making such payments and the same has been uploaded in the website of NSDL.
The TDS certificate in Form 16B would be issued within 15 days from the due date of deposit of TDS. In case of non-availability of PAN, the TDS would be deducted at 20% of the amount paid or payable.
In case of transactions made in installments, the TDS has to be deducted at the time of paying each installment.
In calculating the value of Rs.50,00,000/- the aggregate of payments has to be taken into consideration and not the individual payment. So, there is no tax planning possible by way of creating multiple buyers and sellers.
Is there any exemption to the seller in case he is eligible for taking exemption from capital gains under section 54?
No, because the TDS is on the value of transaction and not on the amount of capital gain. So, investing in the assets specified under section 54 is not of any use.
The value of 50,00,000/- pertains to a particular unit or property and the value refers to the value on the date of agreement provided the payment has been done through cheque/DD.
The main motive behind such action is to curb the laundering of black money through sale of immovable property (other than rural agricultural land).
The section burdens the buyer of the property to deduct tax @ 1% of the amount paid or payable to the seller in case of value of transaction exceeding Rs.50,00,000/-.
But this provision is applicable only for the payment made to Residents for transactions with Non-Residents as covered under section 195 of The Income Tax Act, 1961.
What about the applicability of Sec 203A for obtaining the TAN by the buyer?
In order to remove such hardship, sub-section 3 of section 194(IA) has been introduced which doesn’t mandate the procurement of TAN.
As per Notification No. 39 dated 31st May 2013, the TDS deducted has to be deposited within a period of 7 days from the end of the month in which the deduction is made.
Form 26QB has been prescribed for making such payments and the same has been uploaded in the website of NSDL.
The TDS certificate in Form 16B would be issued within 15 days from the due date of deposit of TDS. In case of non-availability of PAN, the TDS would be deducted at 20% of the amount paid or payable.
In case of transactions made in installments, the TDS has to be deducted at the time of paying each installment.
In calculating the value of Rs.50,00,000/- the aggregate of payments has to be taken into consideration and not the individual payment. So, there is no tax planning possible by way of creating multiple buyers and sellers.
Is there any exemption to the seller in case he is eligible for taking exemption from capital gains under section 54?
No, because the TDS is on the value of transaction and not on the amount of capital gain. So, investing in the assets specified under section 54 is not of any use.
The value of 50,00,000/- pertains to a particular unit or property and the value refers to the value on the date of agreement provided the payment has been done through cheque/DD.
