Section 194-IA of Income Tax Act, 1961-TDS on Sale of Immovable Property

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Section 194-IA of Income Tax Act, 1961-TDS on
Sale of Immovable Property
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• Section 194IA is inserted by Finance act 2013 and
  it is applicable from 01st of June, 2013. A
  person who is purchasing any immovable property
  (other than agricultural land) from a resident is
  required to deduct TDS _at_ 1 from the amount
  payable.

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• On Installments or Loan If the purchase value is
  greater than Rs. 50 lakhs then TDS is to be
  deducted from the first instalment itself and for
  each and every instalment. The purchaser should
  not wait for the aggregate instalment amounts to
  exceed Rs. 50 lakhs. The view that TDS is to be
  deducted from final instalment or after exceeding
  Rs. 50 lakhs are not right.If the purchaser
  has availed loan from a bank and bank pays
  directly to the seller, then its also considered
  as a payment and TDS needs to be deducted on date
  of such payment to seller. The date of payment of
  EMI by buyer to bank is irrelevant. Due Date of
  TDS Payment and Form 26QB The deductor i.e. the
  purchaser of property has to file form 26QB which
  is a Challan cum declaration statement within 30
  days from the end of the month in which payment
  is made. No separate TDS return is to be filed in
  respect of such deduction.

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• Example-1   Mr. Gayle, non-resident, sold his
  residential building situated at Jaipur,
  Rajasthan to Mr. Rahul for a total consideration
  of ? 2.50 crore. In such a case, Mr. Rahul will
  make the payment to Mr. Gayle after deduction of
  tax _at_20 plus surcharge and Health Education
  Cess _at_ 4 under Section 195.
• Section 194-IA does not apply where the payment
  is made to a non-resident. Example-2 Mr.
  Sachin, resident in India, sold his house
  situated in Jaipur, Rajasthan, to Mr. John who is
  resident of USA for a total consideration of ?
  4.20 crores. In that case, Mr. John is required
  to deduct TDS _at_ 1 under section 194-IA while
  making payment to Mr. Sachin.