TDS on paymet on transfer of certain immovable property – Section 194IA – reference to stamp duty value for the purpose of applicability of TDS provision – whether allowable?

 

Section 194IA as inserted by F.A. 2013 w.e.f. 01.06.2013 reads as follows:

Payment on transfer of certain immovable property other than agricultural land.

194-IA. (1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.

(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.

Thus from the above it is clear beyond doubt that, when transferee is responsible for paying sum less than fifty lakh rupees by way of consideration for transfer of immovable property, he is not required to deduct any tax at source as per sub-section (1) read with sub-section (2) of section 194IA.

Please note that there is no linking of actual sale consideration involved in the transaction with stamp duty value thereof for applicability of this TDS provision.

It is important to note here that the linking of actual consideration with stamp duty valuation for the purpose of TDS was proposed by Finance Bill 2012 [Clause 73] by way of new section 194LAA – sub section (3). However the said provision was never enacted and the revised section 194IA was finally enacted by F.A. 2013 wherein the above linking was intentionally dropped to avoid the undue hardship to assessees’ & the unwanted litigation.

 

 

 

 

The old proposal is reproduced below:

Clause 73 of Finance Bill 2012:

 

After section 194LA of the Income-tax Act, the following section shall be inserted with effect from the 1st day of October, 2012, namely:—

“194LAA. (1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon.

(2) —–

(3) Where the consideration paid or payable for the transfer of an immovable property is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of transfer of such immovable property, the value so adopted or assessed or assessable shall, for the purposes of sub-section (1) or sub-section (2), be deemed to be the consideration paid or payable for the transfer of such immovable property.”