TDS on immovable Properties on either Agreement or Stamp Duty value, whichever is higher 

 

 

 

At present, section 194-IA provides for deduction of taxes (TDS) on payment of consideration to a resident seller for immovable property other than agricultural land, having value of Rs. 50 lakhs and more, @ 1% of the value of consideration.

The provision of section 194-IA applies the TDS on the sale consideration and does not currently factor the stamp duty value of such property. This section does not take into account the stamp duty value of the immovable property, whereas, as the provisions of section per 43CA and 50C of the Act, for the computation of income under the head “Profits and gains from business or profession” and “capital gains” respectively, the stamp duty value is also to be considered.

By the Finance Bill – 2022, it is proposed to insert that the TDS under section 194-IA @ 1% would be applicable on the higher of stamp duty value or consideration. This proposal would align the other provisions for transfer of immovable property, which factor the stamp duty value as well. However, the changes proposed in section 194-IA which is effective from 1 April, 2022 would also require consequent amendment to Form 26QB, which is the challan-cum-return for payment of the TDS on immovable property, where the transferor is a resident in India.