Section 194IA is a rule where a person must deduct TDS (Tax Deducted at Source) when buying immovable property (like land or house) worth ₹50 lakh or more. The buyer acts like a mini tax collector, holding back 1% of the payment and giving it to the government. It’s a gentle way to make sure tax is paid.
Who it Applies To
- Buyer: Any individual or company buying property.
- No TDS if the seller is a Government body or local authority.
- Only applies if the total consideration is ₹50 lakh or above.
TDS Mechanics (Super Simple)
- Threshold trigger:
- Purchase amount (sale value + any ₹ consideration) ≥ ₹50 lakh → TDS applies.
- TDS rate:
- Deduct 1% of entire agreed price.
- Payment timing:
- Buyer must deduct at the time of credit/payment to seller’s account.
- Deposit TDS:
- Pay that 1% to the Income Tax Department within 30 days of deduction, using Form 26QB.
- Proof to seller:
- Buyer issues Form 16B to seller as proof of TDS deducted.
Flow of Events
- Agreement signed → Buyer pays ₹80 lakh for a house.
- Buyer deducts ₹80,000 (1% of ₹80 lakh)
- Buyer pays ₹7,920,000 to seller, ₹80,000 to Government.
- Buyer submits TDS online via Form 26QB within 30 days.
- Buyer gives Form 16B to seller as receipt.
Why It Matters
- Prevents tax evasion on big land/property deals
- Seller automatically gets credit for TDS deducted
- Buyer avoids future penalties by paying TDS on time
Quick Recap
| Feature | Details |
|---|---|
| When | Property cost ≥ ₹50 lakh |
| Who deducts | Buyer |
| TDS rate | 1% of full payment |
| Deposit & Proof | Within 30 days via Form 26QB; Form 16B to seller |
