With effect from 1st October 2012, it will be obligatory for the buyer of a property at the time of making payment to the seller, to deduct tax at source @ 1% of such sum, if the sale consideration exceeds -
- Rs. 50 Lakhs where the property is situated in urban areas
- Rs. 25 Lakh in other cases.
There will be no registration of the sale of property unless the buyer furnishes proof of deduction and payment of TDS.
After section 194LA of the Income-tax Act, the following section shall be inserted with effect from the 1st day of October, 2012, namely:—
“194 LAA.
(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 percent of such sum as income-tax
thereon.
(2)
No deduction under sub-section (1) shall be made where consideration
paid or payable for the transfer of an immovable property is less than
fifty lakh rupees in case such immovable property is situated in a
specified area, or is less than twenty lakh rupees in case such
immovable property is situated in any area other than the specified
area.
(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.
(4)
Notwithstanding anything contained in any other law for the time being
in force, where any document required to be registered under the
provisions of clause (a) to clause (e) of sub-section (1) or sub-section
(1A) of section 17 of the Indian Registration Act, 1908, purports to
transfer, assign, limit or extinguish the right, title or interest of
any person to or in any immovable property and in respect of which tax
is required to be deducted under sub-section (1), no registering officer
shall register any such document, unless the transferee furnishes the
proof of deduction of income-tax in accordance with the provisions of
this section and payment of sum so deducted to the credit of the Central
Government in the prescribed form.
(5)
The provisions of section 203A shall not apply to a person required to
deduct tax in accordance with the provisions of this section.
Explanation.—For the purposes of this section,—
(a)
“agricultural land” means agricultural land in India, not being land
situated in any area referred to in items (a) and (b) of sub-clause
(iii) of clause (14) of section 2;
(b) “immovable property” means any land (other than agricultural land) or any building or part of a building;
(c) “specified area” shall mean an area comprising—
(i) Greater Mumbai urban agglomeration;
(ii) Delhi urban agglomeration;
(iii) Kolkata urban agglomeration;
(iv) Chennai urban agglomeration;
(v) Hyderabad urban agglomeration;
(vi) Bangaluru urban agglomeration;
(vii) Ahmedabad urban agglomeration;
(viii) District of Faridabad;
(ix) District of Gurgaon;
(x) District of Gautam Budh Nagar;
(xi) District of Ghaziabad;
(xii) District of Gandhinagar; and
(xiii) City of Secunderabad;
(d)
the area comprising an urban agglomeration shall be the area included
in such urban agglomeration on the basis of the 2001 census”.
Important Links:
http://www.taxlawsonline.com/budget/chap3/as194la.asp
http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2005ITAct/Section194la.htm
