194-IA TDS payment by Joint owner

Hello,

Under section 194-IA of the Income Tax Act in India, the buyer of a property is required to deduct TDS (Tax Deducted at Source) at a rate of 1% of the sale consideration when purchasing immovable property valued at more than ₹50 lakhs. This rule applies to both individual buyers and buyers who are not residents.

In the context of a joint ownership where you are paying the down payment and the loan EMI, it's generally advisable to deduct the TDS from the payment that you are making. Since you are making the financial contributions for the down payment and EMI, it could make more sense for you to ensure that the TDS is deducted from your PAN (Permanent Account Number). 

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CA Vaibhav Garg

Situation: You and your wife are buying a house as joint owners, with your wife as the first applicant. You will be paying the down payment and the loan EMI. You are concerned about the TDS (Tax Deducted at Source) implications under section 194-IA.

Section 194-IA Overview: Section 194-IA of the Income Tax Act requires any person responsible for paying consideration for the transfer of immovable property (other than agricultural land) to deduct 1% of the transaction amount as TDS and remit it to the government.

Exemption Rule: A rule was passed by the Delhi bench of the income tax department stating that joint buyers would not be liable to pay TDS under section 194-IA if the individual share of each buyer is less than ₹50 lakhs.

Based on the exemption rule provided by the Delhi bench, if the individual share of each buyer (you and your wife) in the property's consideration is less than ₹50 lakhs, you would not be liable to pay TDS under section 194-IA.

However, if the property's consideration for each individual's share is more than ₹50 lakhs, then TDS will need to be deducted separately according to the ownership shares. In such a scenario, 1% TDS should be paid by both of you according to your respective shares of the property. The TDS should be calculated based on the share of the consideration for which each of you is responsible.

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Thank you.

Shubham Goyal

Only you should deduct TDS u/s 194-IA. Confirm the residential status of seller. If he is NRI then TDS would be deducted u/s 195

Assuming seller is a single owner

For detailed discussion you may opt for phone consultation

If you are only going to pay full consideration and EMI you should only pay full TDS but then why are you mentioning her name in sale deed.

Because including her name would create a confusion and income tax department might raise a question as to why she did not deduct TDS.

Also, while selling the property you might have to pay full tax on such property and at that time also a question might be raised. Hence, if she is not paying any amount it is advisable to include her name later after registration to save from one confusion.

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Thank you.

Hi,

Technically if the property is jointly owned then the TDS should be paid by both the Joint owners according to their share.

However since the entire financial contribution is being made by you, you may deposit the TDS under your PAN, but then please be prepared with replies as it might lead to queries being raised by the Income Tax Department for your wife's purchase of immovable property and no TDS compliances on her PAN and issues might arise also at the time of sale of such property.

Further there can also arise complexities on  purchasing a property without corresponding income in the ITRs. in your wife's case(although you are financing the same through loan etc.) so I would suggest you to take up an expert advice on that too.

Hence it is suggested to comply on both the PAN as per the share.

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