• Section 194 IA

Sir,
I need your expert advice on Section 194 IA regarding TDS deduction on real estate transactions above 50 lakhs.

I am a buyer of property. The seller (resident Indian,) is advising me not to deduct TDS on the transaction as he has a net loss in this transaction (House Property). He has further said that he has exemption under Section 197 to not get this TDS deducted.
Can u pls advice??
As IT demand will be coming to me and I am not sure whether seller can get such exemption or not??
Asked 2 years ago in Income Tax from Bhopal, Madhya Pradesh
Dear Sir,

If he has NIL tax deduction certificate, then you may not deduct TDS. But in general, we have not seen this certificate in case of section 194IA.

Take that certificate from the seller.

Please feel free to revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
2944 Answers
125 Consultations

5.0 on 5.0

 In view of saving citizens from the unwarranted exercise of deduction of tax, then claiming refund from the Government, Section 197 was introduced. This section empowers assessee for obtaining lower deduction certificate from the assessing officer. When assessee produces this certificate to the deductor, the deductor has to deduct the tax at the rates specified in the certificate. 
However in Section 197 payments made under Section 194 IA is not covered, so the seller cannot apply for a lower deduction certificate.

Thus you have to deduct TDS and pay via Return cum challan on or before due dates to avoid penalty and interest.
Lalit Bansal
CA, Delhi
515 Answers
36 Consultations

5.0 on 5.0

no SECTION 197 NOT AMENDED TO INCLUDE 194ia, SO CONTENTION OF BUYER IS NOT VALID
Anuj Agarwal
CA, Aligarh
43 Answers

4.4 on 5.0

Dear Sir,
As per the provision of section 194IA, any person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property shall be liable to deduct tax @1%. 
So, the liability to deduct tax is on the gross amount and the payer is not allowed to give any deductions.
Further, if the receiver has lower deduction certificate than tax should be deducted at such lower rate only if he produces such certificate to the payer.
Regards
CA. Sachin Sinha
9891315840
Sachin Kumar Sinha
CA, New Delhi
14 Answers

Not rated

Sorry I think your question is already answered
Shyam Sunder Modani
CA, Hyderabad
1408 Answers
95 Consultations

5.0 on 5.0

Hello Sir,

In your case it is preferred if you ask the seller to provide you a copy of the Lower Deduction Certificate and verify if it is for the purpose of Sale of Property.

If not, then straight away deduct 1% TDS and not take any liability on your name.

Trust this clarifies your query. 

Feel free to call back/ get back in case of further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP. 
Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

5.0 on 5.0

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