TDS on transfer of Immovable Property Transferred by Non-Resident

TDS On Transfer Of Certain Immovable Property Where Property Is Transferred By Non Resident

A transferee of Immovable Property is required to deduct TDS while making payment to Transferor on payment for transfer of Immovable Property.

Section 194IA of Income Tax Act, 1961 specifically deals with Tax Deducted at Source (TDS) on certain Immovable Property where Transferee makes payment to RESIDENT Transferor. However, where the transferee makes payment to NON-RESIDENT Transferor of immovable property, Transferee is required to deduct TDS under section 195 of Income Tax Act, 1961. In such cases, prevailing Income Tax is required to be deducted from the amount of payment.

Who need to deduct TDS

Any person (transferee) responsible for paying a sum for transfer of an immovable property to Non-Resident Transferor

Threshold limit for Applicability

There is no threshold limit for applicability of tax deduction on payment being made to non-resident transferor of the immovable property.

When to Deduct TDS

TDS is required to be deducted:

   1)    at the time of credit of such sum in account of the transferor or   

   2)    payment of such sum in cash or by cheque or draft or any other mode

whichever is earlier.

Rate of TDS

Rate of Income tax (TDS) to be deducted shall be 20% or 30% depending on holding period of the immovable property by NON-RESIDENT Transferor.

Lower or NIL tax deduction certificate can be obtained from Assessing Officer 

Responsibility of Purchaser of Immovable Property

• Deduction of TDS  shall be at 20%/30% on payments being made to NON-RESIDENT transferor
• Need to obtain Tax Deduction Number (TAN) for himself
• Pay TDS by 7^th of Next month in Government Account
• File TDS return in form 27Q
• Download TDS certificate in form 16A.

Time-limit for deposit of TDS in Government A/c

·         TDS deducted in a month is required to be deposited within a period of seven days from the end of the month in which the deduction is made

TDS Return

·         TDS return is required to be filed quarterly:

TDS Certificate

•   TDS certificate is required to be issued in form 16A within 15 days after filing of TDS return in Form 27Q.