194IA of Income tax Act 1961
the time of credit of such sum to the account of the transferor or at the time
of payment in whatever manner, has to deduct tax at source at 1 percent.
liability to deduct tax at source is at the time of actual payment or credit of such sum to the account of the
transferor whichever is earlier.
effect from June 1, 2013, any person who acquires an immovable property (other than agricultural land) from a
resident transferor and where the value of consideration Exceeds Rs 50 Lakhs,
shall be required to deduct tax at source at the rate of 1 percent.
is still not clear whether the
transferee shall be required to comply with all the other compliances of tax
deduction at source, e.g., filing of TDS returns, issue of TDS certificates,
etc. This could prove cumbersome as well as burdensome.
difficulty that a buyer may face to
implement this TDS provision will be as under:
Obtaining TAN number for complying with
Issuance of TDS certificate to the seller;
Filing of TDS return quarterly and
mention PAN of the seller;
Taxes needs to be deposited within the
specified time limit with the Government; and
May be scrutinized by the TDS officer
It is better to keep in mind that the above rate of 1% may increase to 20% if seller does not provide PAN due to overriding
provision of section 206AA of ITA.
better alternative would have been to make the Registrar of immovable property responsible for deducting the tax
at source at the time of registration,
depositing it in Government account, issuing
TDS certificate to the Seller and filing of the TDS return. The Registrars already have a TAN number
for filing the Annual Information Returns.
It will be nearly
impossible for the Purchaser to make such compliances.