194IA APPLICABILITY/TECHNICAL ISSUES

[hubert fernandes]

 

194IA Inserted vide finance act qef 01.06.13,

whether is it applicable for ongoing real estate projects where the agreement for sale is executed prior to 01.06.13 ?,

If  part payment of the the consideration on such sale of apartements in ongoing projects(ie agreement executed/registered prior 01.06.13) is paid to the builder/developer  prior to 01.06.13, whether TDS has to be deducted on balance payable to builder or even on the amout paid prior to june 2013?

Assuming that a real esate sale take place after 01.06.13, whether the purchaser is required to deduct TDS on the entire consideration on the date of agreement (ie one time) or whether tds is to deduceted as per payment schedule dates as mentioned in the agreement for sale?

what is consideration? whether TDS is to be deducted only on the sale consideration or also on the car park and other outgoing paid(like electricty meter charges, club house, infrastructure tax etc)?

 

[sanjeev bajaj]

Section 194IA of the IT Act says that tax be deducted at the time of payment or credit whichever is earlier. Hence, payment already made before 1.6.2013 should not be considered for deduction of tax.

Yes, it is applicable for ongoing projects even though agreement for sale is executed before 1.6.2013.

Consideration should be taken for all charges which are includible for the purpose of levy of stamp duty for registration of sale deed.

This is my opinion, If any body has different opinion, Pl let me know.

[sanjeev bajaj]

Further to my earlier reply, Pl refer to clause (d) of section 269UA of IT Act as referred in explanation I  of clause (47) of Section 2 of the IT Act  for the meaning of immovable property which includes plant, machinery, furniture, fittings or other things as well as any rights therein. Hence whatever payment made for any rights therein the same shall be considered as consideration for transfer of immovable property.

Further, it includes constructed of to be constructed.

AI Summary

TDS on property transactions: deduction arises at payment or credit and includes ancillary charges as part of consideration. Section 194IA requires TDS at the time of payment or credit, whichever is earlier; payments made before the statute's effective date need not be deducted. The provision applies to ongoing projects even if agreements were executed earlier. Consideration includes all amounts chargeable to stamp duty on registration and payments for rights in the property; the definition of immovable property covers constructed and to be constructed assets and associated fittings and rights.