TDS under 194M or 194IA

[Ethirajan Parthasarathy]

An individual enters into contract with a developer to purchase a apartment costing 2 crore of which 75 lakh is towards land & 1.25 crore superstructure. All along the individual was deducting tax u/s 194IA on total sum of 2 crore @ 1%.

With introduction of section 194M, does the scenario change. Is he liable to deduct tax u/s 194IA or 194M

[Ganeshan Kalyani]

Section 194IA is more appropriate as it provides for TDS on immovable property.

AI Summary

TDS on immovable property remains governed by section 194IA, not section 194M, for an apartment purchase. The buyer had been deducting TDS under section 194IA on the full consideration for an apartment comprising land and superstructure. Following introduction of section 194M, the applicable withholding provision for this immovable property transaction remains section 194IA; section 194IA continues to govern the TDS obligation in this purchase scenario.