Have you ever heard about the All American Dream? In 1944, President Roosevelt of The United States, defined the All-American dream as, the pursuit of happiness of owning a decent house, a good job, education and health care. This statement also implied if you worked hard and followed the rules, then the government should provide basic facilities, financial security, education, etc. This has been ingrained into one’s head because one wants to live as well as or better than the others. Also, It’s within one’s ability. However sometimes, a person may not be able to handle his/her properties, so he/she may sell their properties. But such transaction are liable for tax under section 194IA of Income Tax Act, India. Let us understand what kind of properties are included under this section and the deductions allowed to taxpayers.
Under section 194IA of Income Tax Act, 1961, with effect to 1-6-2013, 1% tax deductible on amount payable to the transferor by the transferee in consideration to the sale/transfer of an immovable property.
Any amount paid in consideration to the transfer of an immovable property (other than Agricultural land), provided the amount is not less than Rs. 50 Lakhs.
Immovable Property: Any land (other than agricultural land) or any building or part of building is immovable property.
Agricultural Land: A land shall not be treated as agricultural land, provided,
|Size of Population||Distance from Municipality or Cantonment Board|
|10,000-100,000||Within 2 Kms|
|100,000-10,00,000||Within 4 Kms|
|More than 10,00,000||Within 6 Kms|
Agricultural lands not being situated in any area as referred to section 2(14) (iii)(a)(b).
Payer: A payer is any person referred to as transferee responsible for paying a sum of amount to the resident transferor in consideration to transfer of an immovable property.
Payee: A payee is a resident transferor of an immovable property.
Conditions to satisfy for the applicability of section 194IA:
Tax shall be deducted at time of payment by way of cash or cheque or draft of such amount or at the time of credit of such transaction, whichever is earlier.
Rate of Tax shall be deducted @ 1%.
TDCAN: Tax Deduction and Collection Amount Number(TDCAN), shall not apply to a person deducting TDS under section 194IA.
Certificate of TDS: Certificate of TDS and deposit of TDS to the Govt under this section, refer Form 26QB.
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