Section 194-IA of Income Tax Act for AY 2023-24

Section 194-IA of Income Tax Act amended by Finance Act 2022 and IT Rules. Payment on transfer of immovable property other than agricultural land.

Amended and updated notes on section 194-IA of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Payment on transfer of certain immovable property other than agricultural land.

Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 194-IA of IT Act 1961 provides for Payment on transfer of certain immovable property other than agricultural land.

Recently, we have discussed in detail section 194-I (Rent) of IT Act 1961-2022. Today, we learn the provisions of section 194-IA of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 194-IA is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 194-IA of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-194-IA: Payment on transfer of certain immovable property other than agricultural land

Section 194IA (1):

Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum or the stamp duty value of such property, whichever is higher, as income-tax thereon.

[Sub-section(1) of section 194-IA amended(inserted) w.e.f. 1-April-2022 by the Finance Act 2022]

Section 194IA (2):

No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property and the stamp duty value of such property, are both, less than fifty lakh rupees.

[Sub-section(2) of section 194-IA amended(substituted) w.e.f. 1-April-2022 by the Finance Act 2022]

Section 194IA (3):

The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

Explanation: For the purposes of this section,—

(a) “agricultural land” means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

(aa) “consideration for transfer of any immovable property” shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property;

(b) “immovable property” means any land (other than agricultural land) or any building or part of a building.

(c) “stamp duty value” shall have the same meaning as assigned to it in clause (f) of the Explanation to clause (vii) of sub-section (2) of section 56.

[Clause(c) in Explanation newly inserted w.e.f. 1-April-2022 by the finance Act 2022]


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