Section 194-IA of ITA, 1961 : Section 194-Ia: Payment On Transfer Of Certain Immovable Property Other Than Agricultural Land

Explanation using Example

Imagine John is buying a house from Priya in Delhi for ₹60 lakh. Since the property is an immovable property (a building) and the transaction value is more than ₹50 lakh, as per Section 194-IA of the Income-tax Act, 1961, John, the buyer, is responsible for deducting 1% of the transaction value as income tax at the time of payment. Therefore, John must deduct ₹60,000 (1% of ₹60 lakh) and pay Priya ₹59,40,000. He must then deposit the deducted ₹60,000 as TDS (Tax Deducted at Source) with the government.

If, however, the property was agricultural land situated outside the specified urban areas, or if the transaction value was less than ₹50 lakh, John would not have to deduct any TDS on the payment made to Priya under this section.