TDS on the sale of immovable property is proposed to be amended in Budget 2022
For the Finance Budget 2022, Finance Minister Nirmala Sitharaman suggested a 1% TDS (Tax Deduction at Source) on non-agricultural immovable property valued at over Rs 50 lakh, depending on the sale price or stamp duty value, whichever is larger.
TDS on immovable property is now deducted only on the property’s evaluation valuation.
Its proposed modification in the Union Budget for 2022 corrects an anomaly in Section 194-IA of the Income Tax Act, removing inconsistencies with Sections 43CA and 50CA of the statute. Once passed, the amendment will take effect on April 1, 2022.
Sub-section 1 of Section 194-IA provides that any person, assignee, required to pay a citizen (transferor) whatever total amount as consideration for the transmission of any immovable property (apart from agricultural land), wil subtract an equivalent amount with one percent of these sum as income-tax hereunder at the time of credit of these sums.
Subsection 2 states that where the consideration for the transfer of immovable property is below Rs 50 lakh, no deduction under Subsection 1 is allowed.
The section, according to the agreement, doesn’t really consider the stamp duty value of the immovable property. The stamp duty value is considered in Section 43CA of the Act, that allows for such computation of income tax under the Profits and Gains through Business or Profession section, and Section 50C of the Act, which offers for the computation of income under the Capital Gains section. As a result, section 194-IA, as well as sections 43CA and 50C of the Act, are incompatible.
According to the Finance Act 2020, it is proposed to amend section 194-IA of the Act, which asserts that throughout the particular instance of a transfer of an immovable property, TDS must be at the rate of one percent of the sum credited or paid to the citizen or the stamp duty value of the property, whichever is higher (other than agricultural land)
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