Jayanta Bandyopadhyay 24 July 2022

Definition of transaction value..sale of land

We are selling land at Bilaspur fir Rs.48 Lakhs plus stamp duty , lawyers fees etc Rs. 5 L. Total value involves Rs.53 L

While applying section 194 for 1% TDS, what transaction value is to be considered? If we keep it below Rs.50 L, does buyer deduct 1% tds.

Pl guide.

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Quick Summary

This discussion clarifies the transaction value for TDS deduction when selling land. It explains that only the sale price of the land, not statutory charges like stamp duty or lawyer fees, constitutes the 'consideration for transfer'. Therefore, if the sale price is below Rs. 50 Lakhs, 1% TDS under Section 194IA is generally not applicable.

2 Replies

SHIRISH PAWAR, 7738990900 (Advocate) 24 July 2022

Hello,

Your transaction is of Rs 48 lakhs so in your case tds of 1% is not applicable.

LCI Thought Leader Adv. Ravish Bhatt, ADIT, CIOT (Dual Qualified lawyer/ Solicitor International Tax Affiliate CIOT) 26 July 2022

Connect with Mr. Bhatt on Linkedin: Click Here

s.194IA requires deduction of TDS at the rate of 1% at the time of credit of such sum. “Consideration for Transfer of any immovable property” is explained in Explanation (aa) to 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 immovable property.

However, stamp duty is a statutory levy required to be paid as mandated by law and will not form part of Consideration for Transfer of any Immovable Property. Consideration in your case therefore should be less than 50 lacs and in such case no TDS will be required to be deducted presuming that Stamp duty value of the property is also less than INR 50 lacs.