Our agreement is years old but the reckoner value at registration is higher. Do I deduct one per cent on the price or on the reckoner value?
On the higher of the two. Since 1 April 2022 s.194-IA(1) requires the transferee to deduct one per cent "of such sum or the stamp duty value of such property, whichever is higher", and s.194-IA(2) exempts the transaction only where the consideration and the stamp duty value are both below Rs. 50 lakh. The section carries no agreement-date proviso and no tolerance band, so the relief the buyer may have on the s.56(2)(x) charge does not read across into the withholding obligation.
The general entry in this library on s.194-IA, s.194-IB and s.194M sets out the machinery - no TAN, PAN-based challan-cum-statement, thirty days, Form 16B. This entry deals only with the figure on which the one per cent is worked out, because that is where the buyer of a flat bought below the reckoner rate comes unstuck.
The amendment. Section 194-IA as it stood earlier required deduction of one per cent of the sum paid, and s.194-IA(2) turned off the section where "the consideration for the transfer of an immovable property is less than fifty lakh rupees" - the department's archived text still reads that way, and the department's own pages on this section are not all current, so check the text you are quoting. The Finance Act 2022 changed both limbs with effect from 1 April 2022: the deduction is now one per cent "of such sum or the stamp duty value of such property, whichever is higher", and there is no deduction only where the consideration and the stamp duty value are both less than Rs. 50 lakh. The department's current tutorial page on the section puts it as tax "at the rate of 1% of sales consideration or stamp duty value, whichever is higher if the amount of consideration or the stamp duty value of the immovable property is Rs. 50 lakhs or more", and defines stamp duty value as the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of the immovable property. The memorandum's stated reason for the change was to remove the inconsistency between s.194-IA and ss.43CA and 50C, which already work on the stamp duty value.
What did not come across with it. Sections 50C and 56(2)(x)(b) each carry a proviso allowing the stamp duty value as on the date of the agreement where the agreement and the registration are on different dates, and each carries a tolerance band. Section 194-IA carries neither. The commentary read for this entry makes the same point: the amended section has no proviso allowing the agreement-date value. So a buyer who is fully protected on the s.56(2)(x) charge - an allotment letter fixing the price, a bank payment on or before it, and therefore the older and lower value for the income charge - is still, on the words of s.194-IA, deducting one per cent on the reckoner value at the time of payment or credit. The two provisions are not aligned even after an amendment whose stated purpose was to align them.
What that means in practice. The obligation is on the transferee and it is tested at the time of credit or payment, whichever is earlier, so it has to be decided before the deed is registered rather than at assessment. The amount deducted is not the buyer's tax: it is the seller's, and the seller takes credit for it against the income on which it was deducted. Where the seller's own capital gains are computed on the substituted stamp duty value under s.50C, deducting on that value is at least consistent with what the seller will be assessed on. Where the seller is inside the s.50C band and is assessed on the actual price, the deduction on the higher figure is simply more tax collected earlier, which the seller recovers in the return.
One further trap sits alongside this one. From 1 October 2024 the Rs. 50 lakh test is applied to the aggregate of the amounts paid or payable by all transferees to all transferors, so splitting a purchase between joint buyers no longer keeps it outside the section; the library's entry on Vinod Soni records the earlier position and the amendment that ended it.
The buyer decides this before registration, without advice, and a shortfall surfaces later as a demand under s.201 with interest and a fee under s.234E. The intuition that the agreement-date protection carries into the TDS is wrong on the words of the section, and it is the natural assumption for anyone who has just used that protection on the income side. Deducting on the higher figure costs the buyer nothing beyond cash flow, because the tax is the seller's and the seller takes credit for it.
The deductor deducted my tax and never deposited it. The Assessing Officer says he cannot give me credit until the money reaches the treasury, and has attached my bank account. Is he right on both counts?
My tenant deducted tax from my rent but never paid it over or gave me a Form 16A. The department is now recovering it from me - can it?
The reopening notice says my sale below circle rate attracts section 50C, but I am a developer and the floor sold was stock in trade, so section 50C cannot apply. Does that error destroy the notice?
The officer has passed a s.154 order shifting my TDS credit to the next year because the payer's accounting year is different from mine. Can he do that by rectification?
The Commissioner has set aside my assessment under section 263 saying the Assessing Officer did not examine an issue properly — can he do that without deciding the issue himself?
The Assessing Officer sent my property to the Departmental Valuation Officer because he thought my sale price and my 1981 cost were both wrong — was he entitled to?
The circle rate rose between our agreement and the sale deed, and my year is earlier than the proviso. Is there a High Court holding on the agreement-date proviso?
A vendor billed my sister concern but put my PAN on the TDS certificate, so my 26AS shows receipts and TDS that are not mine. The tax has been paid by the sister concern. Can I claim the credit without offering that income?
Every page in this library links to what it was written from, so you can check it rather than take our word for it.