Section 203A

Section 203A — the law in short

What the courts have decided on section 203A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.194-IA: the fifty lakh threshold, the multiple-transferor/transferee proviso from 1 October 2024, and the stamp duty value base from 1 April 2022 CBDT Circulars & InstructionsCuts both ways
  Four of us bought one flat and each of us paid under fifty lakh rupees. The TDS officer says we should have deducted under section 194-IA. Did we have to, and does the answer depend on when we bought?
  It depends entirely on the date. From 1 October 2024 sub-section (2) carries a proviso which says that where there is more than one transferor or transferee in respect of any immovable property, the consideration is the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors — so a flat bought by four buyers for Rs 80 lakh is inside section 194-IA even though each buyer pays Rs 20 lakh. For a transfer before that date there is no such aggregation rule in the section, and the Tribunal has repeatedly read the obligation as arising qua each transferee.
• Statutory position — s.194-IB and s.194M: the once-a-year deduction on rent, the cap that operates only under s.206AA, the gateway that keeps most individuals out of s.194M, and why neither needs a TAN CBDT Circulars & InstructionsCuts both ways
  I am an individual paying Rs 70,000 a month rent, and separately I have paid an interior contractor Rs 62 lakh for my own house. When exactly do I deduct, how much, and do I need a TAN?
  Under section 194-IB you deduct once, not monthly: the tax is deducted at the time of credit of rent for the last month of the previous year, or the last month of the tenancy if you vacate during the year, or at the time of payment of that rent, whichever is earlier, and the rate is two per cent of the income by way of rent, substituted for five per cent with effect from 1 October 2024. Under section 194M you deduct two per cent, again substituted for five per cent from the same date, but only if you are not a person required to deduct under section 194C, 194H or 194J, and only if the sum or aggregate of sums credited or paid to that resident during the financial year exceeds fifty lakh rupees. Neither section requires a TAN: section 194-IB(3) and section 194M(2) each disapply section 203A.
• Statutory position — s.194M and s.194-IB: the rate fell from five per cent to two per cent on 1 October 2024 CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My client is an individual paying a contractor and also paying rent. He has no TAN. What does he deduct, and at what rate?
  Two per cent under either section, for anything on or after 1 October 2024; five per cent before that. Section 194M applies to an individual or HUF not already covered by s.194C, s.194H or s.194J who pays a resident more than fifty lakh rupees in a financial year for contract work, commission or brokerage or professional fees. Section 194-IB applies to an individual or HUF outside the second proviso to s.194-I who pays a resident rent exceeding fifty thousand rupees for a month or part of a month. Neither section requires a TAN, because s.203A is disapplied in both.
• Statutory position — s.194N: the two and five per cent structure, the one crore, three crore and twenty lakh thresholds, and who is outside the section altogether CBDT Circulars & InstructionsCuts both ways
  My bank has deducted under section 194N on my cash withdrawals. What are the thresholds and rates as the section now stands, and is there anything that takes me out of it?
  Section 194N obliges a banking company, a co-operative society carrying on the business of banking, or a post office to deduct two per cent from any sum paid in cash exceeding one crore rupees during the previous year, from one or more accounts maintained by the recipient with it, computed on the aggregate of amounts paid in the year. Where the recipient is a co-operative society, a proviso substitutes 'three crore rupees' for 'one crore rupees' with effect from 1 April 2023; and where the recipient has not filed returns for all of the three assessment years whose section 139(1) time limit has expired immediately preceding the previous year, the threshold falls to twenty lakh rupees with deduction at two per cent between twenty lakh and one crore and five per cent above one crore.
• Statutory position — section 194S: one per cent on payment for transfer of a VDA, from 1 July 2022 CBDT Circulars & InstructionsCuts both ways
  We are paying for crypto bought from an Indian seller. Do we deduct tax, at what rate, and is there a threshold below which we can ignore it?
  Yes, from 1 July 2022. Section 194S requires any person responsible for paying a resident any sum by way of consideration for transfer of a virtual digital asset to deduct one per cent of that sum, at the time of credit to the resident's account or at the time of payment, whichever is earlier. No tax is deducted where the payer is a 'specified person' and the value or aggregate value of the consideration does not exceed Rs 50,000 during the financial year, or where the payer is anyone else and it does not exceed Rs 10,000 during the financial year. Where the consideration is wholly in kind, or is a swap of one VDA for another, or the cash part is not enough to fund the deduction, the payer must ensure the tax has been paid BEFORE releasing the consideration.
• Notification 73/2022 — Form 26QF for exchanges CBDT Circulars & InstructionsCuts both ways
  The exchange agreed under the CBDT guidelines to pay the 1% on its own sale to me. How does that get reported, and where do I see it?
  Through Form 26QF, filed quarterly by the exchange. Where an exchange has agreed, under the guidelines issued under s.194S(6), to pay the tax on a transfer of a virtual digital asset owned by it instead of the buyer deducting, rule 31A(1) requires the exchange to deliver a quarterly statement of those transactions in Form 26QF. Sub-rule (4E) also requires the exchange to furnish particulars of amounts paid or credited on which no tax was deducted in accordance with the guidelines.
• Statutory position — s.194-IC: ten per cent on the cash consideration under a specified agreement, with no threshold at all, and the one section in this family that does not disapply s.203A CBDT Circulars & InstructionsCuts both waysNo later treatment found
  I am the developer under a joint development agreement with an individual landowner. I am giving him constructed area plus some cash. What do I have to deduct, on what, and do I need a TAN?
  You deduct ten per cent, but only on the monetary consideration. Section 194-IC applies notwithstanding section 194-IA to any person responsible for paying a resident any sum by way of consideration, 'not being consideration in kind', under the agreement referred to in section 45(5A), at the time of credit to the payee's account or at the time of payment, whichever is earlier — and unlike sections 194-IA, 194-IB and 194M it contains no provision disapplying section 203A, so the deductor needs a TAN and files an ordinary quarterly return.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.