Section 194LA : TDS on Payments of Compensation on Acquisition of certain Immovable Property

What is Section 194LA?

Section 194LA relates to the TDS provisions applicable on the payment of compensation at the time of acquisition of certain type of immovable property. Any person, who is responsible for paying to a resident, any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land) shall, deduct TDS at the rate of 10%.

TDS Calculator
Tax Deducted at Source (TDS) is a part of Income Tax. TDS should be deducted by a person for specific payments made.
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TDS Calculator
Tax Deducted at Source (TDS) is a part of Income Tax. TDS should be deducted by a person for specific payments made.
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When to deduct TDS under Section 194LA?

The payer is liable to deduct TDS u/s 194LA if the aggregate amount of payment during the financial year exceeds INR 2,50,000. The payer shall deduct TDS within earlier of the below mentioned dates –

  • At the time of payment of the amount in cash; or
  • At the time of payment of the amount in cheque or draft or any other mode.
As per section 206AA if the deductee fails to provide the PAN to deductor then he would suffer deduction at higher of the rates of deduction as: At the rate specified in the relevant provision of the Act, or, At the rate or rates in force, i.e., the rate prescribed in the Finance Act (Finance Act 2019 for FY 2019-20), or At the rate of 20%
Tip
As per section 206AA if the deductee fails to provide the PAN to deductor then he would suffer deduction at higher of the rates of deduction as: At the rate specified in the relevant provision of the Act, or, At the rate or rates in force, i.e., the rate prescribed in the Finance Act (Finance Act 2019 for FY 2019-20), or At the rate of 20%

Rate of TDS

  • The Deductor is liable to deduct TDS @ 10% under section 194LA of the Income Tax Act, 1961.
  • No surcharge, education cess or SHEC shall be added to the above rate. Hence, TDS shall be at the basic rate.
  • The rate of TDS will be 20% in all cases, if PAN is not quoted by the deductee.
As per section 206AB, if the aggregate of TDS and TCS for deductee is INR 50000 or more in each of these two previous years and deductee has not filed the returns of income for two previous years immediately prior to the previous year in which tax is required to be deducted then he would suffer deduction at higher of the rates of deduction as: At twice the rate specified in the relevant provision of the Act; or At twice the rate or rates in force; or At the rate of 5%
Tip
As per section 206AB, if the aggregate of TDS and TCS for deductee is INR 50000 or more in each of these two previous years and deductee has not filed the returns of income for two previous years immediately prior to the previous year in which tax is required to be deducted then he would suffer deduction at higher of the rates of deduction as: At twice the rate specified in the relevant provision of the Act; or At twice the rate or rates in force; or At the rate of 5%

Cases where there is no need to deduct TDS under Section 194LA

TDS is not deductible under section 194LA in following cases when –

  • The person is paying an amount to a ‘non-resident’ person.
  • Aggregate consideration during the Financial Year is less than INR 2,50,000.
  • Payment is in respect of any award / agreement which is exempt from income tax.
  • The payee has filed an application in Form No. 13 to the Assessing Officer and has obtained a certificate for No / lower deduct of tax.
Residential Status Calculator
Taxability in India depends upon Residential Status. Know your Residential status from Resident, NRI or Resident but Not Ordinarily Resident(RNOR)
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Residential Status Calculator
Taxability in India depends upon Residential Status. Know your Residential status from Resident, NRI or Resident but Not Ordinarily Resident(RNOR)
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TDS Certificate

Deductors of tax shall issue TDS certificate to the deductee in Form 16A on Quarterly basis for TDS u/s 194LA. The due dates to issue of TDS certificates is 15 days from due date of filing TDS return. Deductor can download TDS Certificate from TRACES. The certificate shall be given on a quarterly basis. The due dates for receipt of TDS certificates are as below:

TDS For Quarter Due-Date
Q1 April to June 15th August
Q2 July to September 15th November
Q3 October-December 15th February
Q4 January to February 15th June
TDS Return (26Q) for Non-Salary Payments (Annual)
CA Assisted TDS return filing plan for employers, firms and companies making payment of Professional fees, Rent, Contracts, Commission, etc.
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TDS Return (26Q) for Non-Salary Payments (Annual)
CA Assisted TDS return filing plan for employers, firms and companies making payment of Professional fees, Rent, Contracts, Commission, etc.
[Rated 4.8 stars by customers like you]

TDS Return

Filing TDS returns is mandatory for all the persons who have deducted TDS. TDS return is to be submitted quarterly and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc. In case of TDS on non salary payments TDS Return Form 26Q is to be filed. Due dates for TDS returns are as follows:

Quarter Due-Date
Q1 31st July
Q2 31st October
Q3 31st January
Q4 31st May

FAQs

What is a compulsory acquisition?

Compulsory acquisition is the power of government to acquire the land from its owner without the willing consent of owner in order to benefit the society.

How can I claim TDS refund?

You need to file a TDS refund claim when the deductor has deducted more tax than the actual liability. You can claim the difference amount by filing an income tax return.